406 Part III • Acquiring Information Systems
- Because the source code is open, it may be easier to
interface different open source packages with each
other, and you would not have to be dependent on the
software vendor to provide this service.
However, there are some risks with open source
application software, including: - The absence of complete documentation without
paying for it from some service provider. - Only commodity-type applications (i.e., applications
that are generic and common to many organiza-
tions—e.g., a catalog-type e-commerce Web site) are
viable; otherwise, there is no motivation among a
large-enough community of users for you to expect
that the application will be enhanced with the
advanced or specialized needs of users like yourself. - Unless there is some cooperative group of users, dif-
ferent adopters may not know what others are doing,
so there can be duplication of efforts; at least with
proprietary software, vendors usually announce
what future enhancements are coming and when;
however, it is possible through cooperation to join
forces on the development of features desired by
several open source adopters. - There are different types of open source licensing
agreements, so you must be careful to choose soft-
ware with a license that suits your needs (e.g.,
whether you must share code changes or whether
you can sell new applications you might build from
the open source code you acquire).
NEW PURCHASING OPTION: APPLICATION
SERVICE PROVIDERS (ASPs)
A new trend (or a renewal of an old practice) related to
implementing packaged solutions began to emerge in the IT
industry during the first decade of the new millennium:
application service providers (ASPs). Note that we do not
distinguish here between an ASP and a newer term—
software as a service (SaaS)—or the alternative term,
on-demand software. Also, we do not distinguish here
between an ASP and the currently popular term—cloud
computing—which is a broader term that includes ASP serv-
ices delivered over the Internet, often via a Web browser.
Under an ASP purchasing option, the purchaser elects
to use a “hosted” application rather than to purchase the soft-
ware application and host it on its own equipment. The ASP
is therefore an ongoing service provider, and the ASP option
is a different kind of make-versus-buy decision. Instead of
having a software licensing agreement with a firm that
developed the software, a company pays a third party (ASP)
for delivering the software functionality over the Internet to
company employees and sometimes the company’s business
partners. The ASP host owns the licenses for the software.
Almost any software can be delivered via an ASP, from
basic office automation (e.g., Microsoft Office) to special-
ized application software (e.g., Salesforce.com) and large
ERP systems (e.g., the Oracle ERP suite). The most com-
mon ASP services are for Web site hosting, e-mail, finan-
cial/ accounting applications, and e-commerce. The ASP
client pays for as much or as little of the software service as
they need (based on number of users and which modules of
the package the client uses), rather than having to buy a
minimal number of licenses from the original vendor.
The ASP provider may be a specialist in the particu-
lar hosted software or in some vertical industry suite of
software (e.g., software for firms in the health care indus-
try). Major technology vendors, such as Microsoft and
Oracle, also provide a variety of data storage and applica-
tion software via ASP-hosting options. Many ASP hosts
are oriented to supporting small to medium-sized business-
es in a particular geographical area (when they can meet
directly with clients). Some ASPs provide auxiliary servic-
es, such as arranging for the local networking and ISP
service to provide Internet access, and purchasing and
maintaining thin-client workstations for their customers
(when thin clients are sufficient because all software and
data storage are maintained at the ASP host site).
The two major advantagesassociated with purchas-
ing a package, which were discussed at the beginning
of this chapter, are also advantages for choosing an ASP:
(1) cost savings and (2) faster speed of implementation. A
subscription-based service with an ASP typically involves
monthly fees (pay as you go) rather than large up-front IT
investments in both the software package and additional
infrastructure investments to host the package. You can
stop the service at any time without large “sunk costs”
associated with purchasing. For companies with widely dis-
persed employees requiring remote access, an ASP solution
can also reduce network access and other service delivery
costs. Because the package is also typically already up and
running on the ASP’s host computer, the implementation
project should also be less time consuming. Also, the host-
ing service provides all software maintenance and opera-
tional support, freeing up your IT staff to work on other
applications. Often, your organization can afford to use a
package with more functionality (arguably the best or
industry standard software) than you might be able to
afford by directly purchasing the software.
However, there are also some potential downsides,
including dependence on an external vendor not just for the
software package but also for ongoing operations. Good
processes for making the best purchasing decision and
contracting for the needed service levels are even more