Pros and cons about medicaid?

Pros & Cons of ASP or hosted software usage VS purchased software?

• Many software options are now available online via a hosted or ASP solution. Instead of purchasing the software and installing it on a company computer, employees can access the software via the Internet or a secure access. There are advantages and disadvantages of going the ASP route vs purchasing software outright. I'm looking to compile a list of the Pros & Cons of either purchasing software outright and the Pros & Cons of using a hosted software option. Some of the Pros & Cons I can see for purchase software include: Pros - Security of installing the software and having the data on your own equipment, possibility of customization if needed, plus??? Cons - larger up front cost to purchase, need to install and configure the software for your network, need to implement regular data backup, plus??? For Hosted solutions I see: Pros - less up front cost to implement, data backups are done for you, plus?? Cons - Insecurity of having your company data not on your networks, less customization options, plus?? The applications we focus on are accounting related such as inventory control, payroll, invoicing, etc. I'm trying to build a comprehensive list of the pros & cons of either purchasing software directly or using a hosted solution. Our clients range from small businesses with a few hundred dollars to spend to multinational organizations with much larger budgets. Mike Budiac http://www.findaccountingsoftware.com

• Answer:

  Mike, Thank you for your question, I hope that you find the following Answer useful. The 'hosted vs. local' question is one where every client will require a unique answer. Beyond the basic pro and con view I present below, there will also need to be consideration for how the software applications fit into the overall corporate strategy. Also, it is important to understand the nature of the software, how it will be used, and how it will integrate with other services and applications already in use. First, however, the pros and cons you asked for. I am restricting this list to the area of "Business Management Applications", because some of the pros and cons will be different for other product categories such as CRM, office productivity, e-mail, and so on. ======================================= Hosted Business Management Applications --------------------------------------- Pros: 1. Cost allocation - most ASPs will license by some metric related to your client's headcount. This means that the cost of the software can be easily combined into the overall overhead or burden rate, and grows/declines in relation to your client's growth/decline. 2. Quality control - the only constant in business is change, and for the software industry that means new updates, bug fixes and patches, and new version releases. An ASP has both the expertise and the resources to properly evaluate each new patch or release on a test system, ensure that it is ready for use, then update the production systems at a time that is convenient for everyone. 3. Cost management - not all new releases or updates are free. This can mean a relatively hefty annual 'maintenance contract' fee for companies purchasing software directly for local deployment. With an ASP, you pay for the service, not the software, which means that upgrades are usually included at no extra charge. 4. Focus on the business - for small businesses in particular, IT expertise is often outsourced to a third party, or total non-existent. WIth the complexity of properly configuring and supporting business management software, many small IT consulting shops are not properly trained to provide the level of user support and system support required. In a hosted model, support and maintenance are included in the service fee, thus resulting in savings from eliminating the need to train or hire someone to be expert in the system. 5. Big business power at a small business price - an ASP is able to provide the use of solutions that would otherwise be beyond the reach of most small businesses. The infrastructure for a hosted solution can be shared between many clients, giving each client access to the per-user pricing that otherwise would only be available to large enterprises. Even for large enterprises, the total buying power of an ASP can often result in per-user pricing that is better than the equivalent cost of deploying locally. 6. Speed of deployment - a hosted solution can often be deployed to a new client in a matter of days, the majority of that time being training and loading of initial data. 7. Data integrity - for small businesses in particular, the cost of proper data backup systems can often equal the cost of the system being protected. Data backup comes standard with any professional ASP. Coupled with backup power, this prevents a power grid blackout from destroying weeks or even months worth of data. 8. Easy growth - most business management solutions come in a modular format, meaning that you can choose to only use certain modules instead of the whole system. With a hosted solution, your clients can easily add modules as needed, without needing to go through a whole new procurement process, installation, validation, etc. Even without adding modules, the hosted solution has the necessary capacity to allow more users to be easily added without affecting performance, a useful attribute for rapidly-growing businesses. 9. Easy remote access - clients with remote offices or teleworkers will appreciate the ease with which they can access the hosted solution from any Internet connection. This is inherent in the design of the hosted model, since even the employees in the client's main office will be accessing the solution in the same way. To achieve the same capability with an in-house solution would require the implement of both a remote access system, and a robust security strategy. 10. Security - ASPs know that their continued success depends on their ability to protect their customers' data. Therefore, they deploy security solutions that most small businesses can only dream about, and back it up with networking monitoring and tracking to prevent any maliscious activity. This is something that even many large enterprises cannot afford to do, or do not have the expertise to do. Cons: ----- 1. Limited customization - by design, ASPs deploy the same application to many clients in order to achieve economies of scale. Any customization that is done is often for aesthetic reasons only; core functionality, and in some cases even database design, are immutable. For some clients, this can be a deal-breaker. 2. Security - hosted services, by their very nature, have to maintain an open front door to the Internet. Anyone who obtains a set of valid credentials can walk through that front door to access the system. This places the onus on the client to ensure that all employees follow safe computing practices, and protect their login information. For some companies, this is a con... for most companies, this actually becomes an unitended pro. 3. Out of sight... - if something goes 'wrong' and users are unable to use the application, the fact that it is hosted elsewhere can result in increased frustration, and potentially longer waits for resolution. At the same time, depending on the size of the customer, this too can be a pro as the same scenario can happen with a local solution located in another facility. 4. Loss of control - hosted services are often not a good choice for any client with a strong IT organization, as it requires that the IT organization relinquish some control. At the same time, though, many ASPs provide value-added management tools that can provide greater control over the application and its use than would be possible in a local deployment. Another con that might actually be a pro. 5. Costing model - most ASPs license their hosted applications on a per-seat/per-user basis. Depending on the needs and resources of the client, this may actually result in a higher annual cost versus a single one-time purchase. However, since almost all business management software has moved towards a licensing scheme that is also based on the number of users, this becomes a wash. 6. Virtual relationship - many ASPs are still in the mode of offering the services that their clients ask for. Some ASPs are beginning to move into the mode of consulting with the clients to determine what services the client actually needs. This subtle difference can result in a virtual relationship that grows with the client, or one that deteriorates as the client's needs change while the ASP doesn't. 7. Localization - depending on where the ASP is located, and the capabilities of the hosted application, there may be problems localizing the service for the client's specific needs. This affects everything from currency type, to date/time formats. 8. Operating expense - again, depending on the in-house capabilities of the client, the net operating expense of the hosted solution may actually be higher than a local deployment. However, as many companies do not have all of the resources and expertise to match those described in the Pros section above, this is often not an applicable con. Locally-Deployed Business Management Applications ------------------------------------------------- Pros: 1. Complete control - the client controls every aspect of how the application is deployed 2. Security - as no data needs to travel outside of the client's corporate network, there is less chance for data interception or theft 3. Customization - depending on the application deployed, the client will be able to customize the solution to meet their exact requirements 4. Costing - some applications do not have per-user licensing requirements, making them truly a one-time purchase. 5. Selection - there are a lot more choices available in the software marketplace for outright sale versus hosted applications, providing clients with greater choice and flexibility in choosing the right solution. 6. Options - many software vendors provide pricing options and discounts based on the tied-sale of software and implementation consulting. 7. Local knowledge - depending on the application deployed, it may be possible to find local IT consulting shops with the necessary training and certification to support the system, providing a more-personal level of support and maintenance. 8. Upgrade at your own pace - not all upgrades are good things, so having complete control also means controlling when (and whether) to deploy updates released by the software developer. Cons: 1. Maintenance costs - many software developers now charge annual maintenance fees in order for clients to receive the latest patches and upgrades to their software investment, resulting in costs that many clients will have difficulty justifying. 2. Maintenance/Support resources - software vendor and system integrator help desks often cannot solve problems that occur within a client's application, meaning that the client must either train an internal resource against this eventuality, or retain the services of an outside expert if one is even available. 3. Backup/Redundancy - as mentioned previously, the costs associated with data backup solutions can often equal or exceed the cost of the systems being protected. 4. Remote Access - as mentioned previously, providing remote access to a local system requires deploying both a remote network access solution, as well as a robust security strategy. 5. Security - a local deployment requires both logical security as well as physical security; for many small businesses, their entire business can be destroyed if a single computer is stolen during a break-in and all of its data lost. 6. Reliability - if it breaks, the client needs to fix it, or needs to maintain a redundant backup in order to prevent downtime. This is often standard practice for many ASPs. 7. Prevention - in this day and age where a new Microsoft Windows or IIS exploit/bug is discovered almost daily, the need to stay on top of regular system updates, patches, and policy changes can be a full time job. 8. Business evolution - when it is time to move to a newer application, the client will be on their own when it comes to migrating data and user information. For many ASPs, this level of service is automated. 9. Capacity - related to growth, as the number of users increases the need to migrate to larger and faster computing platforms can be both expensive and difficult. ======================================= As you can see, many of the 'Cons' are dependent on the exact situation that each client finds themselves in. Generally, clients who are experiencing rapid growth are best advised to go with a hosted solution. Clients who already have a heavy investment in their IT infrastructure, and who use many custom software applications that interoperate, are better off with a local deployment that can be customized to meet their exact needs. If you would like clarification to any of these Pros and Cons, please let me know. Regards, aht-ga Google Answers Researcher