Lots of companies are building web services instead of traditional boxed software solutions. Salesforce.com is perhaps one of the most famous hosted applications – they offer companies a hosted CRM solution. We even used it for a while.

Then we realized that Salesforce.com didn’t work so well when the internet went down, or when we were not connected to the internet or when their servers went down. Wow, we might as well send the salesfolks home when the CRM system did not work. What if we did our accounting on a hosted system? How about our other applications?

It seems like other people are starting to realize that there is a significant downside to hosted applications. Check out these articles here, here, and here. Scott calls them ‘hostage’ applications – because we feel like hostages. Our data is held hostage and our business is held hostage.