How reliable are hosted applications?

Google's outage isn't the first, but it's probably the most prominent. Salesforce.com has had several outages in the last few years that had customers looking for alternatives. I've worked with several small businesses that had outages that may last 10 minutes or a week.

The reliability of hosted applications are only as good as the company doing the hosting. This is the area that many businesses tend to overlook. If they're using a local company for in-house IT support, they look for references and would want to see somebody in person... they wouldn't necessarily rely on the lowest price. Hosted solution providers, on the other hand, are typically decided on price because the buyer can't see anybody in person. They don't get a good (or bad) feeling from the salesperson and probably don't know anybody else using the service, since there are thousands of providers and millions of customers at this point.

The question I always ask business owners and managers is "how vital is XXX service to your business"? If it's extremely important, I typically recommend keeping it in house. My reasoning includes:
- If you own it, you know what patches, upgrades, and lifecycles are in place.
- If you own it, it may still go down, but at least you can make it a priority. If it's being hosted somewhere, you're no more important than anybody else in their data center... and as a small business, you're probably less important than many of their clients.
- If you own it, you don't have to worry about the hosted provider going out of business unexpectedly. When they go, your data may go with them.
- If your vital application is sensitive to latency, as many EMR programs are, you want to monitor and control that latency, not rely on somebody else to do it for you.

If the application is less vital to the organization, hosting is a more viable approach. That being said, even businesses that think their hosted application isn't "vital" change their mind quickly when something that they're dependent on goes down.

To summarize; I believe that outsourcing your communications to a hosted provider is not a full solution. However, I do think it is a great addition to a reliable communications system.

I'll focus on the voice side of things, and I will stick with the small business focus. Certainly in the enterprise space there are more options and perhaps different questions we should be asking.

As a business, you need to determine the impact of not being able to communicate with your customers. What does it cost you to lose communications for an hour, a day, a few minutes?
Your business and industry will dictate what is acceptable, and what those costs are.

When you are dealing with hosted services; and by hosted I mean you are using the internet to connect with these services - you will have downtime. It's inevitable. There are just too many links between the service provider and the end user. You cannot possibly guarantee that every link between is going to function properly.

Traditional circuit based communications are reliable because the provider generally controls every aspect of that circuit from their office to yours. That's something that packet based services can't match.
There is also a long history of telecom companies working with each other to ensure that circuits are properly switched between carriers. That is something that packet based networks are just starting to sort out now - and the issue is far from resolved.

Unless your business never deals with incoming customer calls, you need some sort of on-premise communications system.

A reliable communications system that includes traditional services such as PRI/T1 will ensure your customers are always going to be able to contact you. These services usually come with some form of SLA from the carrier detailing what level of service you can expect, and what the mean time to repair will be in the event something goes wrong. Ask your VoIP provider for something like that, and they probably won't know what you're talking about.

So where does a hosted service fit in?

Hosted services are great for outbound calling. If the service fails, you simply switch to a "land line." But you don't affect your customer's ability to call you. (Or at least your "Head Office")

Any company with a distributed sales force will benefit from a hosted solution. Employees can generally be located anywhere in the world and still be able to connect to the hosted service. This is great when sales people work from home but you want to be able to show your company name and caller ID when they make sales calls.

It can also be a viable backup solution.
Bad weather keeping you home? Telecommute and use a hosted service.
Hurricane destroyed head office? Move the entire operation into a trailer somewhere and use a hosted service.
The list of possibilities is endless.

I do feel that hosted services have a role to play in small business and in most businesses - I just don't think it's the lead role they should be playing.
They are better suited to a supporting role.

Full disclosure right up front, the company I work for provides hosted services. That, being said hosted services are a very good value – depending. Depending on your specific needs and who is providing the hosted solution.
Major points; how important is your voice/data network and do you want to manage your business or manage your voice/data network.
Most small businesses cannot afford to build out data centers with redundant power sources, redundant service connections from different providers, and have redundant or n+1 equipment arrays. Hosted services can allow small businesses to have a form of business continuity and security.
In general, small businesses do not keep up with patches, fixes, and software upgrades. Small businesses do not have the staff to keep a voice/data network perfectly groomed. They are too busy just keeping the doors open and the lights on. A hosted provider will (should) keep the software working properly and monitor the equipment for any alarms or potential problems.
A typical scenario is that a small business will “triage & stack” all voice/data system problems. As problems occur the office manager (or similar person) will triage the request (who is having the problem and is the problem business impacting) and then stack the request with all the others until there are enough issues to call in their outsourced IT or phone vendor. Hosted services will generally keep everything running smoothly and will also be available to fix any issue with just a phone call or email request. The fix is normally part of the monthly service fee (or should be).
There are many different types of hosted providers – they vary on service offered and the fees charged. Once you know what services you are after make sure that the provider you choose can actually perform all aspects of that service. There is no firm definition for host/managed services. Find out if there are any “other charges”, do they guarantee that the price quoted is exactly what you will pay, are there additional taxes, fees, surcharges. What do you get for your monthly charge; does your service provide proactive service. Is it reactive service, do you have to call them when things go wrong and then they “manage” it by responding. Will your existing network support the hosted service; will you have to purchase any additional edge equipment or circuits. Read the terms and conditions – understand the total service.
With hosted services it is possible for a small business to have same look and feel as an enterprise level businesses. A small business may not be able to afford an Exchange server and employee dedicated to manage it, but a small business can have a hosted/managed Exchange service. The same concept is available for telephone/unified messaging, or desktop services. A hosted service allows a small business to rent a small part of a complex, well managed system.
Going back to the original points: If your data/voice network is important and if you would rather manage your business, then looking at a hosted system should be your next step.

I'm a SaaS vendor and can tell you that the reliability is not realted to the delivery model in general but the vendor delivering it. You could host and manage something on your own and run into all of the same issues a vendor may encounter. Just make sure you have an SLA in place.

First, I have no stock in the first two companies, but regularly wish I did.

I have had three experiences with Software as a Service. The first was with SalesForce. The SalesForce application evolved over three years and was extremely good. It was taking over other databases and permitting the users to proactively have access to huge amounts of information about the customer/s (both users and equipment) that we were serving. It was extremely flexible and the SalesForce staff worked very hard to provide the kind of realtime support and uptime necessary for this program.

NOTE: We did retain a firm that assisted us in implementing the changes we wanted. How this worked with SalesForce is a better question for them than me, but it did work and generally worked wonderfully.

The second company and product is ComView. ComView provides telecom and cellular phone management tools and support in a Sofware as a Service environment. Like SalesForce above, the staff worked very hard to provide great realtime support, provided training on demand (as part of the offering to the customer at all levels of management and supervision who would be responsible for telecom at the department level and above); and were flexible in handling requirements and questions. It is a top rate service and because it is maintained by ComView's staff, (who update telecom and cell company programs and pricing) it frees up the IT / telecom / management personnel at the customer site for other needs.

Last year, Siemens sold Siemens Enterprise Networks to Gores. The new company is named Siemens Enterprise Communications.

When I was with Siemens before the sale, I went through mandatory HiPath 8000 training. The HiPath 8000, now the OpenScape Unified Communications Server, is intended to become a VoIP version of Centrex (and offer the much wider scope of features and opportunities available with a server based system), with the ability to serve large user capacities. (There were two trials in different cities which were occurring as I was leaving. I do not know the results of those trials.)

All VoIP operations require that the quality of service issues such as real time (all voice is real time) and bandwidth are addressed up front. The initial rollout inside of Siemens to Siemens employees found that the competent IT personnel who were familiar with the 8000 were ignored. It was a rushed rollout and caused severe problems.

Over time IT was allowed to do its engineering (including the use of wireless at the location I was with). At that time it was not as reliable as the HiPath 4000 we had been using prior to the forced rollout but was improving regularly.

That was a year ago and I have no idea of the current state of that system.

It was designed to work with Xpressions UC (the replacement for PhoneMail with links to email), and with the Call Center application available from Siemens.

I would note that OpenScape is a software program that was kind of like Outlook and PhoneMail on steroids. There were multiple ways to get the same set of benefits, such as "follow me" if the user wanted to have phone calls hit the desk phone, the cell phone, or go immediately to voicemail; including time of day and day of week control.

There were places for listing conference rooms with their audio and audio visual addresses, which could be emailed.

The designers of OpenScape found an immense number of possible uses for OpenScape and we had some preliminary training on it. However it was not built into the 8000 at that time, and there were server or connection issues that precluded it being available all the time. If you have access to the service, it can be wonderful. If you cannot get to the service, you are hosed.

So, if you are looking for a VoIP Central Office application (minimum of 900 users under normal conditions before it becomes cost effective was the general buzz inside of Siemens), may be a test drive is in order.

Cordially,
Donald Todd

If your phone system is hosted, your provider should have a disaster recovery system in place. This recovery system should be setup when you setup your account. They are becoming quite commonplace. The way it works is when your internet connection goes down, your calls are re-routed through the hosted application to a pre-determined cell phone or land line in a different location.

Bill, I think your questions and concerns about hosted solutions are right on. If a company values its voice services, it better be sure that the outsourced company is reliable and can truly be held accountable for the service. Since most of the service depends either on the company's network or the Internet, it will be very difficult to hold the hosting company accountable for outages. We've all seen how difficult it is to get phone companies to admit when the issue is their problem. Imagine how hard it will be if the call traverses company network, Internet, and hosting company network and equipment. Personally, I know the internally managed system can respond to customer requests and outages, and patching and upgrades are under our control. I can't see a managed VoIP solution from a Telco or upstart company being nearly as responsive and flexible.

So a different perspective I both own a small business with 50+ employee’s and a technology company. Our experience has been that most SMB customer benefit in both function and reliability by switching to a hosted solution. I’ve been a Gmail user from the beginning and the number of times an outage has affective me is just about zero, I can’t say the same for the exchange server we used to run at SMB. In the six year we used exchange we had:

1) 2 hard disk drive failures
2) 1 mother board failure
3) Countless hours configuring remote access and web access
4) Had our server hacked and black listed multiple times
5) Add the amount of time we were down due to OS or software upgrades

Since we moved to Google Apps we’ve had one service outage that lasted a few hours for which Google credited us 3 days of service per their SLA. This story repeats for almost every customer we move from exchange to Google Apps. Here is Google take http://googleblog.blogspot.com/2008/10/what-we-learned-from-1-million.html.

As for our phone service we’ve moved all of our companies to hosted solutions. The features they offer combined with the costs savings and ease of use has allowed us to repurpose resources into money making tasks instead of answering phones. There are some red flags for certain customers including cost of upgrading an existing infrastructure to soft or SIP phone (if required), availability of reliable Internet service, usage fee for high traffic customers.

The one other aspect we seam to keep running into is the quality of support / management our customers are receiving from their current vendors. We are finding that many of the companies providing managed services on a monthly contract basis are not adequately trained to properly support customers. Almost every customer we walk into with a Exchange server is receive bounced emails because the server is not correctly configured. The problems stop when you move them to a hosted Exchange or Gmail service.

From our perspective most small business will be better served in the cloud by cost savings, improved features, and freedom from worrying about software, hardware, and consultants.

If your company has expert manpower in the areas of computer networking, hardware, security, software management, etc. perhaps it's better to manage your own server room or data center.

However, it is an overkill for a small business to have a large team of specialists. What actually happens when you run your own data center is that you end up with a less reliable, less effective system with greater risks of downtime and data loss.

Cloud computing lets you access world class infrastructure with the best professionals working for you for free or for a small subscription fee. Gmail today is far more superior to Exchange any way you look at it.

Small businesses need to conserve cash and should prefer their expenses to be variable instead of carrying fixed costs and overheads. They also need to conserve management bandwidth and focus on their products & customers instead of worrying about non-core activities.

For Google and Salesforce, downtime is not because of incompetent staff or poor systems but due to the massive scale of operations; their systems get more robust with each outage.

But, care and due diligence is required when you outsource services to lesser known service providers. Does the service address my needs? Are they competent? Do they have good disaster recovery procedures in place? Do they have a track record? A lot of these questions need to be asked instead of blindly outsourcing the services.

No is the general answer
Hosted IP is a good service when used correctly, its cost effective and will increase productivity in accessibility and efficiency primarily if the company has an active telecommuting policy. But the reliability can be tricky.
There is nothing said about hybrid solutions using the functionality and flexibility of Hosted with a small on site premised based PBX ( IP or TDM ) with limited analog/TDM lines, as well you can add hosted IP services to existing TDM systems.

Independent consultants should be used to answer just this question as well as the others in regards to telephony integrations with VoIP, internet, cellular service and long distance/local carriers.

There are a number of systems that are coming out everyday that can bridge the hosted and premise based system that should be evaluated and suited for the specific current and future needs of the company.

But as the broad band networks improve and become more reliable on the voice side Hosted will become the primary telephone networks.

A lot of good input has already been posted on this topic, so I will only offer this: Hosted vs In-House comes down to how mission-critical the application is--but I have to differ with those who say that in-house is the automatic answer for mission-critical systems.

The decision comes down to where (hosted or in-house) you can reasonably and economically provide the level of up-time you require. While it is true that an in-house solution gives you the opportunity to deploy the necessary infrastructure and redundancy to reach very high levels of reliability, it does not necessarily mean that it is practical or economical to do so. That is typically where a well-designed hosted service will come out on top. By spreading the cost of the highly-reliable, fault-tolerant, geographically-redundant infrastructure (and all that goes along with that) across many users, many things that would be cost-prohibitive for a single enterprise to do become possible. But notice that I said "well-designed" hosted service--just like an in-house solution can be beefed up to virtually any level, a hosted service can also be stripped down to the point where it is significantly less reliable than what you might be inclined to do yourself.

Bottom line, both hosted and in-house can be viable options for just about any business service, regardless of how mission-critical it is. But you have to know your hosting vendor and they should be forthcoming with enough details of their infrastructure for you to determine their (and thus, your) relative risk of downtime. If they are not, and instead present a "black box", then I would say you probably don't have enough information to make a decision--leaving you to compare a known (in-house) to an unknown. In that case, the choice is clear.

Great information here; the only thing I don't see mentioned is contracts and terms.

I have taken both paths - A) building a highly redundant and fault tolerant environment to support a mission critical in house application and B) using a SaaS vendor for a mission critical application. I have similar risks in both environments, but the difference is that environment A is managed by my resources (time money staff) and it took a lot of all three versus B being managed by a well structured contract and relationship to help minimize or mitigate risk from outages and product development issues.

Obviously different providers will have different levels of contract negotiation, but that usually evens itself out - Google won't change its terms, but has the resources and visibility to make sure any issues are dealt with quickly, and a smaller group will likely negotiate on terms, helping ensure you are a visible and important client to their organization.

The answer is "it depends on the vendor." If the vendor is a large bureaucracy, then yet, your applications and business continuity may be at risk. But if the vendor is small and experienced, then the likelihood of a problem is much lower.

Unless you choose your vendor poorly, the reliability of a hosted application is going to be significantly better than if you host it on your own site. Your own 2 person SWOT IT team or some local Solution provider who hosts software for businesses out of a small office space in a strip-mall is not going to outperform the service offered by a public SaaS provider whose expertise it is to help thousands of companies manage their systems well. SaaS vendors focus their entire business around providing reliable access to their software and SaaS solutions are pay-as-you-go so its easy for customers to leave them if they are unhappy. Therefore, they are strongly rewarded for providing strong uptime and security. Furthermore, any good SaaS vendor provides a guarantee uptime in their contracts which is not something your IT team or local consultant can provide you with. For example, NetSuite guarantees 99.5% uptime and provides customers with a publicly available web page to display system status at all times: http://status.netsuite.com.

Several times a year we lose power due to storms or the occasional construction crew, at which time I use a cell phone to connect to the internet--assuming the cell tower is still standing and operational. While I don't have precise metrics, I do know empirically that NetSuite is up more than ComEd, and they give us plenty of advance warning when the service will be down for maintenance.

Hosted applications are often more reliable than self-hosted solutions. Just because you're handling the servers and software yourself doesn't make it more reliable. Are you an experienced server technician, developer, etc? Probably not.

Who's monitoring your servers, data connection, power supply, security, etc? Most of these companies use well-known hosting providers. These providers have massive data centers with 24/7 security and technical staff. They have back-up generators and back-up generators for those. They have the best data connections you can get. Do you have that in your office?

Security also seems to be a concern with the hosted applications themselves. Most of these worries are misconceptions. Take some time to review our security measures:

http://www.officemedium.com/security

Are Hosted Solutions & Applications Reliable?
http://www.officemedium.com/blog/are-hosted-solutions-applications-reliable

I prefer, whenever possible to buy the product and put it on my own comptuer or website.

BACKUPS are always important. Having onsite backups of important appointments, documents, etc. are part of living in a digital age. Everything breaks occasionally... hosted or inhouse. I've found that having the ability to work OFFLINE on key projects and then uploading materials is preferable, more mobile, and an enforced "backup plan". I love the access and functionality of my key online vendors such as Google and our hosted computing service, Rackspace, but I also keep backups of key documents, and my calendar... and key contacts.