When choosing a new corporate application that multiple staff will be utilizing, you have the choice of whether to host it on your own equipment, or to place it in "the cloud" on somebody else's infrastructure. The differences between these two models are outlined below:
- All corporate applications have something you do on a computer, and something that is done on a server. The server resides somewhere besides your desk, and allows a company's various users to collaborate in that one application. The data for that application lives on the server, and the server decides who gets access to it.
- In a non-cloud system (ie. a "locally hosted system"), the server is located on your premises, or in a data center of your choosing, and managed by your own team. The benefits are more direct control of the equipment, but with an initial server purchase and setup cost, software license fees, and ongoing server maintenance costs borne by you. You also have to secure the server and its data, which becomes particularly important if the data contains personally identifiable information (PII).
- In a cloud-based system, the server is located (ie. hosted) in a data center owned or managed by the company with whom you are contracting for services (examples include Google, Dropbox, Quickbooks Online, Microsoft Office365, etc). A cloud-based system is generally simpler than a non-cloud system for your own IT team (ie. us) to implement and support, and allows you to add users quickly. The environment is secured by the company providing the service, although you have less visibility into the extent of their security/risk mitigation practices. You typically pay per user, sometimes with an initial setup fee depending on the application, but the billing model tends to be linear (price per user).
- If we are examining things purely from a price perspective, non-cloud system costs generally exceed cloud-based system costs for companies under 50 users looking at an investment window of less than 3-4 years. The economics change as you adjust the number of users or the investment horizon.