The hidden costs of hosted solutions

It may seem that the service delivered by hosted systems are the same as those from cloud-based solutions and therefore that it is easy to compare the costs and risks associated with either type of solution.

As long as the solution is not running on-premises, you may think that all the costs and risks have been outsourced, but this is not necessarily the case.

Firstly you must establish exactly what the hosted solution includes; who purchases the hardware, operating system and database, which isn’t always obvious.
Secondly, you need to consider application software maintenance. Even if you have bought a licence for application software, you will not usually get automatic patches, let alone upgrades. Does the application software maintenance you buy include upgrades – that is all upgrades? Or may you at some stage be expected to pay extra to the application software provider to move to a new version. Don’t forget that even if you don’t want the content of the new version, you may find yourself on an unsupported version after a couple of years if you don’t upgrade.

Assuming you’ve sorted out who has bought the hardware, operating system and database and you have signed up to a complete application software maintenance agreement with the application software company, don’t think that all your questions are answered; there are many factors to consider.

The next issue is who will apply the patches as they are released and when? You may have included this within your hosting contract but make sure it is defined within the contract as to how often patches will be applied, for example, will they be applied within 24 hours of release or will they all be bundled up and applied once a month? Does the contract include the operating system, database and any other essential software patches?

Another point to consider about the application of patches is whether the provider is going to test the resultant patch application. After all, the chances are that your software mix is in some sense a unique combination of hardware, firmware, operating system and database. Another issue is time frame of patch application (and any testing undertaken) – if it happens during the working day can you expect any outage? If it happens outside the working day do you have to pay extra?

The third issue you need to consider is upgrades. How many upgrades can you expect during a year to the application software? Is the application of these upgrades included within the hosting agreement? What happens if the upgrade requires an upgrade to the underlying database software – who pays for that? What happens if an upgrade to the operating system is necessary, possibly resulting in an upgrade or change of hardware? What happens if the new version of the application software (or database) requires more disk space or memory – who pays for the new hardware and the time to order, install and test the new hardware, operating system and database environment?

So now that you’ve agreed all the issues with the hosting provider you may assume you have resolved all your costs and identified all your risks, but there is another area to consider; does your chosen application software solution require software on your PCs? Is it a client/server solution?

If so, are you sure all your user’s PC’s – including laptops for any mobile users or those who work from home at any time – have the right version of operating system and sufficient memory and disk space to run the client software? Also how is the client software to be loaded onto the user PCs and who is going to be responsible for any patches or upgrades required by them?

What happens when the application software requires the user pcs to be on a later version of operating software? Do you replace all your user PCs or undertake the process of upgrading them where possible?

We, as a supplier of cloud-based solutions, may seem prejudiced against hosted or on premise solution and certainly we can see how such solutions do address on the above issues. But sometimes the application software that is right for your business is not available as a cloud-based solution. We hope that in such circumstances, this article will provide you with some idea of the issues to be addressed.