SaaS, also known as “on-demand software,” is a subscription-based delivery method of licensing and using software. SaaS uses cloud computing to give users access to software they’ve paid a subscription for. This is different from more traditional forms of software, which requires hard drive storage space, processing power and other means to run and operate. Google Apps, Salesforce, and Cisco WebEx are typical examples of SaaS.
If your business is considering a subscription-based SaaS platform, rather than traditional software, it is essential to know precisely what the benefits are and the risks, if there are any, for your organization. In this discussion, we’ll break down the advantages and disadvantages of SaaS products and services.
Benefit: Requires Less On-Site Resources
Because SaaS products and providers utilize the cloud as a delivery means for the software, there’s a much smaller demand on the user side. You don’t have to install anything or run an application; it’s all handled on the provider’s end. This can save you a lot of money on having to buy sophisticated computers or robust IT solutions.
Risk: Data Breaches And Security
In today’s world, data breaches are commonplace. Many companies look at them as an inevitable occurrence, meaning they aren’t a matter of if, but when. When you enlist a SaaS product, you’re giving them some of your company data. While these companies have sophisticated security protocols in place to stop hackers and malicious attacks, they do happen. And, large SaaS companies are an even bigger target because their data coffers are much larger than your own private business. If the SaaS provider is hacked, you can have your data stolen.
Benefit: Low Upfront Costs
Software is expensive, especially if you need to buy multiple licenses at once. For new companies, adding software licenses can cost thousands and quickly dry up a budget. With software-as-a-service platforms, you don’t own the software, but instead, you own the right to access the service-software. This means it is much, much cheaper at the start and a more controllable, predictable cost.
Risk: Subscription Fees Add Up Overtime
Paying subscription fees for a SaaS product may save you money in the beginning, but if you’re using that software for a very long time, there’s an argument that you could end up paying more than if you had just forked over the lump sum and bought a more traditional software product.
Benefit: No Maintenance, Patches, Hotfixes Or Other Updates Necessary
We’re all familiar with software updates and patches that can cost lots of time and even money. With SaaS, these updates and maintenance are all handled on the provider’s end. Thus, you can spend more time using the software and less time waiting for updates to finish. That said, the cost of maintenance is likely factored into the monthly fee you’re paying for. So, this benefit isn’t entirely free.
Risk: Little Control Over Service Downtime
Most SaaS providers guarantee at least 99.5% service uptime. That’s pretty reliable! The reason it is a risk, however, is because you have no control over when this downtime will occur. You could be in the middle of closing an important deal on realty in Austin when all of a sudden, one of your software as a service products is unavailable and you have to wait to finish the transaction. Before you know it, the property is sold, and you’ve missed out on the opportunity!
What’s interesting about the risks and benefits of SaaS products is that some of the benefits create risks and vice versa. For example, not having to handle updates saves time, but you don’t have control over when those updates take place. Similarly, the upfront costs are lower, but you could pay more for on-demand software deals over a more extended period. You have to weigh these pluses and minuses against one another and find the scenario that makes the most sense for your business and its needs.