The perils of Hosted software
by Sarat Pediredla Under GeneralOne question we frequently get asked at hedgehog lab is, "Do you offer a hosted version of fixx?", to which my answer always is, "No, and we currently have no plans to do this although this might change eventually."
Just to be clear, when I refer to hosted software it refers exclusively to applications delivered over the web as a service or SaaS like Basecamp, Freshbooks, <fancy Web 2.0 app name here>."
Although I am a huge fan of many a good hosted applications (the 2 mentioned above being great examples), I am not entirely convinced of the apparently superior advantage this model has as opposed to installable software.
The advantages and benefits of the hosted model have been covered almost everywhere else, so I won't get into them. What I would like to cover is what we see as our basis for choosing an installable model and why we feel that hosted software comes with it's own perils.
Cost
An often used "benefit" by those selling hosted software is that it is cheaper in comparison to installable software. This is true in most cases but definitely not universal.
But what about the cost of installing, maintaining and administering your installable software? The problem here lies in the fact that historically, most installable software was designed with little thought given to the pains of those managing the systems. For example, our bug tracking system takes a little under 15 minutes on average to install, set-up and run with the default configuration. The last time I signed up for Salesforce, it took me the better part of an hour to sign-up and configure the system for use.
Essentially the problem here is not whether the software is installed or hosted, but the complexity of the system, out-dated pricing models and the user experience it delivers.
Vendor lock-in
I actually disagree with the base argument against reliability of hosted software, that the data is in-secure or the technical infrastructure is unreliable. The reliability I refer to is the reliance of a business on a hosted software for business critical applications. Could you continue business if they suddenly decided to discontinue the product or went out of business?
The well-covered recent story of Sandy and the mixed responses are a great example of how let down people can feel when something they have come to rely on discontinues. If the application was installed, I am sure many people would feel disappointed too, but at least continue using the functionality that is vital to their everyday use.
Another example is of the excellent and now-defunct Zimki, which was shut down last year.
Lack of choice
The primary lack of choice in hosted software is that you don't have any control over when and what features change. Because the system is common for everyone, you have to live with the least common denominator that tries to cater for everybody.
A great example (although not exactly in the domain), is the recent SearchWiki, which was criticised for some shortcomings. Another example is the Facebook News Feed and Facebook beacon.
Following the herd
The biggest problem with hosted software is any lack of real differentiation in the hundreds of web-based project management, CRM, and time tracking clones. The functionality difference between systems is negligible and what really differentiates them is not exclusively to hosted software.
Great support, user-friendliness and listening to customers is not exclusive to just hosted software.
A few years ago, you were one of the elite if you were a hosted service. Today, you are more likely to be in a less crowded market if you are selling installable software that delivers real value.
Having said that, I would not write off hosted software completely given choice available and the ease of use of most systems. I would just advise caution when considering your business model as a supplier and the platforms you choose to use as a consumer.