Are Hosted Applications a Wise Investment?

With lower costs and higher levels of versatility, fee-based software subscriptions can be a great alternative to traditional IT solutions.

By Chris Zawacki

Opinions expressed by Entrepreneur contributors are their own.

Hosted applications have become part of every small-business owner's potential arsenal in providing critical functions to his businesses. They're not hardware components of your existing network infrastructure that are simply moved to an external facility and hosted there, but rather a hosted software application that offers mass access via the internet for a subscription-based fee.

Increasingly, hosted applications have attracted interest as growing numbers of business owners look for alternatives to committing their own time and internal resources to constructing critical solutions. Examples include hosted e-mail and hosted customer relationship management. Widespread consumer access to high-speed internet service and the general consensus on providers' security protocols have created vast opportunities for all parties.

The advantages are many. Using hosted applications, your employees need only an internet connection to work from any location. Moreover, they can access the same interface and information they can at the office, staying totally productive no matter their location. Additionally, in most cases you'll have the ability to allow third parties permission-based access from anywhere. Hosted providers are trained experts in their fields, so you can expect greater uptime, performance and product support as compared to having an application hosted locally in your office. And lastly, because there's no infrastructure or software required in your office, the financial hurdles are low. You simply begin paying the service provider, usually on a monthly basis.

There are limitations to consider. In being unable get your hands on these solutions and make changes yourself, you'll have to rely solely on the providers' support levels; as a result, you will lose some control. It's also harder to switch solutions. Porting data from one hosted provider to another is possible, but it can be time-consuming, costly and frustrating. And in a worst-case scenario, you run the risk of a service provider going out of business.

But make no mistake: Hosted applications have become an immensely valuable option within the small-business landscape. Owners would do well to take stock of their operations and consider hosting as an alternative. There are a few things to consider first:

  • Understand the process of getting your data in and out of a hosted solution. Ask the provider how that process works. Play the worst-case scenario game and learn how to move your critical data away from a provider if necessary.
  • Do your research as if you had an investment in the hosted provider. How long have they been in business? Are they financially stable? What are their levels of service?
  • Clearly define the compatibility between their product offerings and your business needs. Ensure that your business size and type fit the provider's target market and that you're not deploying some scaled-down version of its mainstream product.
  • Educate yourself through other consumers. Read customer reviews and talk to business owners with experience using the hosted application.

The financial investment, in addition to the time it takes to implement a solution and train your employees, is significant but often highly worthwhile. So do your homework.

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Chris Zawacki is a founding Partner of Greenhouse IT. Greenhouse IT provides unlimited support of workstations, servers and networks to Manhattan-based small businesses for a fixed monthly fee. And, as an environmentally friendly company, they work to meet green technology standards for clients when possible.

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