Home

We believe that hosted services are superior to installed software. This document discusses the issues involved in comparing the two types of products. If you're considering installed software, here are a number of factors to consider.

• You Get More
  When you purchase a subscription to a hosted service, you get more than just software. You're purchasing access to a highly available, secure, reliable web service. All you have to do is login and use the service. You're free to spend your efforts on education -- not struggling with technology.
  
  With installed software, you're responsible for the daily operation of your software. Installation, maintenance, security, backups, etc. are your responsibility.
  
  
• Low Initial Costs
  Hosted services charge an annual subscription fee, without a large initial committment. School districts won't have to float a bond to pay for hosted services.
  
  With installed software, the initial investment is quite high. This includes software, but also the hardware, training, installation, etc. Typically the ongoing costs are 15-20% yearly maintence on the software plus hidden costs of maintaining the system (installing security patches, performing backup, monitoring the application for uptime, monitoring for security intrusions, etc).
  
  
• Easy Purchase Decision
  Since the initial subscription fee for a hosted service is relatively low, it's a low risk decision. If the service doesn't work out (for whatever reason), you can always switch to another service or software package the following year. There's no large sunk cost that prevents a change of vendor.
  
  With installed software, you need to be absolutely correct when making the initial decision. Once the funds are spent, the political reality is that you're stuck with the system. It's often impossible to "go back to the well" to fund another purchase (regardless of how badly the software implementation progresses).
  
  
• Hosted Services are More Trustable
  Following similar logic, hosted service vendors need to earn their subscription fees every year -- and need high renewal rates for prosperity. They have a strong business incentive to set realistic expectations during the sales cycle, provide great customer support after the sale, and deliver high levels of customer satisfaction. The ethics of "taking care of your customer" and profit motive are strongly aligned.
  
  With installed software, a large portion of total revenue is earned from the initial sale. There is a strong incentive for the sales force to "get the deal." While most businesses behave honestly, this fundamental conflict between business ethics and profit motive can cause mischief. Another consequence for installed software support organizations is that they are managed as cost centers. As a result they are starved for resources -- resulting in long customer wait times and poor staff knowledge once you do get through.
  
  
• High Availability
  For hosted services, high availability is an important concern. If parents are unable to use the service, it creates a unfavorable perception of the district's professionalism. Downtime is more costly than if only employees access the system.
  
  High availability is also an absolute necessity for a hosted services company. If their service is unreliable, they'll be out of business. Thankfully, the availability goals of the vendor and district are aligned (both need high availability). Historically TeacherEase/SchoolInsight has achieved 99.9% availability.
  
  High availability is a challenging technical goal and requires great expense and expertise to implement. Typical IT deparments don't have the resources to implement a fully-redundant high availability system. When an IT department installs software, its availability is typically similar to email server or network drive. This is typically not sufficient for mission critical systems like a gradebook or student management system. So a major consideration with installed software is, "Can we afford downtime on our expensive system?" How would parents react if it were down as often as our email or printers?
  
  
• High Security
  Web-based services put confidential information on the Internet. A single security breach has significant legal consequences. Gradebook and student management data is an attractive target and needs to be actively protected. Securing a web-based service is a much larger security problem than securing the district's public web site.
  
  With hosted services, you have the advantage of a professional technology company managing security. The hosted service vendor has the incentive to develop deep and expensive network security expertise. They implement high security techniques like restrictive firewalls, server hardening, access restriction, intrusion detection, etc. They also have employee processes and policies designed to safeguard user data. Even more than availability, the vendor needs to deliver security to continue in business. The vendor and district security needs are well aligned.
  
  With installed software, the responsibility for security falls squarely on the IT department. While most districts are familiar with basic network security techniques, very few have expertise to implement the high security techniques justified by the value of data being published to the Internet. The cost of intrusion typically requires a district to recruit/retain/consult a network security expert to minimize the risk of a security breach.
  
  
• Minimal Impact on Technology Staff
  With hosted services, the vendor takes care of the technology. This allows an IT department to provide new services to educators with little impact on the IT staff. Often the hosted service vendor will also do end-user support.
  
  With installed software, the IT department needs to budget staff to manage their new application. This maintenance includes installation, applying security patches regularly, doing security audits, running backups, scheduling of staff responsible if downtime occurs, upgrading servers regularly, end user support, etc. Ongoing IT staff expense is often neglected when calculating total cost of ownership, and can be MORE than the cost of software maintenance.
  
  

Installed Software Advantages

• Local Data / Local Control
  The biggest advantage of installed software is often political. There may be decision makers who are uncomfortable with confidential data being physically located outside the district's premesis.
  
  As discussed in the security section, the data is typically safer with a hosted services vendor. The biggest security threat is from the Internet, and a hosted service vendor is better equipped to address these issues than the typical school district. This is similar to keeping cash in the bank instead of under a mattress at home (or in the district safe).
  
  To give non-technical decision makers a higher level of comfort with off-site data, hosted services vendors have strongly worded confidentiality agreements -- and will often negotiate to more restrictive terms.