Managed applications vs traditional software: Key differences

Software is an important part of the business base and working effectiveness in the digital world now. Different applications are used by different organizations for running enterprise resource planning, customer relationship management, and so on. Managed applications have become a viable alternative for those looking for low-cost, simple application deployment, maintenance and security.

The third-party service provider hosts and manages business software within an application to provide organizations with access. The objective of this approach is to avoid burdening the internal IT resources and to give access to the critical software efficiently and reliably. However, traditional on-premise software must be installed, configured and maintained by an organization’s own IT department.

In this article, we will look at the main differences between managed application services and traditional on-premise software. It will analyze the advantages and disadvantages of every option to assist companies in deciding which choice is ideal considering their necessities and assets.

What are Managed Applications?

Managed applications refer to business software delivered, hosted and managed by a third-party provider in the cloud. According to this model, the application is licensed by organizations on a subscription basis and is made available for use at a cost rather than as software that can be purchased and installed on local servers and devices.

A managed services provider (MSP) will host the software on their off-site data center and will take care of the configuration, updates, security, availability, and performance of the software. This alleviates the business from having to maintain the technical infrastructure and resources needed to support the application. Users can access the software via the internet through a web browser or client.

Common examples of managed business applications include:

– Email

– Office productivity software

– Finance and Accounting

– CRM

– HR/payroll

– Project management

– ERP

In addition to hosting the software, managed service providers handle tasks such as:

– Installation, upgrades and patching

– Data backups

– Technical support and troubleshooting

– Service monitoring

– Security protections such as firewalls and encryption

It allows organizations to relieve demands on internal IT staff and shift the focus away from application management to more strategic initiatives. Also, it offers predictable costs in the form of a monthly or annual subscription fee.

What is Traditional On-Premise Software?

It is traditional on-premise software that is installed and deployed on computers and servers within the organization’s business environment. It refers to buying the software licenses, configuring, integrating and maintaining the application with existing IT systems.

In this model, the business is responsible for owning the software licenses and managing and controlling the entire technology supporting the application. The system must be internally configured and controlled from the operating platform to the network infrastructure.

Examples of traditional on-premise business software include:

– Office suites

– Billing systems

– Accounting platforms

– Inventory management

– Appointment scheduling

– Marketing automation

– Sales force automation

– HR information systems

While traditional software allows for greater customization and control, it also has higher ownership costs. To support its software, the business must invest in computer servers, data storage, networking devices, security tools, and other infrastructure. It must also employ technicians and administrators to install, configure, update and maintain the application and infrastructure.

Key Differences Between the Models

There are several important differences between managed applications and traditional on-premise software:

Installation and Deployment

The service provider hosts managed applications off-site, eliminating the need for companies to procure and set up supporting infrastructure. Users can access the software via the Internet without needing to install anything locally.

With traditional software models, installing software on servers involves extensive planning and configuration of supporting systems such as operating platforms, databases, networking, and security controls. This complex process requires experienced IT staff and administrators.

Upgrades and Updates

Software upgrades, patches and feature updates for applications they host are managed by managed service providers. This allows customers to maintain constant service and continuously monitor and test new versions in controlled environments before deploying changes.

IT teams for companies that are running traditional on-premise systems must manually track vendor upgrades and updates. One must be careful when testing changes before sending them out to the whole organization to avoid conflicts or compatibility issues. The process is time-intensive and risky.

Scalability and Flexibility

Cloud-hosted managed applications offer quick and simple scalability to align with changing business needs. Companies can adjust their subscription level or user counts on-demand instead of procuring additional infrastructure. Service providers leverage their pooled resources and economies of scale to provide elasticity.

Traditional software requires expensive hardware investments to prepare for growth. IT teams also face disruptive installation and reconfiguration demands each time on-premise systems need scaling.

Security and Compliance

Managed application providers that lead are implementing rigorous security controls that exceed the capabilities of most internal IT departments. Examples of measures are intrusion prevention, DDoS mitigation, multi-factor authentication, encryption and advanced threat analytics. Security protocols and infrastructure are robust, comply with standards such as HIPAA and PCI and provide availability.

In traditional software, organizations are confronted with the difficult challenge of vetting, choosing, implementing and managing multiple layers of security tools across all infrastructure elements. In those cases, gaps in security controls or compliance policies would expose the network to being vulnerable and likely have regulatory and audit risks alike.

Performance and Availability

Managed service providers also offer service-level agreements, which ensure the availability and response times of the applications. In order to achieve such exceptional uptime, the state-of-the-art data centers use redundancies in the servers, failover clusters, internet connectivity and power systems. Performance is also optimized with network routing policies and load balancing techniques, which are not available in traditional software setups.

While on-premise environments can be tailored for high availability through redundant systems, achieving service levels equivalent to or superior to managed cloud applications requires enormous investment and technical skills. Even then, reliability depends heavily on the organization’s capacity to maintain complex infrastructure.

Ongoing Management and Administration

Managed services transfer the burden of day-to-day software and infrastructure management to technology partners. The provider’s team of experts handles tasks like troubleshooting, break-fix support, optimizations, backup management and disaster recovery. This frees up internal resources to focus on business innovation rather than application upkeep.

Traditional software forces companies to employ entire IT departments to manage routine application issue resolution and updates. That just requires a lot of investment in skilled staff and complicated administrative tools. Rather than creating strategic impact, time is consumed “keeping the lights on.”

Cost Predictability

With managed applications, everything is covered by monthly or annual subscriptions and is completely transparent in cost. Usage needs can be scaled up or down to match exactly, and there will be no surprises in unexpected infrastructure or resourcing expenses.

On-premise software requires major upfront capital expenditures and ongoing costs tied to system expansions, software licenses, IT personnel, maintenance contracts, and third-party services. Unpredictable issues can drive budget overruns. While subscription models are now available for some on-premise software, the business must still own the underlying infrastructure.

Access and Integration

Managed software vendors provide secure access to applications from anywhere via the Internet. Platforms easily integrate with other cloud services through modern APIs and connectors, minimizing access constraints or connectivity issues.

Traditional software architecture often struggles with remote access and cloud integrations. Inflexible networking and authentication protocols complicate access for a distributed or mobile workforce, and integrating on-premise systems with other cloud platforms can be challenging.

Which is Right For Your Business?

Determining whether to adopt managed applications or take the traditional software route depends primarily on an organization’s resources and capabilities.

Managed services make the most sense for companies wanting to minimize demands on internal IT infrastructure and staff. The built-in expertise of managed service providers enhances security and compliance while also optimizing application availability and performance. Highly scalable capacity accommodates fluctuations in usage.

While on-premise software can’t compete in terms of cost or flexibility, it provides organizations with true control and customizability, making it a good option when those with mature IT departments and infrastructure have developed a need for such software. However, running very complex business systems in-house has major technology burdens and risks. Platforms also can be constrained by rigidity and thus not be able to adapt to new needs.

In fact, many modern businesses are taking a hybrid approach by using both of the strategies, and it’s decided to be selective with the approach chosen. ERP or CRM type of mission-critical software is often serviced via managed services due to convenience and reliability, while supplementary apps can be kept on-premise. It allows for the toggling of platforms between cloud and local deployment models for software type and organizational needs.

Conclusion

In reality, the differences between managed applications and traditional on-premise software are based on deployment methodology. The conventional model comes at the expense of time, where customization is facilitated at the cost of increased technology overhead; on the other hand, managed services offer greater convenience at reduced infrastructure demand.

Companies can focus on business innovation rather than application management by working with leading managed application providers like Salesforce, Workday, ServiceNow and NetSuite. This market growth is an indicator that more enterprises are taking these services and using them for core systems and supplementing with on-premise tools where more control is needed. The right balance is all about analyzing organizational priorities, capabilities and budget.