It refers to a provider of services or applications that are made accessible through a network to a number of customers in exchange of smaller payments.

Application service provider is often referred to as ASP. It should not be confused with active server pages that are often used as programming language. Application service provider is a very broader concept and is very regularly used. Though there are many types of active service providers, most of them hardly share any common characteristics. Of recently, a number of sub-acronyms are being made use of to make differentiation easier between different types of ASP’s. But in spite of these differentiations, only few of them have really managed to gain the recognition. Software that makes use of ASP’s are also referred to as on demand software.