Hosted Applications vs. On Premise - What's the Difference?

Everyone loves a great rivalry: Coke vs. Pepsi, Lakers vs. Celtics, USC vs. Notre Dame, Domino’s vs. Pizza Hut and the list goes on.  A lot of America’s culture has been founded on rivalries just like these.  At the base of this is a common question, who or what is better and for what reason? The rivalries that I have mentioned are commonly known and everybody has their favorites, but one that has been under looked for years is the decision of whether to have your computer software hosted or having it on premise?  Before one can choose a side we have to distinguish the differences between the two.  Simply put, hosted applications run on a server that is managed by a valued partner and on-premise applications have the software on their site and take full responsibility for it. So which is better?  When it comes to choosing, most rivalries are pretty one sided.  Not many Lakers fans like the Celtics and vice-versa.  So let’s break down this match-up.  Well, I guess the first question you have to ask is do you like to rent or buy? With hosted applications extensive IT resources are not required.  The total cost of ownership can be significantly less than non-hosted solutions.  For disaster recovery, hosting company’s often provide routine backups and dedicated support people are usually not required to be on staff to troubleshoot problems if they arise. Perhaps the biggest advantage of on premise software is the ownership of it.  Companies have complete control over their critical business data.  Also, while on premise software requires a larger upfront investment, it delivers a greater return of investment over a sufficient period of time.  Plus, on premise removes all remote-connectivity issues, a critical consideration for a growing business. I know, I know, tough decision right!  Well, I guess that is what makes a good rivalry.  If everybody ate Domino’s than Pizza Hut wouldn’t exist and if everybody used on premise software than hosted applications would not be an option.  There will always be trade-offs, but the key is to understand which issues are most important for you and more importantly for your business.