Email marketing software: In-house and self-hosted vs a Serviced model (Saas)

Email marketing software may be desktop-based or web-based. In this post we will cover the web-based models. And more specifically we will compare self-hosted solutions as opposed to serviced solutions (services).
  • Desktop-based software is the one that you install on your personal computer. Usually it is quite limited in capabilities especially when it comes to interacting with your subscribers and tracking your campaigns.
  • Web-based software (also called server-based) is installed on a web-server and it comes with a database where your newsletters, subscribers and reports are stored.
  • Web-based email marketing software may be further classified into In-house (self-hosted) and SaaS.
  • In-house means that you install it and maintain it on your own web server.
  • Saas which means Software as a Service is maintained by a 3rd party provider and offered to you as a service usually with a periodic subscription fee or a volume-based fee.
  • Both models (web-based and Saas) have pros and cons and you should choose based on your particular needs.
Here are some basics to get you started.
Serviced model
(Saas, Cloud)
Features Features tend to converge in all modern solutions. As soon as a new feature appears every competitor will follow with the same or even better offer. But it still can be a differentiating factor.
Good In-house solutions especially open source ones are more expandable and scalable (customization, integration with the rest of company's software). However, software vendors knowing that their product will be installed on a variety of servers sometimes tend to compromise on some features. That's why you usually read about the Requirements. Saas solutions also have some unique and powerful features because the provider has full control of the underlying technical infrastructure. A modern browser is usually what you need to have.
Cost of ownership & use With an In-house solution you pay only once to acquire the software. And you don't have to pay recurring monthly or volume fees. You may have to pay for updates/upgrades but this is optional. This is clearly a more cost-effective solution.
With Saas solutions you pay monthly subscription fees and/or volume-based fees. For frequent mailings and big mailing lists a Saas solution will be more expensive in the long run. For occasional, low-volume senders, a strictly pay as you go plan without a fixed fee may be a cost effective choice.
Capacity/Volume If you use shared hosting, with an In-house solution you will be limited on the number of outgoing emails that you can send in a time frame. But today with the abundance of cheap VPS hosting plans, dedicated servers and mail relay services this limitation should not be a concern. With Saas solutions you don't have this limitation. But the more you send the more you pay. And with some subscription plans you pay even if you don't send at all.
Deliverability Rumors have it that with good Saas vendors you will have better deliverability. So there must be some truth in it. And there is. But there might be also "content filtering" and restrictions related to the "quality" of your mailing lists. So deliverability, although a critical factor may be an overstated argument. There are things one can do to achieve equally good deliverability when running his own software from his own server. Mail singing, Unique IPs, feedback loops are easily and broadly available. See below the "Hybrid model".
Technical involvement Most vendors will offer you free installation and set-up. But there will be some configuration that you will still need to do yourself. Web-based solutions feel like a website. Some maintenance tasks (e.g. back-up) resemble quite a bit. Minimal to none. The service provider sets-up and monitors everything for you.
Data ownership and protection Although this should not be a concern with reputable Saas providers, companies may have policies that dictate the use of an In-house solution where data access is limited to its owners. This issue has gained a lot of attention today due to the proliferation of cloud-based services and privacy concerns.
And the winner is,
None really. It depends on your needs and objectives.
At this point it is worth considering the hybrid model.

The Hybrid model

  • You buy the software package to install on your own server.
  • If you have deliverability problems or volume restrictions by your Hosting company you purchase mail-relay services from an external provider (also called smtp services such as Amazon SES).
  • The hybrid model is particularly attractive to medium-heavy senders. Overall it results in a lower cost of ownership and greater technical flexibility.

Decision criteria

For most users it is not necessary to draw a Decision Matrix or do a Net Present Value analysis....
Whether you evaluating a Saas or an In-house solution keep in mind the following:
  • Does it have the features that I need?
  • Is it simple and easy to install and use?
  • Do I feel comfortable with the interface?
  • Is it affordable? In the short-term and in the long run?
  • Is it scalable? Can it support a growing business?
  • Is it based on widely used and supported technologies? Will this vendor or provider be here tomorrow?
  • Are there any lock-ins? Can I take my data and change provider or solution?
  • Does it have sufficient documentation and support?
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