Acquiring licensed software is a form of outsourcing

In the IT arena, outsourcing has three meanings. The greatest advantage of tailored applications is their low cost.

Offshoring has caused layoffs of programmers in Western countries and created much bitterness among those professionals and supporters of local labor. The pace of developments in IT might require less expertise within many organizations. There is a peculiar—and paradoxical—aspect to IT outsourcing: while contracts are signed for long periods of time, they typically involve rapidly changing technologies.

In-house development teams can usually complete a new application project in less time than an IT vendor can.

There are conditions under which organizations should avoid outsourcing. Innovative ISs, especially those intended to give their owners a competitive advantage, should not be outsourced. In recent years, enterprise applications have constituted a far larger part of IT expenditures on packaged software. Customization of large applications is inexpensive and nearly risk-free. Vendor selection criteria include functionality, architectural fit, price, services, and support.

Since no provider can guarantee percent uptime, ASPs routinely promise 90 percent uptime. Companies that are growing fast and rely on software for deployment of their operations often hire the services of ASPs. Summary of Systems Flowcharting. Database Management Systems. Event Data Processing. Transaction Processing Approach.

Event-Driven Approach. File Management Processes. Managing Data Files. Limitations of File Processing. Logical vs. Physical Database Models Technology Insight 3. Overcoming the Limitations of File Processing. Enabling Event-Driven Systems. Entity-Relationship E-R Modeling.

Entities and Attributes. Relationships Technology Insight 3. Relational Databases Technology Insight 3. Basic Relational Concepts. E-R Model Development. Model Constraints. Entity Relationship E-R Diagrams. Appendix 3B. The Changing World of Business Processing. Automating Manual Systems. Advances in Electronic Processing and Communication. Automated Data Entry. Digital Image Processing. Communication Networks. Stages of E-Business. Electronic Document Management Technology Application 4.

Electronic Data Interchange Technology Application 4. Internet Commerce Technology Insight 4. Technology Insight 4. Technology Application 4. Appendix 4A. EDI Standards. Management Decision Making Technology Insight 5.

Technology Application 5. Technology Insight 5. Knowledge Management. Gathering Knowledge with Groupware. Intelligent Agents for Knowledge Retrieval. Creating a Knowledge Culture Technology Application 5. Reviews Questions. Systems Analysis. Controlling the Systems Development Process. Project Management.

Quality Assurance. Involvement in Systems Development. Business Process Reengineering. Change Management. Systems Survey. Triggering Systems Development. Definition and Goals. Gather Facts. Perform Preliminary Feasibility Study. Devise the Project Plan. Obtain Approvals.

Structured Systems Analysis. Define Logical Specifications. Design Alternative Physical Systems. Select the Best Alternative Physical System. Complete and Package the Systems Analysis Documentation. Appendix 6A. Tools for Gathering and Analyzing Facts. Literature Review. Internal Presentation. Database and Files Review. Systems Design and Implementation. Systems Selection.

Software and Hardware Acquisition Alternatives. Software Acquisition Alternatives Technology Excerpt 7. Hardware Acquisition Alternatives. The Intermediate Steps in Systems Selection. Prepare Requests for Proposal Technology Insight 7. Evaluate Vendor Proposals Technology Excerpt 7. Complete Configuration Plan. Introduction to Structured Systems Design. Specify Modules. Develop Implementation Plan and Budget. Develop Implementation Test Plan. Develop User Manual. Develop Training Program Technology Application 7.

Complete Systems Design Document. Introduction to Systems Implementation. The Intermediate Steps in Systems Implementation. Complete the Design. Acquire Hardware and Software Technology Excerpt 7. Select, Train, and Educate Personnel. Therefore, large customers should expect to receive substantially higher discounts on subscription fees and considerably more flexibility on other pricing and non-pricing related terms. In this respect, SaaS pricing is analogous to pricing on software licenses where a large client may pay half of what a small client pays on a per unit basis.

Therefore, minimum revenue commitments are particularly important for SaaS providers. A typical SaaS agreement will obligate the customer to purchase a specified volume of SaaS services for a committed single or multi-year term. Suppliers normally attempt to avoid or limit termination for convenience rights and the ability of customers to reduce volumes below baseline levels. Since the cost of service delivery is relatively low in relation to subscription fee revenue e. As a result, the traditional outsourcing or hosting services model — which generally provides a high degree of flexibility for customers with respect to termination and volume reductions — does not translate well to SaaS service offerings.

This is a legitimate point. However, given the relatively low cost of service delivery in relation to the subscription fee e. Payments in Advance not arrears — many SaaS providers insist on payment in advance, either annually or quarterly. In addition, payment in advance tends to make customers more invested in actually using the SaaS products they purchased and working to overcome initial transition challenges. Share this: Print.