Managing Conventional Software

When to use conventional software vs. hosted applications

For this comparison, a hosted application refers to software only accessible via a web browser, which doesn't require anything installed on a computer, apart from possibly a browser extension. Such software will generally be paid for on a subscription basis, and are commonly referred to as "cloud applications".

True hosted applications can run entirely within a web browser, such as Google Chrome, Mozilla Firefox, Apple Safari, Microsoft Edge, and, in fewer cases as it becomes obsolete, Microsoft Internet Explorer. The most well-known examples are the Google apps (Docs and Sheets), Salesforce.com, QuickBooks Online, Oracle NetSuite, and custom-designed applications built in Quick Base; e-mail applications such as Gmail in Chrome, Outlook.com, and Exchange Online using Outlook Web Access; and file storage systems such as Apple iCloud, Google Drive, and Microsoft OneDrive.

By running within a web browser, hosted applications are the easiest to deploy. Any user can get on any computer of any kind (Windows, Mac, or Chromebook), type the web address of the application, log in, and get going. In most cases, initial license fees, as well as hardware costs and service fees for your IT provider, will be drastically lower.

However, here are some drawbacks of hosted applications:

• Less functionality and performance. The modern web browser supports interactive applications manipulating data quite well. However, browser-based applications still cannot match the performance and capability of conventional software running directly on a workstation. This applies both to performance and number of features. For desktop publishing, engineering design, high-powered video editing, and other such creative software, conventional software deployment is a no-brainer. Even for basic applications such as e-mail, word processing, and spreadsheets, businesses continue to pay hundreds of dollars per copy to install conventional Microsoft Office on the desktop, rather than use free browser-based Outlook Web Access, Google apps, or Microsoft Office Online, because of the superior user experience the desktop edition provides.
• Less control over functionality. A hosted application is prone to change at any time, outside the control of you or your IT manager, when your hosted application provider decides to implement upgrades or new features, or makes interface changes they believe their users want. This can be disruptive, especially if your users are less sophisticated or less resilient to change. This can cause your IT manager to get an unexpected and unwelcome barrage of calls for support and retraining. Less frequently, an application provider might remove features it doesn't want to support any more, which can be disruptive if your users relied on those features.
• Possibly lower value for the dollar, over time. Hosted applications are subscription-based, meaning the value over time can be less than perpetually licensed conventional software, especially if your company has basic requirements and doesn't need the latest features right away.
• Less control over diagnostics and user support. If there is a problem, you must rely on the application provider's technical support to fix it, especially if you thought you could get rid of your IT manager because you use only hosted applications. With conventional software on your own systems, your IT manager can access, monitor, and adjust all aspects of it—managing and diagnosing the server hardware and software, fixing problems with the underlying database, configuring and testing workstations to solve problems, and handling users and their training requirements.
• New security challenges. Compared to storing your data on your own IT system, confidentiality and integrity in hosted applications may be more difficult to maintain. If you subscribe to an application provider with millions of customers, that provider will be constantly under attack from pirates looking to break in and steal data. The larger providers, due to their scale, tend to have the resources to implement top-of-the-line technological and procedural controls, but, if you follow the news, many of the largest companies have suffered breaches anyway. Smaller fledgling providers may cut corners, putting your data at risk. And, finally, even if the provider's systems are more secure than your in-house IT systems ever were, any error on your part in managing your users' access can render your data accessible to anyone in the world who is poking around looking for it. An in-house application would expose such insecure user accounts only to your own users or partners, and even if your systems are accessible through the Internet, your system, with the data and e-mail for just your company, does not garner the same level of attention from criminals as the large hosted applications that can expose data for millions of users with one successful breach.
• Less control over your data backup strategy. Most hosted application providers offer limited liability for the availability of your data. Meaning, if they have an incident that wipes out your data, you may be out of luck. Frankly, it is exceedingly rare for a hosted application provider to simply lose your data. More common is a problem with the data being corrupted, overwritten, or deleted accidentally by one of your users. With conventional software, you have the capability to make archived backups in a rotation, to be able to restore your data to a given point-in-time, which you will set up based on how much storage space you have for your backups, how often the data changes, how long it takes to make backups, and how much of the most recent data you can rebuild in case of deletion or corruption. Hosted applications typically offer none of this, unless you purchase add-ons or backup services from a third-party providers that can pull your data and store archives in the cloud. If this is available, it will expand the footprint of data you need to protect from confidentiality breaches, and increase the cost to use and maintain your application. If not, you may find the only option is to occasionally download your data to your own systems, creating tedious extra work and requiring onsite storage space, negating some of the advantages of using hosted applications.

To decide whether to go conventional or hosted, every application should be assessed on a case-by-case basis before deployment, and then re-assessed every so often. You must consider the nature of the applications (individually and overall), your users, your existing equipment, your data, and your requirements. Here are some more specifics:

• A hosted application provides greater value if it's a stand-alone application; that is, you have no need to share its data with your conventional databases or other hosted applications.
• Consider database size. A very large database may call for conventional storage if your hosting provider charges a lot for storage, or it may call for hosting if you do not have enough secure and reliable storage on site and the hosting provider's rates are reasonable.
• Consider your users and your equipment. A company with users who all work on Windows-based desktops wired to the network in the same building is quite different from one with users dispersed geographically, working from home or on the road, with a mix of Windows computers, MacBooks, and iOS, Android, and Windows-based mobile devices.

When to choose perpetual licensing vs. subscriptions for conventional software

All hosted software is subscription based, but not all subscription software is hosted. Prominent examples of conventional software sold by subscription include the Office 365 Business subscription from Microsoft (which provides the desktop editions of Microsoft Outlook, Word, Excel, and PowerPoint), Adobe Creative Suite (including Photoshop, Illustrator, InDesign, etc.), PDF publishing software such as Foxit PhantomPDF, and remote support software such as VNC Connect Enterprise by RealVNC. With these, the software is downloaded to your users' computers, installed the same as if you purchased the software at retail, but licensed for use only so long as your subscription is current.

Recall that perpetual licensing is a one-time purchase of a software license; you can use it forever, but it does not come with version upgrades. Subscription-based licensing is paid monthly or annually; you get upgrades to the latest version and features when they are released, but you can use the software only so long as you continue paying. As an incentive to sign up for subscriptions (which publishers prefer), subscriptions often include add-ons, such as online (cloud) storage, or additional features not available in the retail perpetual edition.

So, the primary factors in choosing perpetual vs. subscription are:

1. Your expected upgrade tempo.
2. The cost of purchase vs. subscription.
3. Whether software is for a project or continuous operational use.

Upgrade tempo. If the software in question isn't used to interact directly with other partners or customers, you may find that your users are perfectly fine using a given version of software for many years, without requiring an upgrade. But, if your users frequently share files created with office or desktop publishing applications outside the organization, then using older versions might cause problems when outsiders send documents that your older applications can't open. This would also apply if your users share within the organization, but your business has been growing steadily, and you find that half your users have old versions, while the more recent users, who acquired their computers and software more recently, have new versions, causing similar problems sharing files.

Cost. This is easy to calculate. Look at the price for the perpetual purchase, and the price for the subscription, and figure out how long before the price paid for your subscription matches the perpetual license. It might be as little as two years, or up to three. After that, consider the fact that you must pay forever for the software if your users will ever need it in the future, unless you cancel it, and then deal with reprovisioning if they need it again. Also consider the value of the free upgrades that come with any software subscription, and how valuable it is to your business to have the latest features and/or just to have everyone on the same version, as described above. Apart from all that, publishers often offer features in the subscription edition that are stripped in the retail edition, such as greater flexibility for installing on different devices (Windows vs. Mac vs. tablets), access to online storage during the subscription period, and other features that wouldn't seem to be related to subscriptions. So, it's not a completely simple mathematical computation, but if you can assign a dollar value to these other considerations, you can make it more so.

Projects. If you are licensing software for a project (which, by definition, is temporary), or for employees that are hired for a short time, then it may make sense to purchase a subscription even if the other two considerations above indicate perpetual.

Another consideration, frankly, is how organized you are. One of the many reasons publishers love pushing subscriptions is because it is so easy for businesses to lose track of the fact the software has become disused, but not cancel the auto-renewal on their subscriptions (or, worse, their accounts payable department renews subscriptions once the renewal notice comes in, without verifying it's in use). If this could happen to you, consider engaging J.D. Fox Micro to support your business, of course, if you already haven't, so we can keep track of all this for you. Or, consider purchasing perpetual licenses so you can, as many of our clients have said, "just get it out of the way" and not worry about it any more.