Installable vs. Hosted

January 8, 2008

This 37signals’ post started a long thread of interesting comments Ask 37signals: Installable software? Quite insightful opinions although mostly leaning towards the hosted SaaS approach.

It would be highly unlikely that we’d sell installable software. This question is actually more about business than it is about software. 

  • We’d be a different company
  • Hosted = Controlled development and deployment environment
  • Installable = Lots of room for things to go wrong
  • Backward compatibility headaches
  • Upgrade cycles

And then also this interesting follow up  Installable vs. Hosted , by Kevin Dangoor, in defense of installable software.

However, I think for a many apps, quite a few potential customers will be left behind by only offering a hosted version.

I’ve seen a number of products start off with one approach and then add the other. I can name two off the top of my head that started off installable and added a hosted option.

Our experience is quite opposite, we have started with a hosted version and later added an installable one. We distribute a free open source version of our product so if you study and de-bug our code it is fine with us, that only helps us make it better 🙂

The SaaS model was a good start, it helped us to mature our product and test the market. It is a significant part of our offering. One of the main reasons though vendor companies choose SaaS model is because it is easier for them. You do not have to worry about all those bullets expressed by 37signals. Is it always a good model for your customer? Not always, if you start paying more attention to your data security and privacy.

Our SaaS/OnDemand version offers a number of free services and we do not lock-in your data (you can always take it and move to your own server). And still, we see that more users prefer to download our open source version and install it on their premises (even though it takes some of their precious time). I bet the data security (in our case we are talking about release/project/feature plans) and in some cases compliance with Sarbanes-Oxley Act plays significant role in their decision making process. We are not Google or Salesforce so we did not expect that everyone would trust us with their critical business and customer related data so we went for an installable version too. And it has been quite rewarding: more users, more useful feedback, our code improved significantly, even the article in O3 magazine.

Our software is riding on UAMP (Unix,Apache,MySQL,PHP) stack which makes it easier to produce the installable version of our product. The release and testing process actually makes our SaaS solution (http://yoxel.com) much more robust. It was quite a challenge and alot of work to create a proper development infrastructure and to start producing the installable version but now after over a year of releasing it I should say it is not that hard anymore.

There are many advantages for a vendor to use SaaS model but here are a few that I personally like in the installable open source software model too:

  • More potential customers who otherwise would be concerned with SaaS
  • We are not responsible for the security and privacy of customer servers/data
  • You can test at a few selected beta-sites before rolling out new version to everyone
  • Our users help us make our software much better by seeing our code

We really like our SaaS model too. Would the trust/security/privacy issue be easily solvable this would be just enough, I think. But at the moment the combination of hosted and installable makes alot of sense to us. Appliance is a good model too, unfortunately we have not reached that stage yet. A good example is SugarCRM which offers all three models!

Enjoy!

http://yoxel.com

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