Hosted Software: SaaS vs Hosted

As more businesses move their internal IT structure to an external environment, the myriad choices in hosting can often be confusing. It is a virtual alphabet soup out there: IaaS, PaaS, SaaS, cloud, hosted. The list goes on. Today I wanted to touch on hosted software and two viable options available to businesses. Hosted software vs. Software as a Service or SaaS. While the two are ultimately similar to the end user, there are advantages and disadvantages to both models.

Hosted Software

Hosted Software is a model that most of us are familiar with. In the past, software was purchased and installed on a local computer or server. The license was good for a lifetime, with upgrades purchased on an annual basis if needed. The costs of the software were all upfront with the initial purchase.

Hosted software is more or less based on this model, but the main difference is where the software is installed. Instead of it being in a local location, i.e. your personal computer or server down the hall, it is installed on a server outside of the office and accessed via a virtual desktop.

The biggest advantage of this model is the mobile aspect. The software is accessible from any terminal or device with internet access, from any location. Additional advantages include a reduction of maintenance and upgrades, off site backups, scalability of server resources, and an overall reduction in IT costs.

The software license is still purchased upfront and owned by the end user or business.

Software as a Service

Software as a Service, often referred to as a SaaS model, differs from hosted software in two main areas. First is the software is rented on a monthly basis and charged per end user. The costs of this model are spread out over time, but can add up to being more than what a hosted software model could be. Monthly charges add up over time.

The second difference is where the software is hosted. Saas is hosted by the software developer, on their servers and accessed via a web browser interface. Again, this model does offer advantages of mobility, reduced maintenance, and scalability of server resources.

One big disadvantage is ownership of the data, as it is often stored with the vendor.


While both models offer the end user a very similar experience, there are some things to consider. The world of IT is changing at lightening speed and it is critical that decision makers are well informed and have consultants that can help guide them through the maze of technology options. Decisions made today, can have huge impacts on business flexibility down the road, even as short as a year from now.

In the end, choosing your service provider that has proven field experience is critical. Are you willing to put the future of your business in the hands of someone that knows nothing of your industry or has open their doors in the past year?