Hosted services takes the burden off your shoulders when it comes to investing in IT infrastructure. On premise servers and software can be a very large upfront cost taking years to see any kind of ROI. Coupled with maintenance and responsibility for security, backups and disaster recovery, on premise technology is not always the best solution.
The advantage of a hosted service is the flexibility you gain from anywhere access, easier cash flow management, no long term commitments and the ability to switch providers if necessary (no vendor lock in).
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