What are the advantages of hosted business software?

One of the key advantages of using a hosted software service is the power of scalability. The more clients of a hosted service there are then the better each element of service should be. For instance, if a hosted service has 1,000 clients then they should have the resources to have specialists in each area of importance, i.e. firewall & security experts; database gurus; network & connectivity divas; operating system administrators. How many small businesses can actually afford specialists in any of these areas, looking after their service all of the time? Many businesses don’t even have one IT generalist looking after them full time.

Hosted services should also be located in data centres, with better and more redundant: connectivity; physical security; power supplies; onsite engineers & hardware spares; backups; network security & firewalls; cooling; fire protection. Can you supply all of this cost-effectively in your office building?

Then there are some key advantages with the pricing methodology used by most hosted services. First, that the monthly rental model that most use means that the capital costs and fixed overheads of your IT network are converted into variable overheads, only growing directly & proportionally when you expand your business and need more staff. Of course, you can also reduce your requirements & costs if needed too. This was very handy for a number of our clients during the first months of the recent recession.

Secondly, I believe that paying for your hosted service monthly actually gets you better support. If you are not tied in to a 2 year contract, then your hosted service provider will be fighting to keep you as a client every single month. I only have anecdotal evidence of this so far, but I think it would be interesting to see some research in this area.

Generally hosted services are also faster to set up. You don’t have to worry about buying servers, installing operating systems and adding the application. Within minutes of signing up online you have a live hosted service. You can then spend the effort and resources you’ve saved on customising and configuring it to suit your business.

What other advantages have I missed?

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