Traditionally, administrators install, manage, and support software on a local computing device within an organization’s environment. For example, Microsoft Word resides on a personal computer. Administrators also manage the operation, upkeep, and maintenance of Word.
By contrast, with online services, a critical portion of the software generally resides with a service provider outside the local computer. This does not mean all the software resides with the service provider; there may be some software local to the personal computer that delivers the value of the online service or enhances the user experience. The common theme among online services is that users derive a significant portion of the value of the software by accessing the service provider’s systems remotely. Another key aspect of online services is that the service provider is responsible for managing the operation, upkeep and maintenance of the software. With Microsoft online services, Microsoft is the service provider that hosts and manages the software for you.