Information Technology Reference
In-Depth Information
Hosted Software Model for Enterprise Software
Many business application software vendors are pushing the use of the hosted software model
for SMEs. The goal is to help customers acquire, use, and benefit from the new technology
while avoiding much of the associated complexity and high start-up costs. SAP, Microsoft,
NetSuite, Intacct, Oracle, BizAutomation.com, Salesforce.com, NetBooks, and Workday are
among the software vendors who offer hosted versions of their ERP or CRM software at a
cost of $50-$200 per month per user.
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This pay-as-you-go approach is appealing to SMEs because they can experiment with
powerful software capabilities without making a major financial investment. Organizations
can then dispose of the software without large investments if the software fails to provide
value or otherwise misses expectations. Also, using the hosted software model means the
small business firm does not need to employ a full-time IT person to maintain key business
applications. The small business firm can expect additional savings from reduced hardware
costs and costs associated with maintaining an appropriate computer environment (such as
air conditioning, power, and an uninterruptible power supply).
Potential problems can occur if the hosted software vendor cannot provide a reliable
operation environment that ensures both that the software is available when needed and that
company-sensitive data is safe from compromise. Car Toys, Inc., experienced an outage of
its hosted BI software that disrupted month-end reporting when the hosted software provider
advantages and disadvantages of hosted software.
Table 9.5
Advantages
Disadvantages
Advantages and Disadvantages
of Hosted Software Model
Decreased total cost of ownership
Potential availability and reliability issues
Faster system startup
Potential data security issues
Lower implementation risk
Potential problems integrating the hosted
products of different vendors
Management of systems outsourced
to experts
Savings anticipated from outsourcing may
be offset by increased effort to manage vendor
Not only is the hosted software model attractive to small and medium-sized firms, even
some large companies are experimenting with it. Flextronics, a large contracted manufacturer,
selected Workday to provide human capital management software as a service for 200,000
employees worldwide. Chiquita Brands, with 26,000 employees, also selected Workday to
handle its HR system needs. Japan Post and Citibank adopted Salesforce.com's CRM
software with 40,000 and 30,000 users, respectively.
ENTERPRISE SYSTEMS
Enterprise systems must support businesses that interoperate with customers, suppliers,
business partners, shareholders, and government agencies in multiple countries. Different
languages and cultures, disparities in IS infrastructure, varying laws and customs rules, and
multiple currencies are among the challenges that must be met by an enterprise system of a
multinational company. The following sections highlight these issues.
Different Languages and Cultures
Teams composed of people from several countries speaking different languages and familiar
with different cultures might not agree on a single work process. In some cultures, people do
not routinely work in teams in a networked environment. Despite these complications, many
