An important decision to make when choosing a document management system is where you want the software hosted. If you run it in-house, the solution is usually referred to as a client-server system; vendor-run applications are referred to as application service provider (ASP) solutions. Both options provide distinct advantages: consider which are more important to you.

Client-server solutions Most software used today is locally hosted - the program runs on your computer and stores the data either on your hard drive or on a network server in your office. This familiar setup gives you the greatest control over every aspect of your document management system.

Having this total control can be a drawback, though. It takes considerable expertise and effort to maintain the document database and keep it secure - and often requires significant expense for consultants and hardware. In addition, keeping the data in-house gives you the responsibility of making regular backups in case of a system crash.

Client-server proponents point out that document management applications are built on proven software that is highly stable and requires little database maintenance. And you can create scheduled backups that copy your data to off-site computers fairly easily. (Interested in remote backup services? Get a free quote today)

If you choose the client-server route, you'll pay a lump sum upfront to buy and set up the system, including software and servers.

ASP solutions
In an ASP solution, both the application and data reside on the supplier's servers, and your staff gets access through a web browser or specialized client software.

The main advantage of ASP solutions is that the database is maintained by IT professionals at the vendor's office. Multiple layers of firewalls and security, uninterruptible power supplies, fail-over (instant switching from one computer to another in case of a crash) and reliable backups are all standard operating procedures for these vendors. They combine to virtually guarantee that your critical documents will always be secure and available. You also get access to enterprise-level features without paying an enterprise-level price.

The biggest risk of online solutions is that they require an active Internet connection. Since no Internet connection works 100% of the time - your internal network may fail, your ISP may experience an outage, or an Internet worm may cause congestion - you may not be able to access your documents at all times. These types of outages are rare, but you should be aware of the possibilities.

With online providers, payment is more likely to involve a smaller setup fee and then ongoing monthly payments based on usage.

Which is right for you?
Right now, many business executives are more comfortable with in-house solutions. However, next-generation IT staffers who are most familiar with the benefits of ASPs are gaining more of a voice in many companies, so the balance is expected to swing towards ASPs in coming years. Here are some areas you should consider:

IT staff. If you have in-house IT staff, a client-server solution may be your best option - but make sure you involve IT in the purchasing decision. Smaller businesses with little to no computer expertise are probably better off choosing an online solution.

Customization. ASPs can easily make basic changes in appearance and functionality, in effect giving you more control over the application than you would get from an internal IT team. However if you need extensive customization and integration, client-server can provide more flexibility. Remember that you will pay a premium for the extra customization work, though.

Sensitive data. If your documents include sensitive data such as Social Security numbers, banking records, or other information that you are legally required to protect, your first instinct may be to keep it in-house so you can be directly responsible for it. However in many cases, ASPs can provide better security than you could in your own data center, thanks to more layers of security and larger IT staffs.

Since both options provide secure, reliable document management options, a final way to make the choice is to consider which of the potential downsides you fear more: being unable to access your documents while your Internet connection is down, or losing data and time because your server crashes.

You can also start off with a hosted service, then move to an in-house solution: ASPs should offer a seamless migration path that will allow you to easily export your data. If you're unsure of which direction you should go, this can be an easy way to get started without committing fully to either direction.

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