New ERP Vendor Hosting vs. In-House

Not Rocket Science, but… Managing contracts for services provided by vendors is different than managing services provided by employees. If it isn’t in the contract, it doesn’t exist. We’re profit; they’re overhead. The benefits of vendor hosting, outsourcing, etc. may be non- financial.

Hosting/Outsourcing Models Services only – customer owns hardware and software; offsite vendor provides remote technical support Hardware and services – customer’s software installed on vendor’s hardware offsite; vendor provides technical support ASP model – vendor provides everything – hardware, software, technical support – offsite; customer contracts for use of the software Outsourced services – vendor provides staff to deliver services onsite based on a fee-for-service contract

Cost Considerations Source of funds – annual budget vs. project budget Analysis period – this year/next year budget vs. life of the contract Staffing – salaries, benefits, application-specific technical training Hardware – purchase, maintenance, upgrades, replacement Post-contract costs –Hardware purchase –Professional services for conversion –Technical support resources

Pros and Cons ProsCons Accountability for hardware support, patches, upgrades placed on vendor rather than UG Less control over hardware/technical support aspects of system No hardware, technical training costs Vendor economies of scale on hardware management Backup strategies, disaster recovery may vary from UG standards “One throat to choke….” Datacenter failover, redundancy, disaster recovery, etc. is vendor’s responsibility Additional costs for hardware, conversion if brought in-house at contract end Faster production ready time Avoids need for local technical support resources No UG resource to draw on during critical times on other IT projects