Ask the Experts: What’s the Difference between ASP and SaaS?

Provided by Jorge Garcia of Technology Evaluation Center

This interesting question recently arrived in our Ask the Experts inbox, so I thought I’d write a brief post clarifying the difference between ASP and SaaS models.

TEC’s Take on ASP and SaaS

Perhaps not surprisingly, Wikipedia’s definitions for these two terms contribute to the confusion:

An application service provider (ASP) is a business that provides computer-based services to customers over a network. Software offered using an ASP model is also sometimes called on-demand software or software as a service. The most limited sense of this business is that of providing access to a particular application program (such as customer relationship management) using a standard protocol such as HTTP.


Software as a service (SaaS, typically pronounced [sæs]), sometimes referred to as “software on demand,” is software that is deployed over the internet and/or is deployed to run behind a firewall on a local area network or personal computer. With SaaS, a provider licenses an application to customers as a service on demand, through a subscription, in a “pay-as-you-go” model, or increasingly at no charge.

As we can see, these two previous definitions don’t throw enough light on the matter to distinguish clearly between ASP and SaaS.

Let’s start with their similarities:

Both a application service provider (ASP) and a SaaS provider provide access to a business software application through a network connection. This network connection could be a local area network (LAN) or a wide area network (WAN). The most common connection is an Internet connection, via a Web-based application. This thin client usage allows users to connect to business applications using a Web navigation tool (AKA a browser, such as Internet Explorer, Firefox, Chrome, Opera, etc.)

Another thing both models have in common is this: because of the way we connect to the business application, hardware, software, and data is allocated in a third-party location, this third party is in charge of maintaining the application and the infrastructure (hardware and software) to keep the application operating. So, companies use or consume applications “on-demand” or on a “pay as you go” basis.

To sum up: both ASP and SaaS providers enable a client (organization or individual) to use business applications, licensing them based on time periods, number of users, type of service, and functionality, as well as other factors.

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