The ASP model is appealing to many businesses, because it promises to dramatically lower the costs of software and services for end users. An ASP company generally owns the software and manages routine maintenance and upgrades, which are a large percentage of information technology (IT) expenditures for small businesses and "start-ups." The ASP also operates and maintains the necessary hardware and network infrastructures to support the application.

An ASP often bills users for the application on a transactional basis or monthly/annual fee structure. This arrangement provides a fixed cost expectation for customers who generally can't afford the major expenses associated with emergency hardware purchases or unexpected upgrades. For all but the most frequent users, this means significant per-user savings.

In general, the ASP model allows companies to reduce costs by performing the following:

* Lowering the "sunk-cost" investment of starting a system
* Enabling extremely short set-up time
* Outsourcing costly daily technical management of the system, thereby reducing head counts and costs
* Eliminating the need for customized IT infrastructure specifically for the system

Operating costs are particularly relevant concerns in the GIS market, where complexity and costs associated with creating and maintaining enterprise GISs have limited large-scale GIS adoption to larger companies. Internally hosting a GIS can be prohibitively expensive for smaller companies and governments due to the initial costs of inhouse installation, including the purchase of GIS software licenses, hardware and databases. These are significant expenses before the data are purchased, created or converted from existing paper maps...

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