Application Management Outsourcing (AMO)
Application Management Outsourcing (AMO) is the ongoing maintenance, management, conversion, enhancement and support of an application portfolio by an external company. AMO, a subset of application outsourcing (see separate entry), includes changes that generally take less than some predefined time to implement (e.g., 10 days or 30 days). Examples of maintenance include regulatory changes, software upgrades, new release installations and “fix it if it breaks” troubleshooting. AMO may involve the transfer of people and application software to the vendor.
Three provider-selection criteria need to be at the top of the list as buyers consider AMO providers over the next five years’ horizon: reliability, security, and flexibilty.
- Reliability: Buyers outsourcing their application management undertake a risk in selecting the provider – especially when the spectrum of applications outsourced includes mission-critical systems. “There is an amount of risk associated with keeping systems up,” states Marc Schwarz, Senior Vice President and leader of the Oracle. “Companies will need the ability to have a better risk profile of the providers they consider.”Buyers need to ensure the AMO provider has people with deep functional knowledge of the software product to provide the highest reliable service for customers’ software products and also to optimize the environment.
- Security: A key aspect of an AMO provider’s reliability is its ability to prevent security breaches and thus help its customers avoid having to pay severe penalties. This is especially true for organizations in the financial services and healthcare industries as well as government organizations. “Security is paramount, and buyers need to select an AMO provider that addresses this at the most intense level,” states Schwarz.
- Flexibility: While the AMO model in general gives buyers more business agility, there is a difference in the flexibility of various provider offerings as well as a difference in hosted or on-premise AMO. The ultimate flexibility resides with providers that allow a mix-and-match approach of application management no matter whether the application resides in the customer’s data center or the provider’s.
- Case study: Application Management Outsourcing ComputerWeekly