ASP Group Lays Ground Rules

Hoping to make the application service provider model a better bet for customers, the ASP Industry Consortium last week announced what it said were major breakthroughs on security guidelines and dispute resolution.

Vendors at the Comdex/Fall 2000 show here hailed the news as a needed boost to their efforts to give customers confidence that their agreements are enforceable and that letting an outside company host mission-critical business applications won't expose clients to a pack of cybercriminals.

"Every single sales call I've been on with a customer, I hear those issues," said Denise Grey, president of the ASP group at Verso Technologies Inc. in Atlanta. "I think it's important that ASPs realize we have to come up with some common practices. Don't go start marketing something that isn't real, because you will hurt the market for all of us."

Grey said she expects that more than 1,000 companies will enter the ASP market during the next decade and that the industry will need to be scrupulous about how it conducts its business.

The consortium ranked security as the chief concern of ASP end users, and it now has a best-practices guide to network security, platform security and integration security.

"We're more secure than the typical end user's own network," said Jim Kirchner, president of The, an ASP in Charlotte, North Carolina, that runs applications for schools from kindergarten through grade 12. "The problem is in getting the end users to believe that."

ASP executives agreed that for the market to take shape, they will need to continually refine the security and service-level agreements they offer their customers.

"To date, it's been a lot of people stabbing at it in different ways," Kirchner said.

The Wakefield, Massachusetts-based ASP Industry Consortium also released an executive summary of its dispute-resolution guidelines. The group anticipates short-term consolidation in the ASP market, along with disputes over data ownership, data transfer and software ownership.

"As an industry, we are going to have to be nimble," said Karen Styres, vice president of marketing at Resonate Inc. in Sunnyvale. She noted that service-level agreements must be comprehensive rather than selective.

"Customers don't want to hear it's a network issue or a server issue; the agreement has to incorporate the whole system," Styres said. "Of course, it gives people a lot more to complain about, and that's why it's important for the ASP industry to address these issues before they become problem areas."

Styres said it's still early for the industry to work from a set of common standards but that it's important for ASPs to understand what their competitors are doing to add surety to the business model.

Grey stressed that the industry must be focused on customer service if the ASP model is to flourish.

"These [consortium guidelines] are great starting points, and you're crazy if you don't follow them," she said.

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