An Examination of Online Software

Transcription

1 White Paper An Examination of Online Software THE CHOICE BETWEEN CONVENIENCE AND CONTROL GEM Series AUTHOR: HENRY A. BROMELKAMP

2 Page1 TABLE OF CONTENTS INTRODUCTION... 2 ONLINE SOFTWARE DEFINITION... 2 BENEFITS OF ONLINE SOFTWARE... 2 DRAWBACKS OF ONLINE SOFTWARE... 4 THE ARGUMENT OF CONTROL VS. CONVENIENCE... 6 DECISION CRITERIA TOOL... 7 CONCLUSION... 8

3 Page2 INTRODUCTION Cloud computing, Software as a Service (SaaS), web applications or online software, no matter what you call it; the ability to access software applications via the internet has become a viable option for many organizations. There is a lot of interest in this growing software distribution model, and it is easy to follow the trend. Foundations however need to understand and weigh the advantages and disadvantages of online software before they decide if online or installed software is right for them. This white paper examines the benefits as well as the drawbacks of online software and provides two arguments: one for convenience and one for control. A decision criteria tool is also included with this information and together will help the reader determine the best course for their foundation. ONLINE SOFTWARE DEFINITION There are several names and technical descriptions used to describe web-based software. For the purpose of this white paper the term online software will be used to describe software applications that are hosted and managed by a software provider. With online software, organizations do not purchase and install software on their computers or servers, instead they access the software with any computer or mobile device that has an internet connection. A secure user name and password are often required to access the online software. The software provider hosts the software at their location and manages all of the technical aspects. The pricing model for online software usually involves a onetime set-up charge and monthly or annual license or user fees. There are many benefits to online software and the next section examines them. BENEFITS OF ONLINE SOFTWARE The rapid growth of online software can be grouped into five primary benefits foundation use to justify their conversion to online software. These benefits include: accessibility, reliability, scalability, affordability and proficiency.

4 Page3 Accessibility Reliability Scalability The word accessibility sums up one of the foremost benefits to online software: staff and volunteers can work anytime and anywhere there is internet connection. This offers a great deal of flexibility for foundations who have a mix of full-time and flex-time staff and volunteers that work remotely, during non-business hours or while traveling. No matter where they are staff is able to connect to information that would otherwise be inaccessible outside the office. Access is beneficial to foundations because it allows employees to be geographically independent, can increase productivity with 24-hour access, and improve collaboration and document management when everyone can access and update the same information. Foundations that have a myriad of office and virtual locations, traveling and flextime work staff often find online software s anywhere and anytime capability increases both productivity and the ability to focus on priorities. The reliability of software is important for any organization, and online software is no exception. Foundations can expect online software to be available when they need it and rely on the software provider to manage upgrades, back-ups and general maintenance. Online software providers are able to deliver reliable service due to their centralized expertise in two areas: the software they support and the staff that is specifically equipped to ensure systems are consistently performing at peak service levels. Internal IT staff can be a bottleneck when it comes to maintaining and updating installed software. Online software providers are contracted to ensure their systems are efficient with limited scheduled maintenance windows, timely software updates, quality hardware, and best practice back-up and security systems. Foundation software requirements may shift over time, often due to additional funds or because the organization is evolving internal processes. Online software can adapt to changes in foundation needs based on the number of users or volume of information. Scalability is an important benefit to organizations that only want to pay for what they need now and have the option to expand with future growth. Some online software also offers the ability to add features and functionality when the organization needs it. Foundations may be able to select various levels of features or add modules and only pay for what they want. As organizations change they can often add additional feature levels or modules to fit their new requirements.

5 Page4 Affordability Proficiency Online software is often an affordable choice because organizations do not need to purchase software and hardware or budget for maintenance, repair, and upgrade expenses. They also do not pay for internal IT staff or external consultants to manage the software, back-ups and security. Online software may save organizations 50-90% of their IT budgets, which is normally spent on making sure current systems stay up and running correctly. 1 Sharing the costs of IT infrastructure and support with other companies, through online software can save organizations significant upfront costs, ongoing support and maintenance costs. With a relatively low implementation investment and short service agreement period the financial barriers to exit are low, making online software an affordable and low-risk option. It is easy for a foundation s resources to be diverted away from their priorities when they are dealing with manual processes, lengthy software implementations and resources spent on IT training, maintenance and upgrades. Online software decreases resources spent on IT and increases the organization s ability to focus on furthering their foundation s purpose. The benefits of accessibility, reliability, scalability, affordability and proficiency are compelling and can make a strong case for organizations to consider this alternative to installed software. Nevertheless, it is also important to understand the potential disadvantages to this software model and these drawbacks are examined in the following section. DRAWBACKS OF ONLINE SOFTWARE Despite the benefits, online software has disadvantages that deserve a thorough examination before converting to this software model. These drawbacks can be categorized into five areas: security, limitations, dependence, continuance and opportunity costs. Security Security is often cited as the most important reason to choose installed software ver online solutions. With installed software, organizations keep intellectual property and data stored inside their own firewalls. This allows each foundation to determine and control their own security systems and protocols. 1 Computer World, How to balance maintenance and IT innovation by Minda Zetlin October

6 Page5 Limitations Foundations that have confidential information such as personal financial data need to take extra precaution when evaluating a software provider s privacy and security systems and compare them to the effectiveness to their own internal systems. Another consideration is that unlike most private organizations, online software providers may be subject to the National Security Administration s monitoring of communications. This could impact the privacy policies of organizations with highly sensitive information. Utilizing online software means the foundation s information is in another company s hands and it is imperative that they weigh the risks against the benefits of using a software provider s security systems and protocols. The basic business model for online software is to develop applications that meet the needs of the majority of buyers. This approach is designed to leverage development and infrastructure to contain cost. A major limitation of online software is that it is built-for-the-masses and not designed to be customized to the individual needs of a single foundation. Online software providers often design configuration features such as the ability to change the names of fields, and select which page views they want to see, however it is uncommon for online software to be truly customizable. The limitations on how the software works may require foundations to sacrifice their established processes and protocols to work within the confines of the online software solution, resulting in a significant drawback to online software. Dependence With online software foundations are dependent on the software provider for everything related to the solution. Unexpected outages, promised feature gets delayed, server speeds are too slow, or for any number of reasons organizations have to wait for the software provider to prioritize and address the issue within their own time frame. Foundations need to have well-defined service level agreements to ensure expectations are met. Yes the online software provider needs to satisfy customers to stay in business; however the dependence on another business can be frustrating at best and detrimental at worst for any foundation.

7 Page6 Continuance How long a software provider plans to support a specific software product with upgrades, updates and maintenance is often uncertain and there is always a risk that the software provider will go out of business leaving a foundation without a software solution. Foundations need to assess the risk and recourse for discontinuation of their current online software or business closures. It is important to plan for possible discontinuation of software service and require tight contract language to ensure systems are fully supported for a set period of time, ample notice is given of changes in support, information is backed-up regularly, and delivered promptly to the foundation when requested. Contingency plans should also be in place in the event the service provider goes out of business without notice. Opportunity Cost There are opportunity costs to consider with online software. One important consideration is the switch from a capital expense to an operational expense if you move to online software. While this isn t a huge impediment over time, it does at least temporarily complicate the budget when the foundation needs to shift funds from a onetime investment to an ongoing monthly or annual expense. Payroll and contractor fees typically cost more than software and an analysis of the cost of diverting resources away from current budgets, systems and processes needs to be calculated into the overall value of online software. Staff resources will, at least temporarily, be refocused on converting from a manual or installed software to an online system, which impacts other foundations priorities. Another potential opportunity cost is when online software does not interface with existing software applications and processes. All of this time and resource disruption has the potential to result in opportunity costs that divert the foundations focus. There are a number of advantages and disadvantages to online software and each organization needs to evaluate how the benefits and drawbacks examined above impact their internal resources and ability to focus priorities on what is most important to their mission. THE ARGUMENT OF CONTROL VS. CONVENIENCE There are a number of benefits and drawbacks to online software and an argument can be made that organizations need to pick between one of two choices: control or convenience.

8 Page7 Determining which is most important to the foundation can help guide the decision for either online or installed software. Convenience Control The reason many foundations choose online software can be described in one word: convenience. The ability to access information from anywhere and anytime is a very strong argument for online software. Organizations can rely on the software provider to ensure security and maintenance and to manage upgrades and outages effectively. Online software eliminates the need for hardware or software purchases with no necessity for capital expenditures or IT staff expenses related to installation, upgrades and scheduled maintenance. For foundations with limited IT resources or the need to prioritize staff time to other highvalue priorities the conveniences of online software may be the right choice for them. When a foundation chooses installed software, there are many elements that can be prioritized and controlled within the confines of their internal IT infrastructure. Time and resource allocations are easier to control with installed software because a foundation can customize the software to align with their own processes and requirements. They can also prioritize updates and upgrades based on the timelines that work best for them. Tight control and internal best-practice security systems and protocols help keep information safe with installed software. A foundation s internal IT staff has a complete understanding of the organization and may be able to more easily integrate existing applications into new software. Costs can also be controlled with one up front price and no ongoing fees that could change over time. For foundations with unique software needs or the internal IT infrastructure and financial resources to manage installed software the argument for control may be stronger than one of convenience and installed software may be the best choice for them. DECISION CRITERIA TOOL Every foundation is unique and needs to assess and determine the best approach to meet their requirements. The table below allows an organization to rank the importance of criteria commonly used for software decisions. The table with a higher total score is an indicator of the direction the organization should consider for their next software project.

9 Page8 Convenience Attributes Access any time/anywhere Automate upgrades, back-ups and maintenance Ability to scale up when company needs change Periodic expenses instead of capital investments Limit need for specific internal IT skills and resources Total Score What is most Important? Scale 0-5 (Where 0 = unimportant and 4 = very important) Control Attributes High level of data security Need for customized solutions Ability to manage timeline and priorities of staff Plan to use same software for many years Ability to integrate other software applications Total Score What is most Important? Scale 0-5 (Where 0 = unimportant and 4 = very important) If the total from the convenience table is higher than the total from the control table, online software is worth further research. If on the other hand, the total from the control table is higher, an installed software solution may the best option for the foundation. CONCLUSION Online software is still a relatively small percentage of overall software sales and installed software will continue to be available for the conceivable future. However there is a growing trend for foundation of any size to choose online software due to the benefits of this model. Nevertheless as studied in this white paper there are also drawbacks to online software and it is imperative that organizations weigh the benefits and drawbacks of online software to help determine if control or convenience is most important to their foundation.

10 Page9 About Henry A. Bromelkamp Henry A. Bromelkamp, president of Bromelkamp Company LLC is well known among grant making foundations. He was a visionary when he created a software database to track grants for a non-profit organization. He has taken this vision forward to develop the most integrated and flexible grants management software solutions on the market today. Henry continues to lead Bromelkamp Company growth with both installed and online software solutions. He shares his in-depth knowledge of foundation technology by consulting with clients, presenting webinars and training sessions, and speaking at conferences to help foundations effectively manage their grant making processes. A strong believer in philanthropy, Henry travels annually to Africa as an Ambassador for Books for Africa, Africa Classroom Connection and Action for Children Zambia. He volunteers at St. Stevens Human Services, participates on three boards of directors and is a Rotary member. He also established Bromelkamp Foundation to provide funding for non-profit organizations that support literacy and address homelessness. When Henry is not busy leading Bromelkamp Company LLC and supporting charitable causes, he can be found either renovating his historic stone and brick Victorian house or keeping active by running, biking, drawing, singing and traveling. You can reach him at henry@bromelkamp.com. About Bromelkamp Company Bromelkamp Company LLC is a leading provider of integrated and online grant management software solutions. Its inspired design meets dynamic technology to provide installed and online software that effectively manages the entire grant management process for foundations. Find out more at: or call 888/ Computer World, How to balance maintenance and IT innovation by Minda Zetlin October