When ASPs Go Under

lar3ry writes: "eWeek has a lead story about companies that have been catching the ASP bandwagon, and now are finding themselves high and dryas ASPs are going out of business. I may be old, but I remember when I was writing applications being used by other companies, that the contracts had agreements that provided for the source code to be held in escrow in case the company that I was working for went out of business. Does this mean that common sense is no longer a virtue in the Internet age? Just whispering a few hot terms like "ASP" makes the CIO of a company blind to any financial exposure that an application has to another company's future? Geez!" This is one thing that scares me about various companies' plans to take care of your data and apps. And unlike "Perpetual Care" at ye olde cemetery, you're still around to feel if the perpetual care stops.

Comments

Escrow doesn't work in bankrupcy

[Anonymous Coward]

We did this a *long* time ago with a mainframe package -- source code in escrow, with us paying the escrow account fees. The company went bankrupt and died; we petitioned the court for the source, as called for in our contract.

Not allowed. The court rulled that the source code was the *only* asset the company had, and, contract or not, couldn't be delivered to us.

So we ordered the contents of the lock-box destroyed (seemed to have been the *only* copy of the source code -- it had been trade secret and the authors left the company after getting peeved at the legal types that forced a takeover) and filed for a full refund of the contract payments because of breach of contract.

We got about 15 cents on the dollar.

Escrow's not the answer

[MikeCamel]

Escrow would only be helpful if these companies were offering proprietary products - some of them may be, but many are not. They are offering access to applications which the out-sourcing company could either not afford to pay full whack for as they're only using it from time to time (maybe a major accounting package) or applications which the companies don't want to spend the time and money learning how to administer. These two cases are about access to available applications in a new way, not about access to new applications.

Microsoft, don't forget, is going with a licensing model that is likely to help the ASP model - you license for use, but that doesn't mean that you hold the software yourself - why not get someone else to look after it for you?

My general feeling is that there is a lot to be said for an ASP-like model. If I have 20 people out of 2000 using a complicated ERP package, for instance, why should I have 2 or 3 of my IT support staff learning all about it so that they can support it all the hours of the day? It may be mission critical, but if I can find someone else to provide access to it, and not have to worry about training for support, then that's got to be a good thing. The problem seems to be that either the market isn't ready, or the model isn't mature enough. Maybe the applications don't suit the deployment model.

What's more, given the discussion about tech support on /. yesterday, maybe this is a good model for OSS applications - you don't need to train too many people to support the software, you just need them available from a central point.

ASP, then, isn't by definition a Bad Thing[tm] - but it may not yet be a Ready Thing for everybody. We seem ready to accept managed hosting - before we sentence the ASP model, let's think around it in more detail.

Great line

[sharkey]

Indy: "Snakes. Why did it have to be snakes?"
Sallah: "ASPs. Very dangerous. You go first."

--

Hrm

[jbarnett]

Just whispering a few hot terms like "ASP" makes the CIO of a company blind to any financial exposure that an application has to another company's future? Geez!"

I got up close and whiserped "A-S-P" in the CIO ear and he didn't exactly go blind like this author would have you think. In fact he just looked at me like I was a freak or something... proving that his eye sight is in fact fine.

Slashdot should check there fact before posting this junk.

Outsourcing: one of the great hoaxes in history

[Spinality]

I have seen so many companies buy into the outsourcing myth. A few execs and PHB's look great for a while, as they count up the savings. But then, lo! and behold, there are some surprises. I have a large, long-term client that outsourced its entire IT organization to IBM. Now, this is no knock on the many good IBM engineers who were providing my client its services and support, many of whom were my friends; unlike many outsource deals, this one did keep good resources and practices in place. But after a couple of years, the company was still hurting, because there was nobody inside the headquarters building whose job it was to make an informed technical decision. All their strategic choices were delegated to a third party in the computer services biz, not in the user company's biz.

Any time a company outsources its mission-critical systems, knowledge, or decisions, it's taking a big chance.

JMHO -- Trevor