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SOFTWARE ON DEMAND

Here are a few things to think about before making the switch to a hosted service provider.

Back during the dot-com bubble, technology tradeshows were packed with Application Service Providers. Th e ASPs were proposing a bold new evolutionary step in the tech world: Rather than install soft ware locally on a computer, you could use your internet browser to use soft ware stored on far-flung servers. In eff ect, it’s the diff erence between loading Outlook on your PC and having all of your email stored on your hard drive—or using Hotmail. A few years ago, the idea didn’t quite catch on, either because the ASPs didn’t have mature products or clients didn’t understand (and didn’t trust) what they were being off ered.

Th at’s all changing, as hosted soft ware—known by a variety of names such as Soft ware-as-a-Service (SaaS), on-demand soft ware or webware—is making notable inroads. You can find SaaS applications for nearly every horizontal business function and tailored for many specific industry verticals. Research firm Gartner reports that the SaaS market reached $6.3 billion last year, and it’s forecasting growth to $19.3 billion by the end of 2011. Th e growth can be attributed to some true benefits to this new wave of on-demand software:

First, SaaS decreases the need for in-house IT resources— both hardware and people.

Second, implementing hosted soft ware is faster compared to on-site soft ware solutions.

Third, hosted soft ware providers oft en automatically upgrade their products to the most current level.

Fourth, because hosted soft ware is accessed with an internet browser, employees can easily use it remotely.

But, that doesn’t mean SaaS is a panacea or that all hosted software providers are the same. Before you make the switch, here are two questions to ask:

Is my data safe and secure?

Perhaps the biggest concern with hosted soft ware is that a company’s data will usually reside with the provider, which could be on the opposite side of the planet. Th e concern is not just hackers—a facility that warehouses many companies’ data is a bigger target than a single company’s databases—but also the prospect that the facility will face some sort of catastrophe like a flood or fire. At Infusion Soft ware, all data is stored in at least four separate locations and continuous backups mean that data can be restored within minutes. Mindbridge allows customers to keep the data behind their own firewall without having to manage it themselves.

Can I customize the application to fit my business?

Next to security, part of what stops businesses from adopting a hosted model is the concern that they won’t be able to tailor it to their own needs. Eric Berridge, cofounder of Bluewolf, says to look for Application Programming Interfaces that support industry standards such as SOAP, XML and AJAX. Customization with some SaaS providers is easier than others. Berridge recommends asking, “If I want to make changes, do I need someone with a computer science degree or can I point-and-click?” —Lee Gimpel

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