Bad marriage
To avoid the greatest trip-up of all, imagine the terms for divorcing your ASP while standing at the altar.
For starters, identify a backup ASP in case your partner closes shop or the relationship sours. "Pretend you need to go through the process this weekend," says Dave Boulanger, research director covering enterprise management at AMR Research. "Who owns the data? Who converts the data? Who owns the interfaces? Who pays for the conversion? You need a transition plan even before you sign the contract."
While you're at it, determine whether you will pay penalties for ending the agreement earlyâ€"and clarify termination remedies in the contract. Make sure to fully document your system's source code. You need to know exactly how your systems work if that ASP goes belly-up. What's more, you don't want programmers to be the only people holding your company's information. If they leave, they take that knowledge with them.
Better ASPs provide punitive reimbursements when the terms of your contract aren't met, including when outages and slowdowns occur. Make these a demand. You'll also want to flesh out vagaries that may come back to haunt you. If a system slows down considerably, is that considered downtime? Designate a threshold. When you hit five seconds of slowdown, that's an outage. Check an ASP's service-level agreement on continuous availability and consecutive-month requirements before you can expect payment for failures. Know that one minute or one hour of downtime can cost thousands of dollars in productivity (calculate a specific amount for your company). What happens if it goes down at 2 a.m., or several times a month for 12 months in row? How much money do you lose? Then incorporate appropriate punitive damages into your service-level agreement.
Also, how quickly will you require your service provider to respond toâ€"and resolveâ€"problems and update applications? Put fees at stake. If there are repeated failures, find out how you can get out of the contract. Solid ASPs will have the answers documented.
Stating the obvious, one e-tailer who got caught when his ASP went belly-up, sighs, "Nobody cares for your business the way you do."
