How to Outsource Your Online Business Needs - dummies

By Greg Holden

One of the most effective ways to save time and money doing business online is to let someone else install and maintain the computer software that you use. Outsourcing refers to the practice of having an outside company provide services for your business, such as web hosting, form creation, or financial record keeping, rather than installing software and running it on your own computer.

One of the companies that provides web-based services on an outsourced basis is an Application Service Provider (ASP). For example, when you fill out a form and create a web page on CafePress.com, you’re using CafePress.com as an ASP. Rather than create your web page on your own computer, you use an application on the CafePress.com site and store your web page information there.

How ASPs can help your company

You have to pay a monthly fee to use an ASP’s services. You may also incur installation fees, and you may have to sign a one- or two-year contract. In return, ASPs provide benefits to your company that include the following:

  • Shopping cart/store creation: In addition to a website, open an e-commerce store with shopping cart services like ZenCart, 3D Cart, X-Cart, or one of many other providers.

  • “Shark tank” feedback: Concept Feedback provides experts who evaluate your website’s design and usability and suggest improvements.

  • Online form creation: FormSite.com is a leader in creating a variety of forms that can help online shoppers provide essential functions, such as subscribing to newsletters or other publications, asking for information about your goods and services, or providing you with shipping or billing information.

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  • Product presentation: Arqspin lets you create 360-degree “spinning” product photography so customers can see your merchandise from all angles.

  • Reduced credit card fees: All merchants pay fees to credit card processors to receive customers’ credit card payments. FeeFighters helps businesses shop for credit card merchant accounts to save money.

Although ASPs can help you in many ways, they require research, interviewing, contract review, and an ongoing commitment on your part.

Pros Cons
Better customer service: By outsourcing scheduling or
other functions, businesses give customers increased options for
interacting with them online. Customers don’t have to call or
e-mail the company; in the case of online scheduling, customers can
schedule or cancel appointments by accessing the company’s
online calendar.
A required contract: ASPs usually allow customers to try
out their services for a while but then offer long-term contracts.
The terms of these contracts can range from one to three years.
Don’t get yourself locked in to a long-term arrangement that
prevents you from trying out cheaper or better alternatives down
the road.
Greater website functionality: ASPs enable your site to
provide better service to your customers and allow you to get more
work done.
ASPs face stiff competition: Make sure the companies you
sign agreements with will be around for a while by talking to
current customers and reviewing resumes of senior staff and key
employees. Scan the web for any press releases or articles that
serve as warning signs about the ASP’s financial health.
Expanded scope: You don’t have to become
proficient in subjects that aren’t part of your core business
or expertise.
Security risks: The moment you hand over your business
data to another online firm or give outside companies access to
your internal network, you risk theft of data or virus infections
from hackers. Make sure the ASPs you work with use encryption and
other Internet security measures.

In many cases, ASPs can provide a software solution and customize it to your needs. Outsourcing not only improves your company’s bottom line, but also helps you convey your message to potential customers that you might never reach otherwise.

Do your homework before you sign up

After you try out the software or other service that you want to lease, you usually need to sign a contract. Read the fine print. Contracts can last for 12 to 50 months; make sure you don’t get locked in to one that’s longer than you need. You have a better chance of getting the service you want if you do the following:

  • Understand pricing schemes. Some ASPs charge on a “per-employee” basis while others charge “per-seat” fees based on each registered user. Still others charge “per CPU,” which means you’re charged for each machine that runs the hosted application.

  • Pin down start-up fees. Virtually all ASPs charge a start-up fee, or a service implementation fee, when you sign the contract. Make sure the fee covers installation and any customization that you’ll need.

  • Don’t accept just any SLA. It’s essential to obtain a service level agreement (SLA), which is a document that spells out what services you expect an ASP (or other vendor) to provide. Don’t hesitate to add, delete, or change sections to meet your needs.

  • Avoid “gotcha” fees. Pricing arrangements are hardly standard with regard to ASPs. Some of the hidden costs involve personalizing or customizing the service to adapt to legacy systems. You should ask questions in order to avoid unpleasant surprises: Is there an additional cost for customizing or personalizing the application? Does it cost extra to back up my company’s data and recover it if one of my computers goes down?

  • Make sure your information is secure. Some huge security risks are associated with transmitting your information across the wide-open spaces of the Internet. Make sure your ASP takes adequate security measures to protect your data by asking informed questions, such as: Is my data protected by SSL encryption? Do you run a virtual private network? How often do you back up your customers’ data?

If the answer to any of these questions seems inadequate, move on to the next ASP.