03.11.2009 by Don Wood.

The trend over the past many years has been to have software hosted and maintained by an Application Service Provider (”ASP”) rather than the company 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 access 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 Property Management & Accounting software companies offer a hosted solution (e.g. Yardi, and Intuit RES). In fact, one firm only provides a hosted version (RealPage).

Should you allow your mission critical software (e.g. Property Management & Accounting system) to be hosted by the Vendor? Here are some pros and cons to be aware of before making your decision.

ASP Pros

Quick Start

ASP applications can often be on-line and operational more quickly. The Application Service Providers (e.g. Yardi) 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

They ASP is capable of applying upgrades, patches, and bug fixes quickly and easily. Regression testing and the like are performed 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 of the ASPs are also SAS 70 ( www.sas70.com) certified and that can help reduce costs on Sarbanes-Oxley (”SOX”) audits.

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, 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.

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 API’s 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 (i.e. RealPage) 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.

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03.02.2009 by Don Wood.

There are still some Multifamily Property Managers using DOS applications like Rent Roll and the AMSI DOS version. Many of you may be surprised that these products are still in use and will wonder why do people still use them? Well, frankly, they work, albeit with risks! Smaller, cost conscience firms find it difficult to justify spending the money for an upgrade when the old DOS system still gets the job done.

The expense to upgrade to a new product can be a lot. Plus, new equipment, training and changing business processes can be daunting and costly. But is the risk of staying on the old DOS application too great? I say “YES!” Early versions of Microsoft Windows actually ran on top of the DOS platform; however since Windows 95, DOS is no longer needed and has fallen in disuse. That does not mean you can’t still operate a computer with DOS, in fact there are some companies that will sell you a PC with FreeDOS as the operating system. DOS is not the only problem or risk, you have to consider the hardware, support, expertise, security, and opportunity costs.

Risks of not Upgrading

Hardware
It is increasingly difficult to purchase hardware compatible with running DOS. As I mentioned you can purchase a PC with FreeDOS but that is certainly not a mainstream purchase. If your current PC crashes you won’t be able to run to the local retailer and grab a replacement off the shelf. New printers don’t usually work with DOS and finding a DOS compatible printer is increasingly harder. You may have to buy used equipment on ebay.

Support & Expertise
Most companies that produced the old DOS software provide little to no support. There are few programmers around that know anything about DOS. Most experienced property management personnel are trained on more modern systems.

Security
If your DOS application becomes corrupted there is little support and expertise to fix the problem. Consistent, daily backup best be your policy! In addition, your data is at risk for hackers using vulnerabilities associated with dial up modems. Newer systems are more secure.

Opportunity Costs
Granted, I did say the old DOS programs still work, but in our changing economy and business drivers, the old software can’t compete with the new functionality. New systems don’t merely do the basics; they provide analytical reports, traffic tracking, and frankly too many features to cover here.  Plus, upgrading opens numerous opportunities to improving your processes, efficiencies, and profitability. Having staff run to a dedicated DOS computer to look up data is inefficient. Your competitors are using up-to-date programs with up-to-the-minute data to make pricing decisions and leaving you in the dust! So cover your risk and upgrade before your luck runs out.

Reduce your risk and improve your business processes and bottom line by upgrading to a web-based solution.

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03.01.2009 by Don Wood.

Studies have shown that many IT projects are considered to be failures. The Standish Group has reported high failure rates for years and recently a study by KPMG found that about half of the respondents reported at least one failed project in the past year. Why do projects fail? The reasons are too numerous are varied to identify; however, I’ll discuss some common failure points. This is not isolated to IT; it applies to any type of project such as implementing a new software, improving a business process, creating a marketing plan, or any thing that can be defined as a “project”. So, what is the definition of a “project”? According to the Project Management Institute (”PMI”) “a project is a unique temporary endeavor, with a set beginning and end”.

Now that we defined a project we should also define “project failure”. That is to say, how do you know if the project failed or succeeded? Ah! That is actually one of the reasons projects fail! In other words, not defining the success criteria can lead to failure. For example, if we implemented a new software system and it worked exactly as the vendor stated but nobody in the company uses it, was the project a failure or successful? I worked on a project for a large Federal Government Agency and something similar happened. It was on a project that occurred before I arrived. There was a large IT project that was scrapped because the business didn’t like the way it worked. But people in the IT Department were patting themselves on the back for delivering the product on time.

Okay, so what are some common reasons projects fail?

• Lack of clear scope of work
• Not defining the project success criteria and expectations
• Lack of communication
• Inadequate planning
• Lack of skilled resources
• Unrealistic time, budget, and/ or scope
• Lack of risk management
• Lack of Senior Management and Business ownership support and involvement

As I said before, there are many reasons why a project may fail, but if you take care of these common issues your rate of success will be much improved.

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