Today we have a guest post of Don Wood, a PMP with over 25 years of experience in project management, business process improvement, and information technology for the real estate industry. In this post he will discuss the pros and cons of IWMS as a hosted solution (ASP).
Dear Readers of iwmsnews.com,
The trend over the past few years has been to have software hosted and maintained by an Application Service Provider (“ASP”) rather than the company’s IT department maintaining the infrastructure to run the software. This trend has increased as most applications have become web-based. That is to say, the software is run with a browser (i.e. Internet Explorer) and can be accessed by anyone with a high-speed Internet connection.
As high-speed Internet access becomes increasingly common the requirement for a Client Server application becomes less important. Many of the IWMS, CAFM, Facility Management, Accounting, and other software companies offer a hosted solution. In fact, some firms only provide an ASP version (e.g. AMTDirect & Expesite, etc).
The ASP does not have to be the software vendor. There are firms that host any type of systems for firms. So, should you allow your mission critical software (e.g. IWMS & Accounting systems) to be hosted by the Vendor? Here are some pros and cons to be aware of before making your decision.
| ASP Pros | ASP Cons |
| Quick start | Less control over mission critical software. |
| Low up-front costs | Potential higher cost of ownership. Usually higher over a 10 year period due to the subscription basis. |
| Easier upgrades | Limited to no control of timing of upgrades Must upgrade when they upgrade unless you pay for separate environment. |
| Easier/ lower cost maintenance | Difficulty with integration of other applications |
| Less human capital required to manage the system. | Difficult to access data for custom reporting |
| Security | Security |
ASP Pros
Quick Start
ASP applications can often be on-line and operational more quickly. If the vendor is the Application Service Providers they are adept at setting up the application and have the necessary hardware in place.
Low up-front Costs
The entry cost of the application is typically lower because you are often in essence renting it. The cost for the hardware is defiantly lower as the ASP provides all of the hardware. You don’t have to hire additional staff to run the data center, troubleshoot network issues, maintain backups, etc.
Easier Upgrades
The ASP is capable of applying upgrades, patches, and bug fixes quickly and easily. Regression testing and the like are performed (or should be) by the ASP prior to updating the files.
Easier/ lower cost Maintenance
The ASP is responsible for maintaining the hardware. They schedule backups, take care of hardware failures, and maintain a contractual agreed to up-time.
Lower human capital
Usually requires less people to run the application internally (i.e., web servers, data storage, administration, etc.). Some ASPs are also SAS 70 ( www.sas70.com) certified and that can help reduce costs on Sarbanes-Oxley (“SOX”) audits.
Security
Security is likely to be stronger if self-hosted. However, if the ASP is SAS 70 certified and has a well architected security process you may be able to rely on the ASP to keep your data secure. Most ASP firms are serious about security as compromises to the security of your data can have a devastating effect to their business.
ASP Cons
Less Control Over Mission Critical Software
Having a mission critical software (e.g. accounting) in the control of an ASP is a risk, but one that can be mitigated. It is important to perform due diligence on the ASP, establishing service level agreements, expectations around access to data, issue resolution, back-up and restore procedures, regression testing, and communication channels.
Potential Higher Cost of Ownership
Depending on the structure of the fees, using an ASP may cost more in the long run. If the fees are transaction based and this is a long term solution, the fees could easily exceed self-hosting costs. There are many factors that influence the total cost of ownership. For example, the staff required to maintain the system and hardware, license fees, annual maintenance fees, transaction volumes, number of users, etc. Generally, cost comparisons will show that costs for an ASP will exceed that of self hosting over a 10 year period; even when additional resources
are required.
Limited to No Control of Timing of Upgrades
In the case of patches and bug fixes this is a positive; however, it can be a problem if new functionality is introduced. Unless you have adequate notice there may not be time to prepare training materials or train staff on changes. Especially if you have well-defined policies and procedures in place. In addition, if the changes were not properly tested the new release could be fraught with problems.
Difficulty with Integration of Other Applications
Integration with another application can be challenging and in some cases not an option. You need to examine the architecture of the system and the hosting environment. Are there Application Programming Interfaces (API) for the data you need? What is the availability to access real-time data? Will there be any transactional load problems? In other words, is it possible that your request for data can over burden their ability to send it? An important question to ask is: who actually owns the data and if you stop using the ASP, how do you get a copy and in what form will the data be?
Difficult to Access Data for Custom Reporting
Like integrating with other applications, it can be difficult to get the data required for custom reporting. In addition, some firms charge clients to access the data. Some data may not be available at the level you require (e.g. summary vs. detailed transactions). The ability for the ASP to send results for data requests may not be adequate, both from a time to process and the ability to process the request.
Security
Keeping your data secure may be more perception than reality. As sated in the Pros section the ASP firms have a vested interest in maintaining security. Still, this is a serious concern that needs to be carefully considered. Self hosting may provide better security by fewer people having access to the data.
Don Wood, PMP is the Director of Corporate Real Estate Technology at Tango Management Consulting.
