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

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

2. Option Comparison

	1. In-House	2. Online / Software as a Service (SaaS)	3. Outsourced / Managed Service Provider (MSP)
Prerequisite	None	You will need an Internet connection - preferably DSL, T1 or cable	You will need an Internet connection - preferably DSL, T1 or cable
Cost Factors	Hardware
	Varies. You may only need a PC or you may need multiple PC's and multiple servers Backup power supply	To operate the software you will typically only need a PC with a web browser	Varies. You may need only a PC or you may need multiple PC's and multiple servers
	Software
	License and maintenance cost	None, see "services" below	Varies. Some MSPs will provide the software
	Labor
	Install, configure, test , train, monitor and maintain	Configure, test and train	Varies. Some or all labor may be done by the MSP
	Services
	Utilities for cooling and electricity	Monthly fees are typical	Monthly fee or annual contract
Anywhere Access	Possibly, if the computer is accessible via the Internet.	Yes	Possibly, depending on the MSP
Electronic Backup	You will be responsible for managing the backup	Possibly, depending on the MSP and the type of solution	Typically included
Reliability Show/Hide details Most hosts will specify the amount of uptime by giving a percentage of time like 99.9% uptime.	Depends on your environment, support and the solution. Hardware can be added for redundancy to increase reliability.	Depends on the solution and your Internet connection. Most will specify the amount of uptime in terms of percent of time like 99.9%. A high degree of hardware redundancy will typically be present.	Depends on your environment, the MSP and the solution
Security Show/Hide details How secure is the solution? Authentication, authorization and encryption are important features to ask about.	You handle all security	The Internet service provider is responsible for security	Varies. Some or all may be done by the MSP
Partner Business Risk Show/Hide details Smaller businesses can fold or be bought out. How much of your business is dependent on the solution? What are your alternatives if the product or service was to cease functioning? Will you be able to get a copy of your data in a timely manner?	You have maximum control	Since an Internet service may control vital aspects of your business, it is vitally important that you get to know your Internet service and have a backup plan. Does the Internet service have strong financial backing?	Since a MSP may control vital aspects of your business, it is vitally important that you get to know your MSP and have a backup plan.
Control	You have total control over the solution.	You have limited control. You may not have convenient access to all your data.	Depends on whether the MSP is running any parts of the solution in their data center
Support	You contact the software manufacturer for support.	You contact the Internet Service for support.	You contact the MSP or software manufacturer for support.
Technology Exposure Show/Hide details Each piece of technology for a solution poses a potential risk because all parts must work together. A common scenario, and source of potential problems, is when an upgrade is done to one piece which in turn prevents other pieces from working correctly.	You must maintain whatever technology pieces you implement.	You are not exposed to technology infrastructure issues directly, the Internet service handles all technology pieces	Depends on the MSP, you may be insulated from technology infrastructure issues.
Software Customization Show/Hide details Some software applications will allow changes to how the software operates and also allow changes on what data is stored. For example, a common change to an accounting application may be to add extra data to be stored on a purchase order. Customizations can be a mixed blessing because while they may help meet a business need, they can also make the software much more difficult to maintain because software upgrades may overwrite custom changes.	Varies by solution. You may have the ability to customize the software code and associated data.	Varies by solution. You may have the ability to customize the software code and associated data. Since users share the same software, there will typically be the ability to customize through configuration changes.	Varies by solution. You may have the ability to customize the software code and associated data.
Software Integration Capability Show/Hide details Do you need to integrate the solution with other software? Each application will have different integration capabilities and different formats.	Varies by solution	Varies by solution	Varies by solution
Hardware Upgrade to Increase Performance Show/Hide details If popularity or growth dictates the need for more processing power.	You will need to secure hardware and possibly migrate software.	The service provider will likely have a process in place to add more processing power.	The service provider will likely have a process in place to add more processing power.