MIS 301 Chapter Notes - Chapter 10: Service-Level Agreement, Application Service Provider, Copyright Infringement

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Chapter : “oftware i Flu: Partl Cloud ad “oeties Free
1. Marginal costs of software = 0 (essentially)
a. Marginal costs = the cost of producing one more unit of a product
b. Duplication costs are the only marginal costs associated with software
2. Open source software: free software that anyone can look at and potentially modify
a. OSS = a threat (how do you compete with free?)
b. Free financially and openly shared
i. Anyone can look at the source code, change it and redistribute it
c. Many companies hire employees to write OSS
i. COST: saves millions a year for companies using open source
ii. Reliability: with more people looking at the program code, the greater the
likelihood that an error will be caught and corrected
iii. Security: by allowing many people to view the code, the security vulnerabilities
come to light more quickly
iv. Scalability: allows a company to handle increasing workloads with the same
1. Many forms of OSS can be migrated to more powerful hardware
v. Agility and time to market: vendors who use OSS can skip many segments of
the software development process new products reach the market faster
e. Example of OSS: Firefox, MySQL, Open Office
f. How to make money from OSS:
i. Offer selling support and consulting services
3. Cloud computing: replacing computing resources with services provided over the internet
a. Software as a Service (SaaS): he users aess a edor’s softare oer the iteret
i. You do’t eed to o the progra; third-party vendor
ii. Also known as application service provider or hosted software vendor
iii. Money comes from advertisements or monthly subscriptions
iv. Benefits for clients:
1. Cost-efficient: forgo large up-front costs and IT support
2. Lessens risks that come with large capital investments; SaaS = variable
3. Highly scalableadaptable to wide variances
4. Service level agreement (SLA): a negotiated agreement between the
customer and vendor that specifies levels of availability, serviceability,
performance, operations, etc.
5. Higher quality and service levels
v. Benefits for vendors:
1. Only one version of the software for different OSes
2. More attued to ustoer’s eeds eause the ru the ustoer’s
systems on their own hardware (tighter feedback loop)
3. Ability to fix bugs for all users
4. Less distribution costs and capacity: go directly to customers
5. Reduce software piracy
vi. Concerns:
1. Large dependence on SaaS vendor (all eggs in one basket)
2. SaaS attracts a lot of start-ups unlikely to survive
3. Those choosing to go with SaaS might have to adopt new versions
instead of sticking with the old training costs
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