In Defense of the Hosted Model: Stop Worrying and Get Prepared


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In late 2005, fell off its proverbial pedestal. It experienced several high-profile outages that caused wide-spread concern over the reliability of the hosted model. Since then, critics have used these outages as proof that a hosted model is not as good as one that is in-house. As an executive in the hosted market, I’m here to tell you it’s simply not true.

There is nothing wrong with the hosted CRM model. It works and is reliable. The well publicized outages of one of the biggest vendors in the space this winter should not be causing the hand-wringing and doubt it is creating. Outages will happen. As with any business activity, there should be contingency plans for when this occurs.

Even with the most expensive client/server system, technology sometimes hiccups. It is unreasonable to expect a hosted service to be above this. Good hosted CRM services have features such as offline functionality. Customers should be talking to their providers about service level agreements and how the service is maintained. You want to know what kind of engine is in the car you are driving, so why not ask how a hosted service is built and maintained?

The nature (and a big advantage) of hosted CRM is that data can be accessed in a number of ways. A good hosted service offers an offline client. Hosted services give users the ability to work anywhere and anytime without going through the burden of installing resource-heavy software into their enterprises.

Offline functionality
Support for offline use is the best defense against outages. Most hosted services offer some sort of offline client, but as a customer, you have to know exactly what that means. When the main host goes down, the fact that you bought a solid offline client is the difference between having an angry sales rep and a happy one.

Offline functionality is not simply being able to retrieve your data from a laptop; it frees you from the Internet. An offline client is not a subset or truncated version. It has to be a fully functional, exact copy of what can be accessed online with all the data on the computers. In the event of an outage, offline functionality should give users access to all data synchronized with their computers.

Synchronization is the second most important feature of an offline client. CRM systems often handle thousands of different targets and projects that are constantly changing. As soon as the host gets back up, there can be no delay in reconciling all the data that has been inputted by anyone with access to the system. The ability to be able to sync-up with the hosted database is not found in all hosted CRM products—and is something a customer should be looking for. It is the difference between being vulnerable to an outage and being mildly inconvenienced.

Finally, with offline, it is important to be able to work with the same interface and all the data you would normally have. It is difficult to get sales reps to learn one interface. If they have to learn several different flavors of the same CRM system, you’ve pretty much guaranteed that the salespeople will not use the service.

The hurricane season is a good example of the whims of nature. Texas was hit with a large hurricane that brought with it the expectation of outages. Companies attempt to build redundancy into their IT systems, but redundancy cannot stop a tree limb from knocking out a customer’s T1 line.

Plug Media Group, an interactive marketing and design company with customers across the United States, is a long-time hosted CRM user and ran into troubles with storms in 2005. PMG monitors a number of new projects and potential sales using the service, and relies on it daily. In the midst of a major storm, the power went down. The company went to an offline client immediately following the outage and did not miss a beat. If the service, itself, had gone down, the same scenario would have taken place. That’s because the hosted model is reliable.

Service-level agreements
No one completely understands service level agreements (SLAs). Internet providers are trying to find common ground to agree on the levels of uptime. Lawyers absolutely love filling agreements with caveats and "what ifs." A set SLA of 100 percent uptime for a hosted CRM service is not offered by any vendor. There are too many variables, and in the end, no one can guarantee that a piece of software will be as reliable as a phone service. On the other hand, a storm can take down phone service, too.

End customers should demand to know the reliability of the service:

  • What has the history of outages been from a service?
  • How does a service let customers know an outage has occurred?

It is completely fair to ask a service how much downtime is expected per year based on previous experience and the redundancies built into the service. Do not expect an exact time answer. However, the answer you get will give you a sense of the reliability of the service. Anyone trying to sell you a hosted service should know this is a valid concern and have good answers for you.

Companies should not go quietly and simply accept outages. They pay good money for a hosted service and should expect the services are built with good technology, are not overburdened and have redundancies. But 100 percent uptime is not realistic. The recent major outages are an anomaly, and understanding what you need to be looking for in offline capabilities and service levels will protect you. The hosted model can be trusted.

Geary Broadnax
Geary Broadnax, president and chief executive officer of Dovarri, Inc., is a recognized expert in the development of hosted sales force automation and customer relationship management software, and an award winning photographer. He joined Dovarri after a successful career at Reliant Energy Communications, an exchange carrier that provides the Houston, Texas, metropolitan area with a combination of voice, data transport and Internet services. Broadnax has received numerous awards of distinction, including the Small Businessperson of the Year award given by the Houston Small Business Association in 1999, and he has twice been a finalist for Ernst & Young's Entrepreneur of the Year award.


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