In a recent post on Bookkeeping in Bunny Slippers, I discussed the benefits of using DirectConnect hosted applications rather than Virtual Desktop services for some businesses. Questions arising from that post demonstrated to me that there are still a lot of folks who don’t really understand what hosted QuickBooks (or other apps, for that matter) really are and how they work.
Here’s the comment that prompted this post. Hopefully, I’ll answer the questions here in a way that will help you all understand the service model. If not, please peruse the “Running QuickBooks in the Cloud” blog for more information, or contact me directly.
‘Can the “hosting” process and steps be explained in more detail? I grasp the concept, but it’s still very new to me, and I would like more clarification before approaching clients heading in this direction. Specifically, an overview of the hosting process, what companies or services offer hosting, how many people can access the file at once, extra costs, and does work seem to process slower, since the data file is not local? THANK YOU FOR THE GREAT CONVERSATION!’
1. An explanation of what application hosting is:
Hosted applications are simply computer software products that are run on somebody else’s computers, generally in a datacenter and managed by a service provider organization.
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The ASP (application service provider) model provides full implementation and technical
management of the systems – including operating systems, software applications, security, and how the service is “delivered” to the customer. - The MSP (managed service provider) model provides for server co-location (sometimes), and monitoring and platform management of the systems. This model often leaves out the software and user security implementation or management, which is then provided on a time and materials basis.
- The SaaS (Software as a Service) model provides for software and systems combined as a single subscription service. This is the model generally used to deliver web-based applications, and often a single application (like Salesforce.com).
So – ASP is a full service model where you can have standard business apps hosted. MSP is a managed service model where the customer gets the infrastructure and management of it, but not the rest. SaaS offers access via the Internet usually to a single web-based solution. ASP is the primary model offered by most of the Intuit-authorized QuickBooks hosts.
2. The hosting process – how it works
In the ASP service, the service provider sets up the servers, installs the applications (and updates), creates the user accounts, establishes the permissions, and provides a way for customers to access and log in to the systems. The customer will usually follow these simple steps to get started with a hosted QuickBooks solution:
- Sign up with the service provider, who may require you to install a little piece of software on your computer to get you ready to use the service.
- Login to their service with the credentials they provide to you
- Copy your data to the host
- Launch your hosted application, open your data file, and start working
- Add additional business users, or maybe client business users, as necessary
Because technologies vary amongst service providers, the “customer experience” will be different from one provider to another. Each uses their own methods of presenting the service (e.g., virtual desktop versus direct connect; login via website portal, web link, or desktop icon), and each has a different approach to helping you print, display, scan, and do other things that involve the equipment at your end of the connection. However, there are a few general “truths” with respect to hosted
- It’s the real QuickBooks desktop editions. The service providers don’t re-write QuickBooks, so it is the same product you’d install on your PC – exactly. While there may be some limitations with respect to certain advanced functionality, the programs are the real deal.
- You can print from the host system to your printers. Different providers offer this functionality using various tools, but generally the ability is there.
- You can move files to and from the host system. Often, this is how you get started on the host: you have your account setup, you log in to the service, and copy your data file from your local PC to your host solution. Again, this feature may be provided in various ways by the providers, but it is a general capability.
- You can access more than one data file. Hosted QuickBooks is generally allowed to work just like QuickBooks running on your PC – you can use the program to open any compatible QB data file on the hard drive (as long as you have the username/password for the file, if one exists). Most hosts don’t restrict you to only using one company data file, which is why the hosting service works really well for accountants and bookkeepers. You can keep backup copies of your QuickBooks files, keep different files for different business entities, etc., just like if you were running QuickBooks on your computer.
- You can have multi-user access. As long as your users are licensed properly (generally, this simply means that each user has a valid license), the service provider allows you to have multi-user access to QuickBooks company data files. This is another important element of the hosting model, which allows multiple users – regardless of location – to access and work together in a single data file all at the same time. Accountants and bookkeepers providing outsourced service can work with their clients online, and team members working from remote locations can access business applications and data as though they were in the office. The hosting provider can’t “break the rules” of the software, however, so whatever multi-user capability or restrictions exist with the software product will also be enforced on the host (for example, QuickBooks Premier edition is still limited to 5 concurrent users per data file).
3. What is the performance like? Is it a lot slower than working on my own PC?
Generally, an ASP hosted application will run very nearly at the same speed as applications running on your local PC. Anyone who tells you that a hosted app is faster than a locally installed app is not likely being very straight with you. The single factor that makes this a truth is the Internet, which introduces a potential impact to performance that you can’t necessarily control. The host systems are generally very powerful computers, so the actual speed of running the application, processing data, etc. should be more than acceptable.
Only the screen display information, keyboard and mouse movements (and print jobs) are moving “across the wire”, all of the processing and other hard work stays on the service provider machines. Where you’ll see the differences are in the login time – launching a hosted service is somewhat like booting up your PC. It may take a little while (no more than starting up your computer, certainly – maybe even a lot faster), but once you’re logged in, it’s there. When you log off, it’s like logging off of your PC – again, it takes a moment, but not a long time.
4. What are the costs?
Unfortunately, the answer to this question is the same answer you often get from IT people: “it depends”. The variables are with the service providers, the apps, the number of users, the volume of data to manage, etc. Consider that the approach to hosting your systems is much like the approach of an internal IT department. They need to know what software you need to run, how many users will be on the system, how big the hard drives need to be to store data, etc. And, because many service providers offer a lot of flexibility in terms of additional applications and service options, it’s hard to nail down a “standard” price. $50 per user per month for a hosted QuickBooks user is probably a safe number to work with. In most cases, this cost wouldn’t also include the cost of the QuickBooks software itself.
Two side notes:
*Software licensing: there are very few software companies that allow rental of their PC and network software products. Microsoft allows rental of Office and other products, and Intuit allows only their Authorized Commercial Hosts for QuickBooks to offer rental icensing for QuickBooks products. Generally, the host will require that you purchase and own the software products you want them to host, or rent from them the titles available for subscription rental.
*Comparing costs: Lots of folks consider hosted apps to be far more expensive than, say, QuickBooks Online Edition, and they may be right. But it’s an apples to oranges comparison. QuickBooks OE is a web-based solution from Intuit that offers different features and functionality than the desktop editions of QB. First, compare features and functionality to determine which solution is best for the business. If QBOE does what you need, then maybe that’s the right solution for you. However, if you need the features and functionality of the desktop editions, or if you have other solutions which integrate with your QuickBooks, hosting the desktop editions (and your other software products) may be the best approach. The right comparison of hosting pricing is comparing the cost against having the software on your PC, and then doing what you need to do (like remotely access the software, work in multi-user with other users, etc.). When you look at the realistic costs of installing, managing, securing, virus protecting, and providing remote access to your systems, the cost of outsourcing all that time and cost begins to look pretty reasonable.
Let’s pretend that a business has a computerized system, they spend 1 hour per day managing, maintaining, installing, backing up, restoring, or fixing something on the system, and the value of their time is $50 per hour. (Don’t argue about the value of the time – most small business owners will futz around with their computers a bunch, spending a bunch of time being very unproductive, and then will say that they don’t spend much on their IT. This translates to “my time has no value”.)
- 1 hour, 5 days per week = 5 hours per week
- 5 hours per week, 52 weeks per year = 260 hours per year
- 260 hours per year, $50 per hour = $13,000 per year
- Compare that to a hosted solution at $50/month = $600 per year
And, if something isn’t right with the service, you get service credits or discounts.
When was the last time your system broke and the IT guy wrote you a check?