from Anne Ku's article on ASP's

Boxes to ASP to the rescue

Box1: Selling and implementing third-party risk management and trading systems

Sales cycles typically range from 3 to 12 months, as the selection process can be informal (whereby selected vendors are asked to give a demo) or formal (whereby an RFI is followed by an RFP, and demonstrations.) Implementation periods can run from 6 to 18 months depending on the complexity and level of integration. Meta Group found an average implementation period of 7 months and an average system life of 3.3 years. The cost of implementation can easily be twice that of the upfront fee, although 5 times is not rare. The complexity depends on how well-defined your requirements are, number of interfaces, level of integration, complexity of your deals, and the range and extent of functionality. One decision maker said "such investments are never less than $100 million across the board." As a ballpark, a replacement of over 25 different applications for a full soup-to-nuts trading and risk management system, complete with power management (contracts and scheduling) expected to be completed under 2 years has a price tag of $5 million.

Source: Interviews with Meta Group, AMR Research, Deloitte & Touche LLP, and decision makers.

Box2: Five Important Criteria in Choosing a System

Client base: Does the vendor have a clientele similar to your company? Are they focussed on/through their other clients? (if so, it will be very difficult for newcomers to come in.) You don't want to have to teach the vendor.

Scaleability: the software needs to be able to grow with your transaction volume. Research groups such as Forrester and others report that software restrictions are among the main reasons for hindering growth.

Integration: How easy is it to integrate with other systems? Has it been done before?

Support: As markets evolve and new types of transactions are being invented, the software has to evolve with it. Don't just ask how well software meets your requirements today but how well they will meet in the future. If you're looking for enterprise-wide solutions or electricity trading, you will require 24 by 7 support.

Quality: What is the vendor's reputation for releasing software that works. Those quickest to evolve with the market release new upgrades fastest. But this is a double-edged sword. Users want it quickly but also want it to be well-tested, stable, and of high quality. Similarly, vendors have rigorously structured testing processes that they carry in-house before release. It is very costly to a trading organization to get software updates that either don't work or break something that worked before.

Source: Interview with Blake Pound, Partner, Accenture's Energy Practice, Houston