“When Do You ASP?” The Software Life Cycle Control Model

Application Service Providers (ASPs) now offer a new alternative for the acquisition and operation of application software, enabling companies to rent or lease applications that are delivered via the Internet. In determining the appropriateness of this strategy, companies must tradeoff the cost and time advantages of this approach with its risks. This paper introduces a Software Life Cycle Control Model that describes the dimensions of control over software features and operations associated with various software acquisition strategies, including internal development and operation, purchasing packaged applications, outsourcing, and ASPs. Transaction cost economics (TCE) is used to identify the key costs and risks that must be considered in the software acquisition decision. We propose when ASPs may be appropriate for companies with existing IT infrastructure and companies lacking infrastructure to develop and operate new applications.

[1]  M. Moschandreas,et al.  The Role of Opportunism in Transaction Cost Economics , 1997 .

[2]  Susan A. Sherer.  Purchasing software systems: Managing the risk , 1993, Inf. Manag..

[3]  W. Dugger.  The Economic Institutions of Capitalism , 1987 .

[4]  Barry W. Boehm,et al.  Theory-W Software Project Management: Principles and Examples , 1989, IEEE Trans. Software Eng..

[5]  Vijay Gurbaxani,et al.  The new world of information technology outsourcing , 1996, CACM.

[6]  F. Warren McFarlan,et al.  Corporate information systems management : text and cases , 1988 .

[7]  Lorin M. Hitt,et al.  Information Technology and Firm Boundaries: Evidence from Panel Data , 1999, Inf. Syst. Res..

[8]  Eric K. Clemons,et al.  The Impact of Information Technology on the Organization of Economic Activity: The "Move to the Middle" Hypothesis , 1993, J. Manag. Inf. Syst..

[9]  Abraham Seidmann,et al.  Two dimensions of software acquisition , 1996, CACM.

[10]  Peter G. Klein,et al.  Empirical Research in Transaction Cost Economics: A Review and Assessment , 1995 .

[11]  Leslie P. Willcocks,et al.  Global Information Technology Outsourcing: In Search of Business Advantage , 2001 .

[12]  Lynda M. Applegate,et al.  Corporate Information Systems Management: Teaching Manual , 1999 .

[13]  Capers Jones.  EVALUATING SOFTWARE OUTSOURCING OPTIONS Do Your Software Operations Add Value , 1994 .

[14]  Chris Bennett,et al.  Application Service Providers: Will They Succeed? , 2000, Inf. Syst. Frontiers.

[15]  Oliver E. Williamson,et al.  Economics and Organization: A Primer , 1996 .

[16]  Todd R. Zenger,et al.  Testing Alternative Theories of the Firm: Transaction Cost, Knowledge-Based, and Measurement Explanations for Make-or- Buy Decisions in Information Services , 1997 .

[17]  O. Williamson.  Markets and Hierarchies , 1975 .

[18]  Roger S. Pressman,et al.  Software Engineering: A Practitioner's Approach , 1982 .

[19]  H. Raghav Rao,et al.  A two-level investigation of information systems outsourcing , 1996, CACM.

[20]  Kalle Lyytinen,et al.  Attention Shaping and Software Risk - A Categorical Analysis of Four Classical Risk Management Approaches , 1998, Inf. Syst. Res..

[21]  Soon Ang,et al.  Employment outsourcing in information systems , 1996, CACM.

[22]  J. Liebeskind,et al.  Contractual Commitments, Bargaining Power, and Governance Inseparability: Incorporating History Into Transaction Cost Theory , 1999 .

[23]  O. Williamson,et al.  STRATEGY RESEARCH: GOVERNANCE AND COMPETENCE PERSPECTIVES , 1999 .

[24]  Alan Shepherd,et al.  Outsourcing IT in a changing world , 1999 .