Seeking An ASP? Be A Smart Buyer

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If youve ever bought a house, a car, a dog or an engagementring, then youve probably discovered the importance of being aknowledgeable buyer.

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Such knowledge will often safeguard against certain fiascoes,such as mistakenly purchasing a haunted house, a car that lacks asteering wheel, a rabid dog or a fake diamond. In other words,understanding your product is the best protection.

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And this emphasis on product knowledge is what a significantnumber of insurance agents and brokers must adopt as they decidewhether or not to implement an application service provider (ASP)to host their agency management system or other technologyapplications. In short, agents must assess both the benefits ofusing an ASP as well as the issues that should be addressed toassure that the ASP will provide their agency with a secure,dependable and responsive solution.

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An ASP is any partner that provides offsite core technologysolutions and support for your agency. They extend beyond onlineagency management systems and include other agency applications,such as rating, Web sites, e-mail, office suites and specializedinsurance software, and can be hosted by the vendor providing thesoftware, a third-party ASP vendor or a carrier.

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First, agents must ask themselves, “Is an ASP right for me?”Secondly, they should ascertain the ASPs performance and servicecommitments. Third, they have to discover how problems are handled.Finally, they must school themselves on the methods of implementingan ASP.

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Whether or not you choose to implement an ASP depends very muchon your analysis of the respective costs of outsourcing theparticular technology versus managing it in-house. It also dependson your access to technology expertise locally and your interest indedicating your time or other staff time to performing ongoingtechnology maintenance functions.

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At the end of the day, however, you do not want to move to aparticular ASP unless you have a high degree of confidence that theASP will provide your agency with a very secure, dependable andresponsive solution.

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The way you establish confidence in your decision is by studyingevery aspect of the ASP. Go through a mental checklist. What arethe typical benefits? What agency applications will the ASP handleand which will I still have to run and maintain locally? Am Iassured of the ASPs financial strength, dependability andcommitment to this offsite technology?

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Am I better off with an ASP if a catastrophe hits the agency?What have been the experiences of fellow agents using the ASP? Thelist goes on, but the effectiveness of your decision depends on howwell you filter out any lingering questions. Knowledge ispower.

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Ascertaining the ASPs performance and service commitments is atwo-step process.

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First, you must understand the service and performancecommitments offered. So request the following from the ASPgenerallyrecognized certifications and the requirements to obtain thecertification, server performance levels, maintenance steps, servercontingency plans for down-time, disaster recovery procedures,schedule of database backup, and virus protection policies andprocedures.

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Second, it helps to know what is covered in the ASPs serviceagreement and what service guarantees are given. And these itemsare only a fraction of what you need to request from the ASP, soyou cannot hesitate to request as much as possible.

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Knowing your ASP also includes looking into the future. Itsimportant to familiarize yourself with methods of handlingproblems, should they arise, because with an ASP, you arecompletely dependent on someone competent being availableimmediately in an emergency.

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You need to know the 24/7 procedures for ASP interruption ifyour ASP goes down, as well as create a back-up strategy to keepthe agency functioning, in which case you should know yourcontractual rights. Find out if your ownership of the data andother information is clear and exclusive. If the agency usesanother software program that relies on the data on the agencymanagement system, can you still use that software if the agencydata now resides in an ASP? If not, does the ASP provide analternative?

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If your ASP is an insurance carrier, educate yourself on rightsto get policy information in the event of a termination of therelationship. Protect yourself from “stolen, lost” or “infected”data by determining the ASPs liability. Ask if the ASP will assumeliability for your agencys business interruptionfor a period oftimein the event of an ASP crash.

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Finally, it helps to know if your agency can procure insuranceto cover some of the risks arising out of ASP failures.

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It would be tragic if you went through all the trouble ofeducating yourself about ASPs but couldnt implement one. Avoid thispredicament by assuring that you have a dependable, high-speedcommunications link with the ASP, supported by a financially strongand committed Internet service provider. Also, know what trainingthe ASP provides for your employees, so they can use iteffectively.

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In the end, your knowledge will help you make the right choicein purchasing an ASP. For more information, consult a new checklistby the Agents Council for Technology, titled, “Evaluating ASPs:Issues Agents Should Consider” on the ACT web site atwww.independentagent.com.

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Jeff Yates is executive director of the Agents Council forTechnology, affiliated with Alexandria, VA.-based IndependentInsurance Agents & Brokers of America. He can be reachedat [email protected].


Reproduced from National Underwriter Property &Casualty/Risk & Benefits Management Edition, August 11, 2003.Copyright 2003 by The National Underwriter Company in the serialpublication. All rights reserved.Copyright in this article as anindependent work may be held by the author.


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