How to Run Your Software? In-House vs. Online vs. Outsourced

Author: TechShortcut Staff | Article updated: October 20, 2009

1. Overview

Of all the articles on this site, this is perhaps the most fundamental because it concerns one the most common decisions businesses face when evaluating technology solutions. Solution options have virtually doubled because there is usually an Internet-based application for each type of traditional/in-house solution. While all the choices can be difficult to navigate, these options allow businesses more flexibility than ever before to meet business needs.

Below are the most common options for implementing a solution.

Solution Implementation Options

Options	Description
1. In-House / Traditional	Traditional or in-house implementation means that you install the software on your computers and perform any configuration, maintenance, upgrading and user support. For web-based solutions, you may be renting a server. Example: You install backup software on your computer.
2. Online / Software as a Service (SaaS)	Applications available through the Internet can be referred to as Software as a Service (SaaS), Internet services, on-demand applications, web applications, online applications or even "cloud" applications. In the recent past, an Application Service Provider (ASP) meant that an IT firm would host and manage an off-the-shelf application for a company. Since software applications were typically built to be used by only one company at a time, each company would have it's own location on the ASPs hardware to install and run it's software. A fundamental shift has occurred now because Internet applications are built as multitenant applications. Multitenancy usually means that all users share the same application software and only the customer data is separated. A multitenant application means that you never have to worry about software upgrades because all users are be upgraded simultaneously. Example: You sign up with an Internet service to perform data backups.
3. Outsourced / Managed Service	Outsourcing firms are typically called "Managed Service Providers" or MSPs. With a managed service, some aspect of your technology solutions or infrastructure is outsourced to an external information technology (IT) firm. You may outsource all or part of the effort needed to manage a solution which may include installation, configuration, training, maintenance and support. The IT firm may run the software in it's data center or the solution may run on hardware in your environment and be managed remotely by the IT firm through the Internet. You can outsource business applications, network management, website management, backups and security. The MSP may in turn outsource some aspects of its operation to other managed service providers or application service providers. Example: You contract with an IT firm to manage backups for your entire network.

Options

Description

1. In-House / Traditional

Traditional or in-house implementation means that you install the software on your computers and perform any configuration, maintenance, upgrading and user support. For web-based solutions, you may be renting a server.

Example:

You install backup software on your computer.

2. Online / Software as a Service (SaaS)

Applications available through the Internet can be referred to as Software as a Service (SaaS), Internet services, on-demand applications, web applications, online applications or even "cloud" applications.

In the recent past, an Application Service Provider (ASP) meant that an IT firm would host and manage an off-the-shelf application for a company. Since software applications were typically built to be used by only one company at a time, each company would have it's own location on the ASPs hardware to install and run it's software.

A fundamental shift has occurred now because Internet applications are built as multitenant applications. Multitenancy usually means that all users share the same application software and only the customer data is separated. A multitenant application means that you never have to worry about software upgrades because all users are be upgraded simultaneously.

Example:

You sign up with an Internet service to perform data backups.

3. Outsourced / Managed Service

Outsourcing firms are typically called "Managed Service Providers" or MSPs. With a managed service, some aspect of your technology solutions or infrastructure is outsourced to an external information technology (IT) firm. You may outsource all or part of the effort needed to manage a solution which may include installation, configuration, training, maintenance and support. The IT firm may run the software in it's data center or the solution may run on hardware in your environment and be managed remotely by the IT firm through the Internet. You can outsource business applications, network management, website management, backups and security. The MSP may in turn outsource some aspects of its operation to other managed service providers or application service providers.

Example:

You contract with an IT firm to manage backups for your entire network.

What is the Difference between "Online" and "Outsourced"?

In general, online application firms focus on providing a specific application solution. With MSPs, the focus is to manage some or all of a company's IT operations as more of an IT partner. The term "management" is the key. As Internet services gain in popularity, expect MSPs to also help manage any Internet Services you use just as it would for other pieces of your technology. At the same time, expect SaaS providers to add more applications and more built-in management capabilities. Suffice it to say that MSPs potentially offer a more independent and customer centric approach to managing all or part of your IT needs. Another differentiator is the fact that many MSPs will perform work directly within your in-house IT infrastructure.

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