Hosting
Hosting refers to running software on servers in a data center so it is reachable over the network — including the provision of computing power, storage, networking and ongoing maintenance. For an ERP system, the hosting model determines where company data lives and who is responsible for availability, updates and backups.
Hosting refers to running an application on servers that sit in a data center and are reachable over a network — usually the internet. The host provides the technical foundation: computing power, working and data storage, network connectivity, power and cooling, and the physical and organizational protection of the systems. Depending on the model, the host also takes on tasks such as operating-system maintenance, updates, monitoring and backups. Hosting thus answers the fundamental question behind any business software: "Where does the system run, and who makes sure it keeps running?"
In the ERP context this question carries particular weight, because the ERP system holds a company's central data foundation — item and customer master data, orders, stock levels, documents and postings. The hosting model determines where this data is physically stored, how quickly and reliably the system is reachable, and how responsibility is divided between the company and the provider. Whether a business rents its ERP as a cloud service, runs it in its own server room or has it managed by a service provider shapes cost structure, security and daily effort in equal measure.
At a glance
- Hosting = running software on servers in a data center, reachable over the network
- Covers computing power, storage, networking, security and — depending on the model — maintenance
- Core models: cloud/SaaS, on-premise (self-operated) and managed hosting
- For an ERP it determines data location, availability and the division of responsibility
- In the DACH region, server location, GDPR and SLA commitments are decisive
How hosting works and what it includes
With hosting, the software does not run on the user's own computer but on a server that a provider operates in a data center. Users access it over the network — in a browser, via an app or through an interface. The server provides the four basic resources for this: computing power (CPU), working memory (RAM), persistent data storage and network connectivity. The data center supplies the surrounding environment: uninterruptible power supply, cooling, redundant internet links, fire protection and access control.
Technically, a single physical server is nowadays usually split into several virtual servers (virtualization), so that resources can be allocated flexibly and expanded when needed. This elasticity is at the heart of modern scalability: when load rises — for example during an online retailer's Christmas season — computing power and storage can be scaled up at short notice without buying new hardware. Hosting also covers ongoing operations: monitoring, applying security updates, regular backups and resolving faults when disruptions occur.
From hardware to application: the operating layers
Hosting can be thought of in layers of responsibility. At the very bottom sits the physical infrastructure (data center, servers, network), above it virtualization, then the operating system and database, and finally the actual application — in the case of an ERP, the business software itself. Depending on the hosting model, the line at which the provider becomes responsible runs through this stack at a different point: with pure server operation the company handles almost everything above the hardware, while with a ready-made cloud service it handles practically none of it.
Hosting models in the ERP environment
In practice, three basic forms of hosting an ERP system are distinguished. With cloud hosting — usually as SaaS (Software as a Service) — the software vendor runs the application itself in its own data center and provides it for a recurring fee; maintenance, updates and backups rest with the vendor. With on-premise operation the ERP runs on servers within the company itself or in a rented data center, and operation remains entirely in-house. In between sits managed hosting: a service provider supplies servers and takes on parts of the operation, while control over the software stays with the company.
The choice is not a purely technical question but a trade-off between control, effort and cost. Cloud models lower internal effort and upfront investment, but tie you more strongly to a single provider (vendor lock-in) and partly shift data sovereignty outside the company. Self-operation offers maximum control and individual customization, but demands staff, know-how and ongoing investment. Hybrid forms — for example a setup where sensitive parts stay in-house and scalable parts sit in the cloud — are also widespread.
Distinguishing hosting vs. cloud vs. SaaS
These terms overlap but do not mean the same thing. Hosting is the umbrella term for running software on third-party or your own servers. Cloud describes a particular kind of hosting — flexibly scalable, accessed over the network and paid for based on usage. SaaS is a specific form of cloud in which you rent a finished application without worrying about the technology underneath. In short: every SaaS is hosted, but not every hosting arrangement is cloud or SaaS. An on-premise ERP is hosted too — just in-house.
Why the hosting model matters so much for an ERP
Because the ERP is business-critical, hosting has a direct impact on a company's ability to operate. If the system goes down, order intake, invoicing and shipping come to a halt. That is why availability and response times are central criteria: they are contractually guaranteed in a Service Level Agreement (SLA), for example as a guaranteed availability of 99.9 percent per year. Equally important are structured backups and a recovery plan (disaster recovery), so that the system resumes quickly and without major data loss after an incident.
Economically, too, the model shapes total cost of ownership (TCO). Cloud hosting causes predictable recurring fees instead of high upfront investment, while self-operation bundles hardware, licenses, power, maintenance and staff. Security is decisive in both cases: certifications such as ISO 27001 attest to an audited security management system at the data center, and data encryption protects against unauthorized access. Clarifying these points before making a choice avoids later surprises around outages, costs or audits.
Hosting in the DACH region: data location and data protection
In German-speaking countries, alongside the technology it is above all the legal framework that is decisive. The GDPR requires that personal data — customers, suppliers, employees — be adequately protected and passed on to third parties only under clear conditions. In hosting, the provider is usually a data processor with whom a data processing agreement must be concluded. If the server location lies outside the EU, additional safeguards are needed; many DACH companies therefore prefer data centers in Germany, Austria or the EU.
On top of this come tax requirements: the GoBD require that tax-relevant data remain available, legible and unalterable throughout the statutory retention period. Hosting must support this through reliable backups and documented processes (procedural documentation) — regardless of whether the ERP runs in the cloud or in-house. Server location alone does not make a system legally compliant, but it is an important selection criterion and should be set down contractually.
Choosing the right model
There is no universally best hosting — the right choice depends on size, industry, IT know-how and security needs. A small online retailer without its own IT department is usually up and running faster and more cheaply with a cloud ERP, whereas a manufacturer with special customizations or strict internal requirements tends toward managed or self-operation. What matters is weighting the criteria in advance: data sovereignty, availability, running costs, scalability and the effort of running it yourself.
Before deciding, a structured review pays off: where are the servers located, what availability does the SLA guarantee, how do backups work, and how easily can you get your own data back when switching providers (exit strategy)? Answering these questions as part of the ERP selection process leads to a hosting model that fits not only today but also grows with the company.
Example
Example: A growing online retailer chooses its hosting
A retailer with 15 employees sells through its own shop and several marketplaces. At the start it runs its ERP as a cloud service in the SaaS model: the vendor hosts the software in an ISO 27001-certified data center in Germany, handles updates and backups, and the retailer pays a monthly fee per user. During the Christmas season the order volume grows tenfold — thanks to elastic cloud resources the system stays stable without any additional hardware being needed.
As the business grows, its individual requirements increase: the retailer wants deep customizations and its own interfaces. It therefore considers switching to managed hosting, where a service provider operates the servers but the company gains more control over the software. When comparing options it looks at server location, the availability of 99.9 percent guaranteed in the SLA, the backup concept and the ability to fully export the data in the event of a later switch.
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