On-demand options confuse buyers

6 September 2006
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07 September 2006 | Paul Snell

Purchasers are employing on-demand systems to save money but are seeking clarity on the most effective of the four payment methods the technology offers, according to e-procurement provider Wax Digital.

On-demand systems are hosted by a provider over the internet, offering an alternative to traditional licensed and installed software. It can be paid for with a flat fee; licence fees; charges based on use; or performance-based fees.

The survey of 100 IT purchasers found reduced cost of ownership was the primary reason for using it. But almost a quarter said they didn't know what pricing model their firm would prefer. The remaining 75 per cent were divided equally over which options to choose.

Daniel Ball, business development director at Wax Digital, told SM: "Purchasers believe employing an on-demand system will cost them less in its lifetime, but they are still not sure how to calculate this cost saving."

Buyers previously cited security as the main concern regarding on-demand (**News, 3 August**). Now systems integration, user uptake and customisation are considered more important.

Ball added that on-demand software allows everyone in the organisation to access it because it is web-based, but ERP was a better option for companies with a small, centralised purchasing department.

SMsep2006

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