A terminalserver configuration is made up of the following components: terminal server service, the protocol (Remote Desktop Protocol or Independent Computing Architecture Protocol) and the terminal clients.

The terminal server service runs on one or a series of Microsoft Windows servers. Applications such as MS Word, Excel, Outlook, CRM applications or even SAP are installed on these servers.

The terminal servers now make the installed applications available to the terminal clients by using a specific protocol. In the case of Microsoft, this is RDP (Remote Desktop Protocol) and ICA (Independent Computing Architecture protocol) for Citrix. The applications in this system are always run on the terminal server and the protocols serve to transport the desktop contents to the terminal client that then displays this content. The keyboard entries and mouse movements are sent from the terminal client to the terminal server.

Each user only sees his individual session, which is transparently managed by the server operating system. The user is independent of the work session of other clients.

There are a number of advantages of this technique, which actually isn't so new (text-based terminals were the first interactive entry devices for the classical mainframe computers):