Whether you’re the CEO of a Fortune 500 company or the sole-proprietor of a local boutique, you need to be aware of the different types of web-based business software before you’re able to intelligently pick the best option for your organization.
I consult a wide variety of business executives, and many of them don’t know the first thing about web-based business software. Some are eager to learn while others have the “I’m-too-important-to-worry-about-tech” attitude. Sure, that was fine a decade ago (or maybe even a few years ago), but as the mobile and social web transform our business landscape, a CEO with some geek kung fu is a valuable asset to a forward-looking corporation.
So what exactly is web-based business software?
By “web-based business software” I mean your content management system (CMS), customer relationship management (CRM), eCommerce platform, and any other business software accessible over the internet including productivity and back-office tools.
How do you choose the best software for your business?
Before you can choose, you must understand the concept of Control vs. Responsibility.
By “control” I mean your ability to freely modify, move, and duplicate your data and software code.
By “responsibility” I mean your level of involvement in creating, maintaining, upgrading, and securing said software. To quote Zed Shaw, responsibility means “the rewards or punishments for the outcomes.” Sounds good to me.
The “your” I’m referring to varies based on the size of the organization. In a large company, it’s the CTO, CIO, IT director, or some other technical person. In a small business, it’s the business owner or an employee who wears many hats. The “your” often determines the preferred level of control and responsibility.
The following quadrant diagram shows the control and responsibility of different forms of software.
Let me explain a few concepts:
Open Source means many things, but in this case, it’s your ability to view, modify, and move the software. You can run open source software locally, upload it to your server, or move it from one server to another. Open source software is often available for free, but not always. There are many commercial software products built with open source code. Examples of free, open source CMS platforms are Drupal, Joomla!, and WordPress. A commercial open source CMS is Expression Engine.
Closed Source, on the other hand, means the source code is compiled or otherwise encoded so you are unable to modify or duplicate the software. You usually must purchase a license and use a “key” to run the software on your server.
Self-hosted means the software is served from a server that you own, rent, or at least control. Some businesses choose to keep their servers in their office, while others pay a third-party hosting facility to house and maintain their servers. Small companies will often pay a hosting company to share a server with other small businesses.
To learn more about hosting options, read my article Shared, VPS, or Dedicated: Which web hosting type is best for your business? It’s a bit dated and doesn’t mention cloud hosting. If you’re interested in cloud hosting, then I recommend LiquidWeb’s Storm On Demand.
SaaS stands for Software As A Service, and according to Wikipedia is sometimes referred to as “on-demand software.” With SaaS, the software vendor hosts and serves the software to the user via the internet. SaaS can be free, but usually vendors charge a fee for premium features, additional storage space, and bandwidth. An example of an open source SaaS CMS is Drupal Gardens. An example of a closed-source CMS is Squarespace.
So how do you know if SaaS is a good fit for you and your business? One of the most concise answers to this question can be found in Webvanta’s 5 Tips for Better Sites PDF by Michael Slater:
The Hosted Service Tradeoff: Life is full of tradeoffs, and the decision to use a hosted CMS is no exception. With any SaaS system, you’re giving up control over the back-end software, in return for being relieved of all responsibility for building, maintaining, and serving that software. As long as the system meets your needs, this is generally an excellent tradeoff. You get to focus on your design and business needs, and let someone else take care of the technical details and day-to-day operations.
That’s great, but if you’re like some of my clients, then you just have one question:
What’s the best option for me?
That’s tricky. It really depends on your requirements, budget, and how you feel about Control and Responsibility.
Responsibility can be expensive. Can you afford to pay a team to plan, design, code, test, and continuously support your software? Do you have a realistic budget and time frame? Is the control worth the responsibility?
If the answer is yes, then go with self-hosted custom software or self-hosted open source software.
If the answer is no, then you should consider SaaS.
I don’t recommend closed-source, self-hosted software at all. Closed source reduces your control over software, so if you go that route, then you might as well go with SaaS and be relieved of the responsibility of hosting.
The other (more important) question you should ask is, “what’s the best option for my customers?”
Oh, yeah. Your customers. They’re important too, right? They want fast, easy-to-use experiences across all screens.
But to build something like that would be cost-prohibitive for a small business with a limited budget, right?
There are some exciting things happening with the convergence of open source and SaaS (OpenSaaS) that are changing the way I think about software. I’m keeping a close eye on Drupal Gardens, Magento Go, and vTiger On Demand. The fact that Drupal and Magento also offer commercially supported, enterprise-level solutions is a big reason why I’m a fan. Both platforms will accommodate you as you grow.
As for closed-source, all-in-one SaaS, I’m looking at Business Catalyst. Being a control freak and believer in open source, I’m weary of jumping into BC’s proprietary platform. But their price point is low enough to take a risk. I’m not interested in their partner program or white labeling, but for $39/month, it could be a good solution for some of my small biz clients.
Every situation is different, and that’s why it’s so important to spend time defining your requirements and budget. If you don’t have any idea where to begin, then it’s a good idea to consult with an objective, experienced geek like me.