The ASP choke hold

SAN FRANCISCO (11/17/2003) - The ASP is one of those dot-com era fads that turned out to be more enduring than its description suggests.

The term became hot in the late 1990s when the Internet bubble was still inflating. ASPs' value proposition -- that customers could lease functionality over the Net rather than having to buy and install complicated software -- seemed bulletproof. Several ASPs became the darlings of tech investors.

Of course, some of those companies are no longer with us, either because they failed to deliver the right functionality or because the markets they served proved illusory. But those that remain offer clear proof of the concept.

My first direct experience with this proof came a couple years ago when the publishing company that was then my employer adopted an ASP-based solution to count visitors to its Web site.

Until then, I had labored for years with a succession of software-based traffic-monitoring solutions, all of them a pain to administer. With the ASP-based service from WebSideStory, though, we just embedded JavaScript in each page we served. WebSideStory's datacenter would then automatically count our visitors, report real-time results, and enable us to do on-the-fly changes to maximize traffic.

There are many other examples. Two weeks ago, for instance, InfoWorld profiled several ASP-based CRM solutions . This week, we review some excellent spam killers, two of which -- those run by FrontBridge Technologies Inc. and Postini Inc. -- are delivered via the ASP model.

Common wisdom says that, as compared with enterprise software, the upfront cost of ASP solutions is generally nil and the level of your commitment in using them is minimal. You simply pay by the month for as long as you use the service.

Lately, though, I've come to question the "no commitment" part of that argument. This became clear during a recent meeting with the ASP that provides InfoWorld's CRM. One of its folks was explaining how to get more from the service by using its built-in tools, pumping its data directly into our billing system, and so forth.

Those are the right steps to take. But each step also weds us more firmly to this particular vendor and makes it that much harder to cut the connection if a better solution comes along.

That's no accident. All service providers build hooks into their products to hold existing customers in place, which is worth remembering whenever you hear the sunny side of the ASP story -- from us or from anyone else.

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