When negotiating with a potential ASP, most companies spend their time looking at the per-seat price and the guaranteed uptime percentage. Given that prices are beginning to stabilize and most ASPs are agreeing to the same levels of guaranteed uptime (and remediation for downtime), companies should now begin considering contract issues that extend beyond the honeymoon period.
And because most ASPs can do no better on uptime than the service level agreement (SLA) that they pass through from their connectivity vendor, there’s not much negotiating that can be done in this area anyway. Two key factors that you must take into consideration are how the ASP handles support and what options they provide for updates of hosted software.
Determine the level of software support
One of the first issues to consider is the level of support the ASP will give for the software that they provide for you. Today, this boils down to two levels of support. Level one support typically provides an answer to a single question for customers: “Is the software running?”
The ASP help desk simply determines whether the customer’s servers are able to deliver services both at the data center and from the customer’s location. As a differentiator, however, many ASPs are beginning to provide a second level of software support that seeks to answer a much more difficult question: “How do I use it?”
Providing this service requires a much different skill set on the ASP help desk. The ASP has to employ software specialists for each of the software products that it intends to support. And since the complexity of the question may involve significant help desk resources in order to resolve the issue, very few ASPs will provide this support as a per-seat element of a support contract.
Most ASPs price advanced software support services either by the incident (where anyone can call) or by the coordinator (where all questions from a company are routed through a central support person designated by the company).
Understand your upgrade options
Another important issue to resolve is how the ASP handles software upgrades for the company. Here are some issues to consider:
- Does the monthly rental cost of the hosted software include software updates as they’re made available by the manufacturer, or do you have to pay an additional fee to use a future version of the software?
- Are you forced to upgrade versions within some reasonable period after the software update is issued, or can you stay on the same version for the length of the contract (allowing you to minimize your ongoing training costs)?
These issues may seem trivial, but given that the software upgrade cycle has been fairly constant at 18 months, you’re likely to encounter this issue twice within the term of a 36-month agreement.
It's better to understand these issues now than to blindly face them later. They can become determinant factors when the SLA and the pricing look the same among multiple providers.
Negotiating contract issues with ASPs
Have you been successful in getting a contract that provides all that your company needs from an ASP? What negotiating tactics have you used that have proven unsuccessful? Send us your negotiating tips for working out a deal with an ASP.