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Many organizations are re-evaluating their approach to delivering enterprise applications, and are looking for ways to control IT costs. There is growing evidence of reluctance to fund large-scale implementation projects, and of tighter budgets forcing more careful cost-benefit analysis to justify IT investments. These efforts to control IT costs lead to consideration of alternative models for delivery of enterprise applications, such as the Software-as-a-service model or ASP (Application Service Providing).

This paper discusses the business drivers for application servicing and gives a detailed description of the Software-as-a-service model in comparison to traditional one. It brings the arguments that the Software-as-service model constitutes a viable alternative to software licensing for many application types today, and will become the dominant method for delivery of enterprise applications in not too distant future.