For rent: Agency systems
- By John x_Zyskowski
- Nov 12, 2000
In the latest sign that the application rental model of outsourcing is catching
on in government, two federal agencies recently signed contracts to rent
enterprise application services from USinternetworking Inc.
The Federal Railroad Administration (FRA), part of the Transportation
Department, will rent access to USi's e-mail and collaboration applications,
which are based on Microsoft Corp.'s Exchange Server software.
The Federal Energy Regulatory Commission (FERC), through a subcontractual
agreement with a systems integrator that USi declined to identify, will
tap into USi financial management applications that are based on PeopleSoft
In the ASP model of outsourcing, a service provider is responsible for
buying, customizing and maintaining the enterprise software. Customers then
pay a flat monthly fee to rent access to the applications via the Internet
or a private network.
"It just makes so much sense, and it's more cost-effective," said George
Molaski, chief information officer at DOT. "The government is getting less
IT resources. The ones we have in-house need to be focused on supporting
the [government's] missions and not taken up on those that are essentially
FRA will provide the new USi-hosted e-mail application to all of its
800 employees, many of whom are safety inspectors located throughout the
country. The one-year contract with USi, with two additional option years,
will cost the FRA $26 per month per user, according to agency officials.
Transitioning the FRA staff to the new e-mail service from their current
in-house system, which uses Novell Inc.'s Groupwise software, is scheduled
to be completed in January, according to Cristal Perpignan, an IT manager
with FRA in Washington, D.C.
She said that training workers to use the new system will be a bigger
challenge for FRA than any technical migration issues because USi is handling
those. She added that training for the new application would have been necessary
whether the software was installed in-house or outsourced to an ASP.
Perpignan expects that renting the e-mail application will be less expensive
for FRA than running its own software, which has become maintenance-intensive
for the agency's IT staff.
"We think we'll almost immediately see a return on investment in the
first year," she said.
Another benefit of using an ASP is that an agency can know precisely
how much it costs per month to run a software application. Those figures
are often difficult to pin down when the application is operated in-house
and costs are spread across staff, procurement and system maintenance budgets.
"That's very important from a management perspective," Molaski said.