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John Simmons is a gentleman. He won't reveal the first words that entered his mind when he heard that his company's application service provider (ASP) was going out of business. Simmons, a senior vice-president at the Greeson Co., a privately held food broker headquartered in Grand Rapids, will reveal only his second thought: "We've got to act quickly."

Last December, HotOffice, the ASP that the Greeson Co. used for E-mail, document storage, and mobile communication, announced that it would be shutting down in just 14 days. HotOffice had worked out a transition deal with its former competitor, Intranets.com. Simmons spent a few days researching sites and then three or four more days conducting a trial evaluation at Intranets.com before signing on. "The support center has been excellent," Simmons says of the new service.

Simmons and his fellow former HotOffice customers were among the lucky ones. When time-billing site Red Gorilla abruptly closed shop last year, it locked its customers out of their own data for a week. What's worse, ASP burn isn't limited to no-name start-ups. Intel and SAP had backed Pandesic, an E-commerce ASP that exited stage left last summer.

Analysts say the ASP market is still growing, and for good reason: the model is attractive to small businesses like the Greeson Co. for the cost savings and convenience. But what's less convenient than losing access to your own data? The trick is getting the benefits of an ASP without the headaches.

Here's how. Get tough up front, says Traver Gruen-Kennedy, chairman of the ASP Industry Consortium. Before you entrust someone else with your digital treasures, demand a service-level agreement -- a contract that describes exactly what the company provides for its customers -- detailing the ASP's provisions for handling disasters.

Gruen-Kennedy realizes that when it comes to negotiating contracts and resolving disputes, small-business customers don't inspire ASPs to do back flips in the way big-name, billion-dollar customers might. So his consortium has collaborated with the United Nations to create an international "virtual court" (at www.allaboutasp.org) for handling disputes and arbitration. "We want to turn borderless cyberspace into borderless legal space," he says.

The court works like this: After a small business files a complaint, a tech-savvy judge or group of judges mediates the dispute, and 175 countries uphold the outcome. Gruen-Kennedy thinks that the service will help to defuse data-hostage situations before they get ugly.

The ABCs of ASPs

High-tech companies have always made up their own language, usually to society's detriment. Who among us hasn't complained about incomprehensible jargon?

But the niche industry of application service providers (ASPs) has taken jargon to an extreme. At times it seems as if people who work for ASPs are speaking in their own secret code. "We're an MSP-plus," says one vice-president, referring to so-called management service providers. "The term we're using is application management provider," or AMP, says a public-relations man. And these guys work for the same company.

In a misguided attempt to create market differentiation, ASPs have succeeded in creating market confusion. In its simplest form, an ASP is a company that rents software. The software resides on the ASP's servers, and customers -- including small businesses -- access it through the Web.

As the model expands across industries, ASPs have tinkered with the acronym, dubbing themselves BSPs (business service providers), AIPs (application infrastructure providers), FSPs (full service providers), and so on. "All these things are really ASPs," says Todd Carter, editorial director of ASPstreet .com, an industry Web site. "They're looking for a niche, so they want to appear different."

It's a little like algebra, he says: "XSP" is an ASP, where x is any variable you feel like plugging in.

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