Prepare for the worst
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Prepare for the worst
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As the ASP market consolidates, it's better for customers to be safe than sorry. Here are some ways to prevent an ASP disaster:
Crunch the numbers Check an ASP's financials and delve into its business model. If the ASP is offering an advertising-supported free service, for instance, be leery. Meet the customers Analyse an ASP's customer mix to avoid those relying too heavily on dot-coms. Find out a provider's retention rates if it's been around long enough to have contract renewals or its rate of sign-ups if it is new. Own the data Maintain ownership of data in a contract with an ASP and formulate a procedure for obtaining, backing up and transferring that data. Have a buyout plan Many ASPs own the software license themselves or amortise the cost for the customers over time. Either way, make sure the contract contains a way to purchase the license outright. |
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Source: eWEEK reporting |
Sometimes, a failing ASP works out details in advance for customers, partnering with a competitor to take over service and migrate customers. Hot Office.com, for one, contacted Intranets.com in November when it realised it was running out of funding and would cease operations, said Intra nets.com CEO Steve Crummey. The two companies agreed that HotOffice.com will refer customers to Intranets.com, which paid an undisclosed amount in the deal. Intranets.com also set up part of its site for transferring HotOffice.com customers.
Working out such details ahead of time can smooth the path for customers. Mark Hill, principal at Regency Capital Partners, and a former HotOffice customer, was impressed that HotOffice.com worked out the kinks before its demise. "It was classy because typically guys who shut their doors just walk away," Hill said.
HotOffice.com and Intranets.com both provided a set of collaboration tools over the Internet for free, so customers such as Regency didn't have much at stake financially. Hill's biggest problem was with the 10-person company's business cards. He had just had them printed with the HotOffice.com email address for sharing documents when the provider closed in December. Otherwise, the move to another provider didn't require many changes, since only three employees had begun using HotOffice.com, Hill said. The changes mainly involved setting up a new account and using tools on the Intranets.com Web site to transfer data from the HotOffice.com system.
But sometimes customers are left to tumble through the rubble alone. That was the case for customers of iSearch, which announced its demise in a message to customers in mid-February that appeared when they logged on to the company's Web-based HR recruiting system, said Susan Fine, senior director of executive recruitment at Sears, Roebuck and Co.
Fine's first concern was keeping the application running. Not only had iSearch provided an application for 25 Sears recruiters to internally track resumes and search its candidate database, it had also hosted the employment section of the Sears.com Web site. Downtime could have damaged Sears' professional recruitment efforts.
"We put pedal to the metal," Fine said. "We were all in crisis mode to identify new interim solutions and prioritise time to make sure that when [candidates] came to Sears.com, they weren't just looking at an empty site."
Time was running out. Sears had two and a half weeks to find an alternative before iSearch went dark. That left little time for in-depth due diligence, so Sears' strategy was to find an interim solution and then to continue searching for a long-term provider.
While iSearch didn't help Sears find a new provider, fellow customers did. Fine connected with other iSearch customers, who offered opinions about other potential ASPs. At the same time, she was receiving daily phone calls from competitors seeking Sears' business.
