What If Your ASP Bites?

Dispute resolution guidelines unveiled for application service providers

Geneva  May 18, 2001  The ASP Industry Consortium and the World Intellectual Property Organization (WIPO) today unveiled a set of global dispute avoidance and resolution procedures for application service providers (ASPs).

ASPs, which host and manage software offsite for other companies, are gaining a degree of popularity as a means for small- and medium-sized firms  and some larger corporations  to "rent" enterprise applications without having to invest in a license for the software or to build their own applications.

While ASPs are still a relatively new phenomenon in the supply chain, Geneva-based WIPO, a U.N. agency dedicated to promoting the use and protection of intellectual property works, and the ASP Industry Consortium, an advocacy group formed to promote the application service provider industry, set out a year ago to prepare the guidelines to help address ASP contract disputes before they become prevalent.

"The jointly developed procedures will provide greater certainty about business and legal obligations for the ASP model," said Francis Gurry, WIPO assistant director and director of the WIPO Arbitration and Mediation Center.

Gurry joined with Traver Gruen-Kennedy, chairman of the ASP Industry Consortium, in asserting that the guidelines are acutely needed because lawyers, judges, arbitrators and other dispute-resolution experts may not be familiar with the ASP industry and require insight into how ASPs work.

The new guide provides an ASP industry primer, as well as examples of where disputes are likely to occur. It lays out a series of dispute resolution methods, both in terms of litigation and alternatives to litigation, with advantages, disadvantages and descriptions of commonly used alternative dispute resolution techniques.

The guidelines also help describe operational ASP best practices in areas such as problem identification, customer help desk and service level agreements, with the idea that a provider operating under these best practices can avoid many potential disputes. The guidelines also provide recommendations for drafting dispute resolution clauses for typical ASP contracts, as well as advice on management of and insurance protection for the ASP business relationship.

"ASPs represent the future of computing because, among other reasons, they transcend borders with an efficiency and effectiveness required in today's global marketplace," added Gruen-Kennedy, who also is chief strategist and vice president for strategy at software company Citrix Systems. "Cyberspace has no borders, yet the world still operates under a system of cultural and historic borders, meaning a process is required to address business disputes that may occur in a cross-border relationship."

The global dispute avoidance and resolution guidelines are available publicly through the web sites of both the ASP Industry Consortium  and the World Intellectual Property Organization.

For a perspective on whether to ASP, buy or build your supply chain applications, see the article "Do I ASP?" in the June 2001 issue of iSource Business.