An application service provider (ASP) is a business that provides computer-based services to customers over a network. The need for ASPs has evolved from the increasing costs of specialized software that have far exceeded the price range of small to medium sized businesses.
As well, the growing complexities of software have lead to huge costs in distributing the software to end-users. Through ASPs, the complexities and costs of such software can be cut down. In addition, the issues of upgrading have been eliminated from the end-firm by placing the onus on the ASP to maintain up-to-date service.
A simple example would be a company like SalesForce.com that offers CRM software directly via their website rather as a desktop piece of software. Theoretically both parties benefit from this arrangement.
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