 In
February, I wrote about Application Service Providers, vendors who make their software
available to customers via the Internet. Since then, both the hype and the number of ASPs
have grown astronomically.Unfortunately, increased quantity has not
produced increased quality. Instead, virtually every software vendor has looked at whether
to offer its products via the ASP model — often despite whether that approach makes
sense for the company or its software.
Put simply, many ASPs look like network integrators did a decade ago.
They have limited experience, they are struggling to find the right business model and
their sales personnel lack professionalism.
In the spirit of “forewarned is forearmed,” here are my top
10 ASP gripes:
1. Unresponsive Sales Staff — Many sales reps think that a
several-day response time for phone and e-mail messages is reasonable. Perhaps they have bigger fish to fry, but none of
these folks has gotten my clients’ business.
2. Questionable Product Selection — Some ASPs offer software
that was not designed to operate over the Internet. MS Word via a browser? No way! (To
check this out for yourself, go to the Citrix Demo Room at http://www.citrix.com/
demoroom/login.htm.).
3. Offerings that Don’t Yet Exist — Read promotional text
carefully. Use of the future tense suggests that a product or feature is not yet
available. Vaporware is just as prevalent here as it is in the software industry,
generally.
4. Weak Strategic Partnerships — ASPs often rely on software
resellers for implementation assistance and software customization. If the ASP and the
reseller don’t have a strong relationship and well-thought-out procedures, critical
tasks can fall through the cracks.
5. Unnecessary Barriers to Doing Business — An example: One ASP
demands that prospective customers sign a lengthy, detailed nondisclosure agreement —
the type that companies use before starting merger negotiations — before the ASP will
even provide a proposal!
6. Delays Developing Proposals — ASPs can take weeks just to
come up with a price quotation. If you are looking for a real proposal that explains what
the vendor will do and the benefits you will receive, don’t hold your breath.
7. Few References — Some big-name ASPs serving large firms have
long customer lists. With many other ASPs, you are likely to be a pioneer.
8. Stingy Contract Terms — Warranties and remedies are often
even more limited than the terms network integrators offer. Try to negotiate a service
level agreement (guaranteed percentage-of-time availability) with a significant financial
penalty if the ASP does not meet the agreed-upon level.
9. Huge Price Variations — Order-of-magnitude price differences
between ASPs make careful shopping essential. Demand a detailed list of all one-time and
recurring charges. If you have questions
about why a charge is there, keep asking until you understand the answer.
10. Wasted Time and Money — Put all these problems together, and
you have a high level of frustration and waste. This is especially surprising given that
ASPs’ strongest selling point is that they are supposed to help their customers
become more efficient!
Don’t get the wrong impression. ASPs have their place, and there
are good ones. Nevertheless, today’s market is so immature and fast-moving that
“caveat emptor” is the most prudent buying philosophy.
 Dana Shultz is an
Oakland-based attorney and certified management consultant specializing in computer
technology and the Internet. He may be reached by e-mail at dhshultz@ds-a.com and on the Web at www.ds-a.com.
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