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Pros and Cons of Software Delivery Models: On-Premises, Hosted, and Cloud

by | Sep 3, 2014

Software Delivery Models Accounting SoftwareWhat is the first decision of the modern software purchaser, the decision that business owners need to make before they even start vetting vendors? As you begin to consider software solutions, the first decision you need to make is that of choosing either On-Premises, Hosted (Single-Tenant), or Cloud Computing (Multi-Tenant, SaaS).

Meet the Big Three

If you are considering a new financial management system, there’s one decision you can and should make early on. Which delivery model will provide the highest ROI for your organization? Choose wisely.

On-Premises Solutions

With this traditional model, you license software and run it on your own servers. When considering this model, be sure to account for the capital and operating expenses associated with deployment, operations, support, customization, integration, maintenance, and upgrades. While these costs can be too great for small and mid-sized organizations to sustain, on- premises solutions remain a viable option for some larger companies. These organizations often have a built-out IT infrastructure, investment capital, and expertise to support and maintain major software applications.

  • Application Development: Developed for the 1980s innovation of client/server, Windows-based computing.
  • Deployment: Installed on the customer’s own hardware.
  • Implementation: 3-6 Months.
  • Customization: Can be expensive and time- consuming. Risk of “dead-end” customizations that break when new versions of software are released
  • User Interface: Designed for Windows machines in a client/server environment, and not always optimized for ease of use and learning.
  • Upgrade Period: 12+ Months
  • Multi-Tenant (?): Not multi-tenant. Each instance of the application requires its own hardware/ software/networking environment.
  • Hardware Requirements: Requires a specific operating environment.
  • Accountability: Vendor is responsible for the software, IT department is responsible for operations.

Hosted Solutions (single tenant)

In a hosted environment, the software physically resides at a remote data center operated by an expert third-party hosting provider. Your team would usually use a product like Citrix to access the software over the Internet and see the screens being generated at the hosting provider. This model eliminates the responsibility of maintaining hardware infrastructure, and therefore can help you avoid large upfront capital expenditures. But it works by providing you with a unique “instance” of your financial system on a dedicated server. That means you would still face the same costs for customizations, upgrades, integration, and support and service.

  • Application Development: Runs on-premises software in a third-party data center and adds a layer for online delivery (e.g. Citrix).
  • Deployment: Installed on a third-party vendor’s hardware – delivered via an internet connection.
  • Implementation: Usually 3-6 months.
  • Customization: Same as on-premises.
  • User Interface: Same as on-premises, with an extra layer for presentation (e.g. Citrix).
  • Upgrade Period: Same as on-premises.
  • Multi-Tenant (?): Same as on-premises.
  • Hardware Requirements: Same as on-premises. Users typically limited to Windows only
  • Accountability: Hosting provider and software developer are two different organizations so accountability is complex. IT department is still responsible for operations.

Cloud Computing Solutions (multi-tenant).

Just like Google, Amazon, and online banking, cloud-based financial applications were built for the Internet age. Also known as “software as a service” (SaaS), these applications offer direct, always-on access to the solution, typically paid for on a per-user/per-month subscription basis. They are multi- tenant, which means you can unlock only your own data, but you work from a shared system—a single set of resources, application infrastructure, and database. There are no upfront fees, capital investments, or long-term commitments because you do not buy, license, or manage the underlying hardware, software, or networking infrastructure. Upgrades are performed at no cost to you. Even if you make extensive changes to the system, your customizations “roll over” to work with the new upgrade.

  • Application Development: Developed from the ground up for online delivery.
  • Deployment: A single vendor both develops and operates the applications – delivered via an internet connection.
  • Implementation: Usually 6-12 weeks
  • Customization: Clickable configurations replace costly customization and do not break with application upgrades.
  • User Interface: Designed from scratch for the Web environment, to match the paradigm users expect and are familiar with. Built from the ground up to be easy to use on multiple devices, with multiple operating systems
  • Upgrade Period: Generally quarterly
  • Multi-Tenant (?): Applications are designed to be multi-tenant.
  • Hardware Requirements: Delivered via a Web browser so generally operating system- and browser-agnostic.
  • Accountability: One vendor provides end-to- end solution so accountability is inherent.

What’s Right for You?

Choosing the right method of delivery is the most important decision, and you haven’t even looked at the software. Financial leaders today balance the need to manage an increasing level of business complexity with the need for speed.

This is why Intacct has released the 2015 Cloud Financial Management Software Buyer’s Guide, the step by step guide to purchasing your next software offering. In the Buyer’s Guide, you will learn more about choosing a financial platform, including:

  • More information on Software Delivery Models
  • “Is the Cloud Really Right for my Organization?”
  • Step-by-Step Guide to choosing a cloud provider
  • How to be an Informed Cloud Buyer
  • What to Look for in a Cloud SLA

Click to download the 2015 Cloud Financial Management Buyer’s Guide.

InCloud360 is a proud provider of Intacct Products to growing businesses across the Southeastern United States, including Florida, Georgia, Tennessee, and more. Learn more by reading through other information on our blog:

We also welcome you to call us and learn how you can select best-in-class financial management software Intacct.