Raising the Host Bar: Hosted CMS Model Comes of Age

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There was a time when analysts believed that we would buy all our software using the ASP, or hosted, model. Why bother with all the issues of installation and upgrades, server maintenance and security, when for a fee, you could let the vendor take care of it all? But like so many dotcom-era pipe dreams, the hosted model went up in smoke when the bubble burst . . . that is, until Salesforce.com came along and everyone took a second look. During the past several years, hosted content management increasingly gained in popularity.

Hosting is certainly not for everyone, however. If you have confidential information, even the hosted CMS vendors will admit that this is not the right model, but for public-facing content, hosting offers a variety of advantages, especially for companies with a lean IT staff and limited budgets. Yet—right or wrong—concerns about hosting linger, and this article explores the pros and cons of using hosted content management.

Why Has Hosting Made a Comeback?
Tony Byrne, founder of CMS Watch (and an EContent contributing editor), says that when the Internet bubble burst in 2000, everyone suddenly backed away from Internet-based businesses, but in today's economy hosted CM makes more sense. "There has always been a strong case for hosting, but when the bubble burst, there was skepticism about Internet-based everything. In some cases this was justifiable, but in other cases, it was throwing the baby out with the bathwater," Byrne says. "A lot of companies were cutting back on outside contracts and saw hosting as one more expense. Now companies are more creative and more open minded and more confident in the quality of networks and with the quality of service, and that has opened the door a bit more."

Byrne also points to customer relationship management software company Salesforce.com as having had a huge influence on the hosted model as a whole. "They have been so successful and have been such a disruptive force for traditional vendors like Seybold and SAP, and their success after the collapse of other ASP services suggests that this is a viable model for certain other scenarios," Byrne says. 

Steve Kusmer, senior VP for search and content solutions at WebSideStory (and former CEO of Atomz, which was purchased by WebSideStory earlier this year), thinks the shakeout in the early years was part of a natural market selection process. "I remember those days where everything was going to be hosted, and of course trends like that work themselves out. What's happened since '98 is that the Darwin approach took hold. Things that didn't work died. The technology did not support the notion of hosting Microsoft Word, but areas like sales support and Web sites are natural for it," Kusmer says. 

Where's the Market for Hosted CMS? 
Depending on who you ask, the market for hosted CMS runs the gamut from small business all the way up to the enterprise, but there is no agreement among industry experts as to exactly where the market lies. Mary Laplante, senior editor of the Gilbane Report, a publication that follows trends in content management, thinks hosting is best suited for small- to medium-sized businesses or departments inside large enterprises. "There is a profile that fits a candidate for a hosted solution. It's certainly a viable option for small and medium-sized businesses. If you look at the way a number of the providers of hosted solutions market their offerings, they really target these companies." She says that, for departments inside large organizations, it may be easier to adopt an outside hosted solution, and it often costs much less than bringing CMS in-house. 

Jim Howard, CEO of CrownPeak, doesn't agree with this assessment. He thinks that hosted CMS is best suited to larger enterprises, and the more complex the site, the greater the need. "Small businesses don't generally need a CMS. If you have ‘Joe' who spends 50 percent of his time modifying HTML pages, and that's all the organization requires, that's great. A lot of organizations can get by with Macromedia Contribute or ‘Joe,' but when you get to the size where you need a CMS, we are here to manage Web sites, and there is no size restriction," according to Howard, who says CrownPeak has one customer that is using its product to manage 40 sites.

Why Go Hosted?
There are a host of reasons for going the hosted route. As the case studies that accompany this article illustrate, content management in general puts content in the hands of content owners and frees Web or IT staff to concentrate on what they do best. But for many enterprise customers the decision to go with a hosted vendor often comes down to cost and ease of use. Byrne says that subscribing to a hosted service eliminates the complexity of managing a technology like a CMS, and businesses find that very compelling. "If you are in the content business instead of the technology business, and can take technology off the table, that seems to me a pretty attractive proposition," says Byrne. 

Byrne continues, "If you talk to vendors, they say that you get up and running quickly, that you don't need a capital investment, upgrades, or installation. It takes away a lot of the hassle, and that's all true." But he thinks the more important characteristic is the ability to focus on content instead of the tool and how to manage the various technical tradeoffs within the CMS. "Focus on the implementation goes away. There is still an implementation, but it tends to be more straightforward with hosted systems," Byrne says.

Howard says that at CrownPeak, customers come looking for him, and that he does not need to sell the hosting aspect so much because that is exactly the reason they come calling. "They're busy. CMS is hard to buy because it's complex and there are a wide range of products . . . The level of complexity goes down with a hosted service like ours," he says. 

Both Howard and Kusmer point out that with a hosted service, they are motivated to keep customers happy because they are hired only on a subscription basis. "We are financially motivated to keep you happy because we are essentially paid by the year and count on renewals," Kusmer says. 

In addition, Kusmer points out that they are constantly working to update the product and making those changes available to customers in the background as soon as they are available. "We are innovating much faster than our installed-base competitors. The reason is that we can update the application rapidly. We update about every two weeks with minor bug fixes or feature additions," he says. 

Another appeal, according to Howard, is that customers consider hosted CMS less risky. Most managers want to avoid risk with purchases and Howard says his company, rather than the customer, bears the burden to make sure the CMS works. "If you think about implementing an internal IT application and you are going to get your IT organization to put it together, the risk of failure falls entirely on you, whereas with us, the risk is on us. If your people don't like us or aren't using us, shut us off," Howard says. 

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