Giving ASPs a second look

IT budgets are getting cut--but your boss's wish list of new applications keeps growing. In times like these, Eric Knorr says you owe it to yourself to consider an ASP.
Written by Eric Knorr, Contributor

To meet business demands in tough times, you need creative solutions to keep from stretching your resources to the breaking point. In other words, when you're faced with too many high-priority projects and too few hands, it's time to farm some of those projects out--in which case you owe it to yourself to consider an ASP.

An ASP, you ask? Aren't they failing right and left? Hasn't the ASP model been disproved? Not entirely. In fact, a few focused ASPs are thriving--mostly those that cultivate expertise in a few specialized solutions. Take Appshop, a successful ASP that does little more than host Oracle's E-Business Suite. Or Salesforce.com, which offers a simple, HTML-based CRM solution. ASPs like these offer limited customization--so your business might not get everything it wants. But in this climate, time-to-market and minimal drain on resources may make an ASP the only practical option.

When you shop for an ASP, you're not picking a vendor--you're picking a partner. After all, you're entrusting an ASP with critical data--and if the ASP goes south, you could be in big trouble. Here's a quick guide to finding an ASP you can rely on:

-- Due diligence. This is the most important factor of all. Get all the company financials you can--revenue numbers, whether the company is profitable, the months of cash on hand, and so on. And because most ASPs use a co-location facility to house their servers, you'd better do your best to determine the viability of that company as well. Most importantly, check an ASP's customer references and, while you're at it, find a few on your own.

-- Try before you buy. Roughly half of ASPs have a free trial offer--a sensible proposition, since all you have to do is fire up the browser to use the app. This is a great way to get a feel for the performance level of an ASP. Walk through a few tasks that require server-side processing at a few different times of day to ensure things don't slow to a crawl at peak hours. -- Service guarantees. Most ASPs let you negotiate an SLA (service-level agreement) tailored to your needs. At a minimum, an SLA guarantees a certain level of uptime (in the 97 to 99.9 percent range) and customer service, but SLAs commonly cover data security and performance, too. For mission-critical apps, you need an SLA with teeth: Don't accept an SLA that promises service credits for downtime that exceeds the contractual limit; hold out for an SLA that compensates you for loss of business.

-- Service-level management. How do you know whether you're getting the uptime you paid for? There are the obvious outages, of course. But for mission-critical apps, ASPs should give you the monitoring tools to determine if things go off track.

-- Exit strategy. If for any reason you must part company with your ASP, you need certain assurances written into your SLA that not only will you get your data back intact, but that you will also own any application development that has been done on it. (The complexity of ensuring this is another reason to avoid custom coding.) When possible, negotiate an SLA guaranteeing that if you terminate the contract and move the application in house, the transfer will happen within a certain number of hours or days.

Though not to be taken lightly, partnering with the right ASP can provide one way out of budgetary gridlock, thanks to pay-as-you-go pricing plans that reduce your up-front costs. Don't go to an ASP for a perfect, tailored solution. But if you can't afford that, it's time to give ASPs serious consideration.

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