Every so often the computer industry has to reinvent its delivery mechanisms. In the first place hardware is what we all bought and software came with it, then in the 1980s it was software that was king and in the 1990s integration seemed to be the keyword.
Now businesses are being offered portal services and ASP models which, on the face of it, also seem attractive to the customer but have real pitfalls from a legal perspective.
The term "application service provider" seems to be used quite loosely. It should apply as a generic term to describe a company that hosts software applications on centralised servers and then makes those applications available on a rental fee basis to customers who either subscribe via the internet or a private network.
My experience is that some software suppliers are describing their service as an ASP service simply because it is the latest buzz word.
The obvious advantage of using an ASP is that customers only need to pay for the software applications they are actually using rather than having to pay a licence fee for an application with facilities that may never be used.
But there are some considerable disadvantages in the ASP model that customers should bear in mind such as:
From a legal point of view it is extremely important, when choosing an ASP, to be sure that its terms and conditions meet the service levels and solution expectations of the customer to a satisfactory degree.
The whole issue of negotiating and drafting computer contracts and service level agreements is addressed in my new book E-Licences and Software Contracts