Technology 101: What is Hosted Software?

For any business, costs need to be constantly monitored in order to identify where savings can be made. This goes for hardware as well as software. And with the various ways to deploy applications today, it’s important to understand the benefits of the different options available. In this edition of Technology 101 we’ll be discussing Hosted Software, its benefits and pitfalls.

Hosted software: A simple overview

When looking at introducing software into the business, we increasingly need to make a choice around deployment options. Do we want to install it on premise, host it remotely or in the cloud?

Hosted software means having your software installed in a datacentre, providing online access to the application. It differs from Software-as-a-Service (SaaS) as it is essentially an owned and licensed product, whereas SaaS just provides rented access to the software, in a Pay-As-You-Go model.

Cloud hosting, on the other hand, is a variation on the remotely hosted scenario where the software is hosted in a virtual server environment. Cloud hosting allows for the kind of rapid scaling that many growing organisations need as they adapt to increasing demand.

How hosted software works

As with on premise software, hosted applications are purchased outright under licence. Once licensed, the ongoing costs for hosted software are then typically part of a commercial model with the software vendor or a Value Added Reseller (VAR) managing ongoing maintenance and hosting.
The maintenance fees you pay for hosted software will typically cover things such as bug fixes and new version updates. You would however also need to factor in installation fees, potentially a provisioning fee from the hosting centre as well as a monthly charge for the hosting solution.

The strengths of hosted software

As with any IT solution, there will always be pros and cons to weigh up before making a decision. The drawbacks will vary depending on your exact requirements and the unique commercial challenges that you’re trying to overcome – but these are some of the tangible strengths of hosted software to consider:

  1. Robustness and reliability
    The majority of hosted services will come with clearly defined service level agreements, outlining exactly what to expect in terms of reliability. The hosting centre will have a clear focus on security, redundancy and disaster recovery. This places the responsibility of uptime and performance on the hosting provider, rather than you as a customer.
  2. Full maintenance
    Having a hosted solution with a maintenance contract can save your business a great deal of time and money. By freeing up more internal resources, your organisation can make optimal use of the technology and help support the bottom line.
  3. Software ownership
    Hosted software gives you ownership of the application. This can be beneficial in terms of cash flow predictability for the business, as the only ongoing spend would be to cover maintenance and support. However, even without the maintenance, you would still be able to continue using the current version you are on.

When is hosted software not ideal?

Hosted software will not be right for every business. There will be scenarios where the hosted model is not as favourable as keeping the software in-house – particularly where the ongoing maintenance cost is considerably higher in the long run.

One issue to consider is that hosted applications rely on a solid internet connection, as well as sufficient bandwidth to make use of the full service. This can make the business vulnerable to disruptions.

There could also be challenges in terms of integration with other software solutions, particularly where these are business-critical. Local applications may not always be able to integrate in real time with hosted software.

Get the right partner

Whether or not your organisation is suitable for hosted software will depend largely on how your business operates and what your IT infrastructure looks like. If you want to maintain full control of all applications, their dedicated servers and integrations, then on premise software may be the best option. However, many companies that are less mature in an IT sense can benefit from having access to first-rate managed services for their software applications through a remote hosting package.

Thanks to our expertise in application management, support and hosting, we have supported a wide range of businesses with their software strategy and implementation. Through a genuine partnership, we can help to leverage your software investment in order get the best possible value from it.