Installed Vs. Hosted – What’s The Difference?

September 18, 2017       THE NONPROFIT TIMES      

A growing number of donor management systems are hosted entirely online, and accessible via a web browser. In this model, sometimes called Software-as-a-Service (SaaS), or using an application “in the cloud,” you pay a software vendor to provide online access to the software. The software and all your data are stored on the vendor’s servers. You don’t have to purchase any hardware, the vendor handles software updates and data backups, and your staff can access the system from anywhere there’s an internet connection.

A wide range of software vendors use this model — including many banking and health record system providers. Generally, cloud systems are quite secure. In fact, online systems frequently have stronger data security processes than of which small nonprofits are capable. Cloud software also can make it easier to support other online processes, such as emailing donors or integrating with your website. You typically pay a monthly or yearly fee for the system — some consultants like to say that you “rent” the software. Costs can range from a few hundred dollars per year on up.

As a more traditional option, some donor management systems are purchased up front and installed onto your network and your staff’s computers. Many of these systems are based on the Microsoft Windows operating system, so if your organization uses Macs or another operating system, you may have a difficult time finding a compatible installed system.

A few of these systems require a dedicated server — literally, a computer that does nothing but run the software — if you’ll have multiple users. Make sure to determine this up front so you can factor that into the cost of the system. With any installed system, you’ll be responsible for installing software updates provided by the vendor and running data backups, although some vendors will help you with this as part of their support service.

Installed system vendors typically charge a “license” fee to buy the system, which is often based on the number of staff members (also called “users,” “seats,” or “licenses”) who will be using the system. After you pay the licensing fee, you typically are not committed to paying anything else, although most vendors also offer the ability to get system updates (such as new software releases with improved functionality) for a continuing annual fee. This fee, generally somewhere between 5 and 25 percent of the initial cost, is usually called a “maintenance fee.”

A few of the vendors who provide installed systems also offer a version of their software that can be accessed online through remote access technologies such as a Windows Terminal Server or Citrix Server. This model essentially transforms a system, which is traditionally installed, into an online hosted model.