What is Self-Hosted Software | An Overview with Pros and Cons

Table of contents

Chart of pros and cons of self-hosted software

Self-hosted software is also called on-premises software and refers to an open-source application installed and maintained by a person or an enterprise employing their private web servers.

Self-hosted software allows complete control over your infrastructure and data but requires more effort to manage, maintain, and secure. Many web apps you use on a daily basis, such as Google Docs and Gmail, are run on a third-party server. The server hosts the application when you want to use it, and you can then access it on a browser. 

However, when it comes to self-hosted solutions, they run on the user's servers; therefore, the user has full control of the data. For instance, self-hosted project management software can be accessed through the internet and is a good option for individuals or enterprises that want to be in charge of data security, privacy, bandwidth, and storage. But if you encounter an issue with the solution, you will be responsible for fixing it. 

Self-hosting a solution is a good choice for people and organizations who have the resources for setup and hosting. When implemented correctly, you can benefit greatly from the different features of a self-hosted platform, especially when it comes to data security. However, as the organization is responsible for hosting the platform adequately, it requires more effort, and there are risks involved in the platform’s implementation and operation. 

Here's what you should know about Self Hosting

  • Self-hosting involves deploying and managing software applications on an organization's own infrastructure, offering complete control, data security, and customization options.
  • This approach is crucial for industries with stringent data privacy requirements, such as healthcare, legal, and finance.
  • Organizations can implement self-hosting through renting private servers, creating virtualized environments, or leveraging Platform as a Service (PaaS) models.
  • While self-hosting provides control and data security, it comes with challenges like limited scalability, higher upfront costs, update responsibilities, and reliability concerns.
  • Self-hosting use cases span healthcare data management, legal firms, financial institutions, specialized manufacturing, large enterprises, educational institutions, and research facilities, each benefiting from tailored solutions that meet their specific needs.

In this Article:

Dreamfactory graphic

Generate a full-featured, documented, and secure REST API in minutes.

Generate a full-featured, documented, and secure REST API in minutes.

Generate your No Code REST API now

What is Self Hosting?

Self-hosting refers to the practice of deploying and maintaining software applications or services on an organization's own infrastructure, rather than relying on external cloud providers or third-party services. In a self-hosting setup, an enterprise takes direct responsibility for managing the software, hardware, and data, typically within its own premises or through private hosting arrangements.

This approach offers organizations complete control over their data, enhanced data security, extensive customization options, and reduced dependency on external vendors. Self-hosting is especially beneficial for businesses with specific privacy and compliance requirements, such as those in regulated industries like healthcare, legal, and finance. However, it also comes with challenges related to scalability, initial costs, update responsibilities, and reliability that organizations must carefully consider.

How Does Self Hosting Work?

Self-hosting involves deploying software applications or services on an organization's own infrastructure, allowing complete control over the management and maintenance of these resources.

Typically, self-hosted software is installed and operated on servers physically located within the organization's premises, giving them direct oversight and responsibility for their software ecosystem. This approach enables businesses to safeguard data and ensure data security, especially valuable for industries with stringent privacy concerns.

To implement self-hosting effectively, organizations may need an adept IT team to manage the infrastructure, software updates, and ongoing maintenance.

Why is Self Hosting Important?

Let’s look at the opportunities a self-hosted platform offers to your business:

Complete Control of Data

Self-hosted software requires you to purchase a license or a copy of the solution. Since the software is licensed, as it is being used within the premises of an individual or an enterprise, there is greater data protection as compared to cloud computing or SaaS (software-as-a-service) infrastructure. So the organization can retain all the data and is in charge of what happens to it. 

It primarily benefits organizations in highly regulated industries, such as healthcare, as they have extra privacy concerns. Such enterprises hesitate to take the leap into cloud computing. 

Maintains Data Security

With self-hosted software, an enterprise’s servers and data are physically located on the premises. So, the software's management and maintenance are their responsibility. This is especially helpful in the case of a cybersecurity threat when the ITops team can use backup and disaster recovery solutions to access crucial data. 

Self-hosted software is great for organizations with sensitive data, such as legal, healthcare, and finance. These companies must follow stringent cybersecurity regulations and often host their data onsite rather than opting for a data center located far away. 

Also, self-hosted software requires an adept IT team to manage the infrastructure and data security.

Enables Customization

When it comes to ease of customization, on-premise software has unlimited options as compared to cloud computing. It is the go-to solution for large enterprises with complex IT needs, so the customization offered by self-hosted solutions makes a world of difference. It is especially beneficial in niche industries such as specialized manufacturing, where you can modify the software according to specific requirements. 

Less Vendor Dependency

As you have direct control over the implementation and can customize the on-premise software, there is less dependency on the vendor. This gives you independence and long-term planning reliability. However, the complexity of custom deployment implies that you would require a dedicated IT team comprised of consultants and implementation specialists. 

Upgrade at Your Convenience

In today’s rapidly changing tech world, constant software updates are considered to be normal. However, your organization doesn’t require all these updates in order to operate successfully. As not all upgrades are significant, self-hosted software lets you decide whether to deploy updates. You can also decide when to deploy the updates released by the software developer.

Self-Hosting Challenges

Although self-hosting is excellent for data security and reliability, it has some downsides. Let’s have a look at the challenges you can encounter by opting for self-hosting.

Limited Scalability

Software scalability refers to the ability of a system to expand its functionality and capacity according to user demand. The software should be able to handle increasing workloads and data volumes. Moreover, it enables businesses to add and remove data without incurring additional costs. Scalability is crucial in deciding whether the software will adapt to the new users who join a system. Also, when it comes to integrations, you need to consider whether they are scalable. 

If you want to scale a self-hosted software, it can impact the hardware and uptime. Scalability also requires more planning and preparation for on-premise solutions compared to cloud computing, where it is simple to add more users or storage. 

Higher Costs

Self-hosted systems have higher upfront costs because of hosting and hardware-related expenses. Although cloud solutions aren’t cheaper, self-hosting can be more expensive, given that you need an IT department to install and maintain the hardware and software. Additionally, you need to factor in the time it takes to set up, maintain, and update on a monthly basis. You may end up paying thousands of dollars on self-hosting infrastructure, which would also take considerable time. However, in the long term, self-hosting may be cost-effective, especially if your organization has its own IT staff that manages the self-hosted software in-house. 

Update Responsibility

Although self-hosting gives you the freedom to choose when to update your software, it also comes with a big responsibility and requires technical expertise. You need an IT team and legal experts that can take care of the updates on a regular basis. Some of these updates are crucial if you want a competitive advantage or even to ensure that your organization abides by data laws. On the other hand, if you opt for cloud-based services, the updates are the provider’s job. 


Self-hosting is dependent on your hardware, so downtime and failure cannot be avoided. But when anything goes down in your self-hosted infrastructure, you cannot function until it is fixed. On the other hand, cloud servers can be easily re-spawned when they go down, thereby helping you resume work as soon as possible. It implies that you can get back to business much faster when there is an outage. However, it is not possible when your self-hosting has any issues.

Self Hosting Use Cases/Examples

Self-hosting finds application across various industries and scenarios, catering to specific needs and preferences. Here are some notable use cases and examples:

  1. Healthcare Data Management: Healthcare organizations often opt for self-hosted solutions to maintain patient records, ensuring compliance with strict data privacy regulations like HIPAA. Self-hosting allows them to exercise precise control over sensitive medical data.
  2. Legal Firms: Legal entities frequently self-host case management and document storage systems, where data confidentiality and security are paramount. This approach enables customization to meet the unique requirements of legal practices.
  3. Financial Institutions: Banks and financial institutions may self-host critical systems like core banking and customer data management. This choice aligns with stringent regulatory requirements and data protection standards in the financial sector.
  4. Specialized Manufacturing: Industries with highly specialized manufacturing processes benefit from self-hosted solutions that can be customized to match their unique production requirements. Such customization aids in optimizing efficiency and productivity.
  5. Large Enterprises: Large organizations with complex IT needs and a desire for independence often prefer self-hosted solutions. They can tailor software to their specific workflows and data handling processes, reducing dependency on external vendors.
  6. Educational Institutions: Educational institutions may self-host learning management systems (LMS) and student information systems (SIS) to maintain control over sensitive student data while customizing platforms to align with their teaching methods.
  7. Research Institutions: Research facilities dealing with sensitive research data may choose self-hosted data repositories to meet security and compliance standards specific to their field.

Employing Self-Hosting Services for Your Business

If your enterprise prefers self-hosting over cloud computing, there are several ways of implementing it. Rather than doing everything in-house, you can also take help from other providers. Here is how your enterprise can use a self-hosted service and save valuable time and resources: 

  1. You can rent private servers from a hosting provider. These servers are not accessible to the public and are used by individuals or organizations to run their own applications and services.
  2. You can use a virtual environment to self-host a solution. This refers to a software-based environment that allows you to run multiple applications and services on a single physical server by creating virtualized instances of operating systems and hardware. Virtualization allows you to isolate applications from each other and manage and allocate resources efficiently.
  3. Platform as a Service (PaaS) is another effective model that you can utilize successfully for self-hosting. PaaS is a cloud computing model where a service provider offers a platform for customers to develop, run, and manage their applications and services without the complexity of building and maintaining the infrastructure. The provider takes care of the underlying infrastructure, while the customer focuses on building and running their applications.

In general, the choice between all these options depends on the specific requirements of your application or service, including security, performance, cost, and ease of management.

Dreamfactory graphic

Generate a full-featured, documented, and secure REST API in minutes.

Generate a full-featured, documented, and secure REST API in minutes.

Generate your No Code REST API now

Leverage DreamFactory for Self-Hosting API-Driven Apps

DreamFactory’s open-source backend as a service (BaaS) platform enables developers to build API-driven applications and services. You can deploy the DreamFactory platform on your own servers or infrastructure.

By using DreamFactory, you can rapidly build and deploy RESTful APIs for your web and mobile applications. It supports multiple databases, including MySQL, Microsoft SQL Server, and PostgreSQL. It can connect to various other systems, such as file storage services, email, and push notifications, through its API-driven platform.

Additionally, DreamFactory provides a user-friendly administrative interface for managing API access, authentication, and authorization, making it easy for developers to manage and secure their APIs.So, if you are looking for a fast and scalable way to build and manage APIs, DreamFactory provides complete control over the infrastructure and security of your platform. Start your free trial here.

Related Reading: