Application hosting is pretty popular these days, and a lot of that popularity can be attributed to the proliferation of web-based and SaaS solutions that have clearly revealed the benefits of mobility and managed service. Not everyone wants to or can use a web-based application, however, causing demand for hosting of desktop applications to grow. Take a look at what’s going on with Intuit QuickBooks, for example. With all the push to QuickBooks Online, Intuit has created a surge in the demand for hosted QuickBooks desktop editions. Folks want their QuickBooks available for remote access and to support multiple users from different locations… but they also want to continue to use the feature-rich QuickBooks desktop products their businesses rely on. Hosting lets them have their cake and eat it, too. It’s the best of both worlds.
Back in 2000, there were a few in the tech industry that said the desktop would be dead soon. Business users wouldn’t be sitting down to work at computers, they would be using various devices to access their applications and data, from anywhere. Those early visionaries recognized that mobility was the coming thing, and that even the smallest of businesses would need what was at the time enterprise-class technology. I wasn’t so sure about the potential death of the desktop and the beloved applications businesses love to use, but I was pretty certain that “working online” with centrally-managed systems was the thing to work toward.
A lot of hosting companies started up at that time, and a lot of them went out of business just a few years later – some in virtual flames. Customers lost time, productivity, and in some cases their data. Investors lost their investments. It wasn’t that the service providers weren’t doing a good job, or that the technology wasn’t quite up to the task – the problem was the hype and the money. Too many people sat on the sales-side of the technology, making promises they couldn’t deliver and coming up short in meeting investor and customer demands.
Quite a number of years have gone by, and the market is still rife with promises unkept and solutions undelivered. But some of us in the industry have learned a lot over the years, so I’d like to share some of that learning.
Application hosting services gained popularity because they solved some major problems for businesses and their collaborators (including accountants, bookkeepers, remote workers, etc.).
Hosted application services allow everyone to work on the same software and data, regardless of where the user is located. Hosted application services provide centralized access for businesses with multiple locations or mobile workers. And hosted application services make it easier for contracted or engaged professionals like accountants and bookkeepers to work closer with their clients.
In the beginning, when we were just launching these hosting services, the equipment, facilities and expansive engineering labor requirements were really expensive so there was tremendous pressure to find ways to keep costs down. For customers, the plan was to pack as many users into the environment as possible, with volume representing a way to get a lower per-user cost. This concept paved the way for the accountant cloud server model, where it was suggested that an accounting firm could bring all their clients onto the cloud server to help keep the costs down. For a while that model worked pretty well, but then some issues started to be revealed.
With small business application hosting, particularly when dealing with QuickBooks, it should be recognized that nobody uses just QuickBooks.
There’s almost always a plug-in or add-on or some other solution that is also required with QuickBooks. Taking payments in QuickBooks requires a 3rd party plugin if you aren’t going to use Intuit payment solutions. Downloading payroll data from another service may also require a plugin, as does the tax add-on and the order sync tool and the solution that integrates orders from the website or via EDI from vendors or suppliers. It is almost never just QuickBooks. When a provider tries to pack all that customization into a single server and serve a whole lot of different business, each with their own needs – things go a bit sideways. Servers hang, customer applications interfere with one another, and data gets compromised.
The next phase then was either VDI or dedicated service. VDI was and continues to be too expensive and complex when you have to factor in database engines, shared storage and such. Dedicated service (server) is a bit more straightforward and still has some economy of scale. With this model, each customer gets what they need. They’re still in a cloud-hosted environment so collaboration isn’t a problem, and every customer has the benefit of working with exactly the software solutions they need for their particular business. The challenge is serving just a few users. Even though cloud servers can be relatively affordable to get these days, it may still be too costly for one- or two-user situations. (Note that these are the folks that often find themselves compelled to try the online, web version of an application simply due to cost.)
The customized cloud delivery is the right concept, but many service providers still have problems supporting multiple applications for customers and often charge quite a bit extra while delivering a marginal level of service. You may find a provider who will try to deliver any application for you (and many will do that poorly) or you may find a popular provider that can only offer a particular set of applications for hosting. If the provider isn’t able to deliver the applications the business needs, or if they are unable to deliver custom or personalized service, then they are likely not the right provider for the business.
The emergence of public cloud services like AWS should make it easier for small businesses to get affordable computing power and customized cloud service from any IT provider, but it hasn’t yet.
The public cloud is still far too complicated for most small businesses to navigate or even get started with. Truthfully, it is difficult for many IT resellers and partners to navigate, too. Getting started is potentially costly in terms of time and resources especially for service providers, so those costs and complications end up reaching through to the customer. The public cloud just isn’t ready for the average small business to take advantage of directly, so on-premises servers or managed cloud server hosting are still the most viable options.
A big wrinkle in the whole hosted online application model is that many businesses don’t really need or want to completely outsource their IT to a cloud provider.
Considerations relating to privacy and proximity are paramount for many business owners, not to mention the trust factor. Lawyers, accounts, manufacturers… business owners in any industry may be uncomfortable considering moving their systems and information out of their immediate control. There could be regulatory concerns or logistical challenges, or it could be something as simple as realizing that there remain applications or data on computers on-premises that make an outsourced hosting approach more complicated and costly while delivering only a partial solution. Whatever the reasons, there remains a lot of in-house IT and that’s OK.
There is no doubt that business owners and their team members need and want mobility and secure remote access. They also want to work with the IT providers they trust and maybe they even want to continue working from servers they have already contracted for or purchased. Others may wish to leverage cloud platforms, but remain closely associated with their IT providers.
Forcing a business owner to migrate their systems to a hosting platform when all they really want is remote access or multi-user service seems a bit like overkill.
Granted, there are many benefits to be derived from outsourcing IT management and administration, like improved focus on the business, and various business processes and workflows could be more streamlined with a centrally-managed and fully accessible solution. Yet those benefits are the intangibles that businesses must discover after-the-fact, and are achieved only if the business works specifically towards those goals. In short, it isn’t necessarily what business owners are buying.
If we have learned nothing else over the years it is that things don’t move as quickly as we’d like them to.
The world never seems to end before your homework is due.
Software-as-a-Service hasn’t completely killed off desktop software, and smartphones and tablets haven’t ended the useful life of the desktop computer. What they have done is fully expose the desire and need for mobility and access, and have opened the doors for tools to address those needs better than the other approaches previously available.
Make Sense?
J
published on Sleeter.com blog, now Accountex Report, January 22, 2013. This is an oldie but a goodie… perhaps more relevant now than ever.
Make Sense?
No retailer wants to become the next Target (pun intended). Payment card fraud costs businesses and consumers billions of dollars every year. What’s even more frightening, many of the breaches in the news are the result of innocent participants inadvertently granting access to the bad guys. The Target breach in 2013 exposed the data of 110 million payment cards. Hackers got into the network using perfectly good credentials of the HVAC company. Sometimes password security just isn’t enough, which might bring in to question the security of all those SaaS subscriptions and online shopping sites folks use these days.
In today’s business world, risk, uncertainty and volatility are just par for the course – everyday realities of simply being in business. Nothing is certain, they say, except death and taxes. Yet there is a fine art to driving profitable growth in a business, and adapting to existing and emerging risk takes a great deal of experience, information and agility. While planning and process development may occur at many levels within the organization, it is the FP&A (financial planning and analysis) capability which helps top performing businesses be top performers.
Cooper Mann Consulting 