For many small and mid-size businesses that have employees working in remote locations or traveling half the time, the sharing of software can be difficult and expensive. One solution is application server providers (ASP), 'on-demand' software applications that often cost less than traditional off-the-shelf software that needs to be installed on each computer.

With an ASP, the services and applications are accessed over a network, and can even be built around a standard protocol such as HTTP. ASPs are typically easy to use, and make for an affordable alternative to traditional desktop software.  But some businesses question whether ASPs are secure.

Here's a run-down of the pros and cons of ASPs for small businesses.

Pros: benefits are in the services provided

ASPs come in several different models. Some companies, such as Google, provide relatively straightforward office applications that can be used online to create text files and spreadsheets. 'You have the option of saving your work to a disk somewhere in Google, or to save it to a local hard drive on your PC or laptop," says Jon Toigo, founder of the Data Management Institute, and author of The Essential Guide to Application Service Providers (Pearson/Prentice Hall).

Another model is an ASP that provides a specific service, such as monitoring your local PC or storage structure from a remote location. 'This is like outsourcing,' says Toigo. 'You are able to augment your internal IT staff, or compensate for a lack thereof, by using a third party to do the work for you.'

The value add of an ASP is what makes it so desirable for a small business, because the application is hosted online and all of the management and updates are taken care of in the background.

'You don't even know when it gets an update, because it is just there when you access it,' says Giovanni Gallucci of Kinetic Results, an advertising, marking and public relations firm with offices in Manhattan and Dallas. A long time user of ASP software, Gallucci says cost is the biggest factor for small businesses. 'If you try to buy something off the shelf like a project management software, it is going to cost several hundred dollars a person, plus you might even have to upgrade your PCs at the office to run them.'

When a business subscribes to an ASP, such as Basecamp, it can do essentially the same thing but for $30 to $50 per user annually, adds Gallucci.

Another reason to consider ASPs is that they open up more sophisticated applications to the small and mid-size business market. 'Customer relationship management tools, personnel and HR tools, ERP/MRP tools and other big systems -- traditionally those that were the playground of only the best heeled firms -- are accessible today by smaller firms at an affordable price point,' says Toigo. And some of these alternatives can be quite cost effective as they're available on open source operating systems. 'An alternative to most of the brand name products from Oracle or SAP can be obtained in the form of open source running on cheap Linux platforms today that deliver adequate performance to smaller firms at a price they can afford,' Toigo says.

Cons: security concerns and lack of customization

ASPs are not without their faults. One outstanding issue is that there is limited customization, so users will have to adapt somewhat to the software instead of tailoring the software for your business.

The other big issue is security, which has been a concern since the earliest days of ASPs in 1999. Today there is awareness that the problem has, in fact, gotten somewhat worse. Vendors, say experts, can only do so much to close the holes through which intruders might gain access to your sensitive business information. 'It doesn't matter how many firewalls or intrusion prevention systems that a company or an ASP puts up,' says Toigo. He says that the ASP software is somewhat 'porous' with many holes that serve as an open door.

Businesses need to decide whether the benefits outweigh the problems. ASPs have become popular with small and mid-size businesses due to their ease of use. This is especially true for smaller firms that lack an IT department and have limited resources to upgrade office hardware. The software is typically always available from anywhere. This can be a major plus for companies with branches in many time zones, or those whose personnel travel quite a bit.