Web applications are uniquely suited to remote access and service since they run easily over ubiquitous Internet connections and require little, if any, client-side software installation. Companies sign up to use an ASP's server, open a Web page containing the application, and start working. Services are usually paid on a monthly subscription basis.

Nevertheless, many large companies are hesitant about using ASPs, says Rob Enderle, a Giga Information Group analyst. They want to maintain control over applications and already have the infrastructure in place to support and develop them. But for small and midsize companies, using an ASP is much the same as using a Web-site hosting company.

Mark Esdale is an enthusiastic supporter of the ASP model. Esdale, CEO of software integrator CAD Resource Centre Ltd. in Toronto, has moved all of his company's enterprise applications to ASPs. With 70 employees, six offices, and $25 million in revenue, CAD Resource is the right size to simplify its IT department by limiting up-front capital investment in hardware, software, and resources using an ASP.

The software company turned to Upshot.com four years ago for its Upshot sales-force automation tool. The program tracks accounts, customers, and leads, and records correspondence and customer histories. At first, CAD Resource hosted the application in-house, but two years ago it switched to renting it online. Esdale has never looked back.

Whereas CAD Resource could only commit three or four servers to running the application when it hosted it in-house, Upshot.com has 30 to 40 servers that customers can tap. As a result, application performance is faster and slowdowns during peak traffic hours are a thing of the past. Moreover, Esdale pays 60% less annually compared with the cost of deploying and maintaining the application in-house, and his service costs about $1 per day per salesperson. The apps usually take a day to get running. "We're not trouble-shooting or setting up applications anymore," Esdale says.

Chip Lee is another ASP advocate. The associate executive director of information and communication services at the International Society for Measurement and Control turned to Interpath Communications Inc. two years ago. Lee hired Interpath to host Vignette StoryServer to manage online content for members. Without such a service, the nonprofit engineering society in Durham, N.C., couldn't run the application. "We couldn't justify hiring people to manage this application," Lee says. "If we had only one StoryServer programmer on staff, we'd be shut down when that person inevitably left." By contrast, Interpath can hire the talent required to develop and manage the hardware and software components of a Web application.

ASPs don't solve all business computing issues, of course. CAD Resource's Esdale is hoping for an ASP middleware solution that will integrate various ASP software for him. Most ASPs only offer standalone applications that address one aspect of enterprise computing.