First, governments are experienced with outsourcing, having used service bureaus and other firms, such as EDS, to process payroll and healthcare claims. Second, many governments are still saddled with IT staff who are mainframe programmers. Nor does he think the market is limited to just small and medium-sized local governments. Besides the federal agencies using USi, a number of states have expressed interest in ASP model, according to Terhorst. Using an ASP does have its drawbacks, however.
Security is another concern.
As business grows and more applications are hosted, they may strain an ASP's resources and spread the staff too thinly to provide the high levels of service the customer has come to expect. Nor are costs always lower. Monthly expenses may rise when installation and integration fees are tacked on. And if the organization wishes to license its hosted software, which some do, the costs are the same as if they installed it in-house. ASP vendors counter that real savings comes from not having to hire additional IT staff.