We recently considered petitioning Microsoft, that they offer a “Microsoft Certified Acronym Professional” course. The reason behind this is the seemingly never-ending advent of new acronyms used to describe products in the technical world. For example, the term “ASP” at one time exclusively referred to Active Server Pages, a Microsoft web development tool. Now, the term ASP is also used to reference Application Service provider.

Just what is an Application Service Provider? An ASP (from this point forward will refer to Application Service Provider to avoid confusion!) is a company that has developed a software application and taken a unique approach to its distribution. Specifically, when using the ASP model, the developer of the application hosts the software it sells user licenses to on its own hardware. Individuals or companies that purchase a license to use the software are then able to access it remotely for use. In nearly all instances, the purchaser of the license accesses the software hosted by the developer via the Internet.

The ASP model has gained popularity as of late and is proliferating into the marketplace at a rapid pace, including the direct sales and network marketing industry. While popular, like anything else, it has its pros and cons. The ASP model will work well for some purposes; however its use can be detrimental in certain instances.

What are the advantages of an ASP application to the direct sales and network marketing consumer? Typically, ASP applications are initially less costly to the consumer, result in faster implementation because the developer is configuring them in its own controlled environment and, when well designed (not the instance in all cases!), can trim operating costs by reducing customer service.

What are the specific benefits to a direct sales or network marketing company that wishes to employ an ASP application? Cost, cost and cost. If your enterprise is a small one or a startup, chances are that you are operating on a confined budget. ASP applications usually cost less than applications that are sold for the purpose of being installed on the client’s site. This is because the developer maintains control of the application, directly due to the fact that it remains hosted on the developer’s hardware.

Bottom line, the developer’s exposure is minimized. There is no longer the fear on the developer’s part that the client will install the software at its site, begin using it and then fail to pay the developer for it. As the application is hosted on the developer’s hardware, the developer can pull the plug and cut off client access as soon as a scheduled payment is missed. Because of this security, the developer can afford to adjust pricing.

Implementation is another area where the consumer saves money. When purchasing a system that is to be installed locally at the consumer’s facility, the consumer is responsible for purchasing hardware that will run the software. Additionally, the consumer also assumes responsibility for hiring staff that will be able to maintain the hardware and the system alike. Not having to purchase servers to run the system or technicians to maintain it can result in a significant saving to the consumer.

Finally, the third primary benefit with a well-designed ASP application (and this is not the case in all instances!) is the ability that it has to trim customer service costs. Just as an ASP application can give the purchasing company of it access to the data through the Internet, it can give the purchasing company’s distributors pass-worded access to the data for updates of their own personal information.

If a distributor does not need to contact a company customer service representative in order to make certain non-critical updates, the company theoretically does not need to retain as large a customer service staff. Reduced staffing directly results in reduced costs. The benefits of an ASP are cost, cost and cost, but what are the disadvantages to the direct sales and network marketing consumer? The primary disadvantages of an ASP are data access, recurring fees, and data migration.

When using an ASP application, the developer hosts all facets of the application, including the database. Particularly in the direct sales and network marketing industry, data access is exceptionally important. Everyone has heard the horror stories of one networking company mining another’s database in order to steal distributors and sales leads. As disheartening as this may sound, there are unscrupulous ASP vendors that will do the same – take your data that they are hosting, mine it and sell it to the competition.

Another potential disadvantage with an ASP is recurring fees. An ASP generally costs less up front money to purchase a license for and begin using. However, as it uses the developer’s hardware and bandwidth, the consumer typically must pay a recurring monthly fee for use of the hardware and bandwidth. In most instances, these fees are charged on a “per record” basis.

Consider this, if there were a $5/mo per distributor (record) fee and you had only 4,000 distributors, the recurring fee each month for use of the system would be $20,000 a month and $240,000 (nearly a quarter million) a year assuming that there is not even any more growth. In many instances this defeats the amount of money saved on the initial purchase – especially in the case of our industry where explosive growth is quick and not uncommon. This example serves as a great segue into the final, and perhaps greatest, disadvantage. The disadvantage being referred to is data migration.

When evaluating an ASP application, it is imperative that a pre-negotiated buyout for transfer of the data is in place. If there is not a pre-negotiated method by which you can migrate the data from the developer’s host facility to your own, do not purchase a license no matter how attractive the lower startup cost appears. Companies that achieve substantial growth will need to migrate their systems in house. Special offerings that the company wants to make and customizations to the system that the distributors demand will make this a bonafide and absolute necessity.

If the client is ready to migrate, there are three options available. The first is to receive the data “dumped” into a *.txt, *.xls or *.dbf format (client’s choice) for migration into a completely different non-MultiSoft Corporation system. The second is to purchase the actual ASP application itself and have MultiSoft Corporation assist with the installation of it and the database at the client facility. The third is to purchase the entire source code for the system and have MultiSoft Corporation implement the system and train client developers on its use and code.

This provides the client with an array of options and allays any data migration fears associated with the ASP model. If you purchase a license for an ASP application from another source, make sure that source provides, and I cannot emphasize this enough, pre-negotiated migration avenues – even if they are not as flexible as those offered by MultiSoft Corporation, make sure the bare minimums are in place.