BUSINESSWEEK ONLINE : DECEMBER 4, 2000 ISSUE
FRONTIER -- DIGITAL MANAGER

ONLINE EXTRA: How to Avoid Being Bitten by an ASP
They're guilty of hyping expectations. Here's a reality check

It's true that application service providers (ASPs) haven't lived up to the hype of the past year. Many ASPs offer huge corporate programs re-written (and not very well) to run over the Web. They're hard to use and not particularly suited to small businesses. Wise business owners worry about data security, sensing a threat not just from hackers but also from potential errors within the ASP. Legitimate concerns run the gamut from the financial stability of vendors to download speeds. The result: At the moment, less than 12% of entrepreneurs would consider an ASP, according to a recent study by Cahners InStat Group.

Still, the ASP concept is powerful -- and attractive. For one low monthly fee (or a per-use charge with some applications) you can outsource all the headaches of maintaining servers, updating the programs, and purchasing expensive software. Ideally, you just call up the application you want to use over the Web, input your data, and send it back to the ASP's servers.

The ideal could become reality as high-speed Internet service becomes more widely available, and the current 500 ASPs shake out, both in numbers and quality. So, if you want to explore ASP options, here are some tips that will help.

What an ASP Can Do For You...

* The ASP should give you quick access to applications that you don't have and would otherwise be forced to buy.

* It should simplify your internal computing needs.

* You can budget for technology more effectively because your costs are spread across predictable monthly payments.

* ASPs can host your Web site and handle your e-mail.

* ASPs can offfer secure Internet access to application services via virtual private network (VPN)


Questions to Ask before You Sign Up...

* Is the application stored on a dedicated server that minimizes the risk of an intruder gaining access to your data -- or on a less secure, shared server?

* What hardware (if any) is required?

* Does the ASP provide customization options?

* Does the ASP offer implementation, customer service, and training on an ongoing basis?

* Is the ASP willing to put its commitment to you in the form of a clearly defined service level agreement (SLA)?

* Does the ASP offer application reporting?

* How many companies does the ASP partner with, and do their partners have the money and staff to fix a problem?

* If the ASP goes under, can you pull your data out?

* Does the ASP have redundant servers in separate locations?

* Does the ASP offer a secure connection such as a VPN?

* How does the ASP manage data backup and disaster recovery?

* Has the ASP handled a mission-critical application over the Web before?

By Alan Hall in New York

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