What is SaaS?
In numerous business sectors, Software-as-a-Service (SaaS) has been gaining some serious traction among companies. Before going any further, here’s a quick little definition of SaaS from Investopedia:
“A cloud-computing approach to providing users with computer applications. Instead of each user having to install the software on his computer, the user is able to access the program via the internet. Businesses commonly use software as a service (SaaS) in customer retention management, human resources and procurement. Technology companies, financial services companies and utilities have lead the business world in adopting SaaS technology.”
It’s not hard to see why SaaS has been catching on among companies whose stock in trade is quick response times and fast turnarounds. For one thing, technology advances at a truly astronomical pace – computer hardware obsolescence occurs virtually the second a product is rolled out onto the market. For most businesses, frequently keeping pace with technological evolutions as they happen would engender insurmountable costs. Purchasing an IT service over the cloud so as to leave your provider with the challenge of keeping up with the technology arms race certainly has the appearance of being more fiscally-sound. However, things may not be quite so simple…
For example, one possible monkey wrench in the SaaS panacea actually stems from its key benefit of being outsourced. Even with very qualified personnel at the helm, if your SaaS provider doesn’t offer onsite and/or real-time support during urgent events, your company could run into serious issues for which you are unequipped to resolve nimbly. Clearly, there are issues that you must consider before you opt for the SaaS route.
In the spirit of helpfulness, we at Cimpl offer you a useful list of arguments for using SaaS as well as issues to consider when selecting a SaaS provider. First, the pro-SaaS points!
Reasons you WANT SaaS
- Quick access to innovation: SaaS, almost by definition, requires that users easily receive software updates and upgrades relative to legacy software/hardware. Remember: the burden of keeping up with technological advance lies with the SaaS provider!
- Fewer upfront costs/Lower Total Cost of Ownership (TCO): You’re not paying for infrastructure because you’re only paying for software. Kiss pricey hardware purchases goodbye!
- Greater processing efficiencies: Any business service or process that you entrust to an SaaS provider means it becomes one less process that you must do yourself – you’ve freed up your own resources to do something at which you’re more competent. On the provider’s end, they’re dedicating all their resources to carrying out the desired task, and as such should be more efficient than you on this front.
- Fast deployment: Good SaaS vendors will roll out their applications when you’re ready. You’re not hiring and training people on a whole new set of protocols – you’re hiring a service that’s set to take off immediately because that’s their job (of course, the good SaaS vendors will make sure to train you and your staff in the optimal use of their service – do see the section below on how to pick your SaaS vendor)!
- Easier integration with standard tools: Good SaaS providers know that they’re catering to a broad audience. As such, they’re going to make sure that their solutions are built off a common set of web service protocols and application programming interfaces (APIs) – this makes the good SaaS easier to integrate with existing ERP/other business systems you may have.
- Early insights into best practices and benchmarks: When a good SaaS vendor reaches a critical mass of customers, the provider can and should aggregate any non-proprietary, non-confidential activity data from its customer base. In this way, the provider creates an extremely valuable and unique pool of benchmark data that can be further shared or sold back to its customers as a way to glean important insights into their respective industries and business trends.
- Less risk: Most SaaS vendors offer a 30-day trial – that way, you can “test-drive” the solutions. You really can’t do that with hardware solutions most of the time – once you’ve invested heavily in an onsite infrastructure, it’s staying put until you get rid of it…
When SaaS could be less-than-optimal
Now, as much as SaaS is a very good idea for many businesses, I’d be less than honest if I didn’t point out its drawbacks. They are few, and they are far outweighed by the benefits. Regardless, in the spirit of transparency, it’s important that I share this with you. And so, here are issues to note:
- Recurring payments: Most SaaS providers aren’t Google or Dropbox – they need to charge fees for their services because, as noted above, they really need to keep up with technological advances and trends long before anyone else. That investment has to come from the fees they charge you, regularly and continuously. Once you sign on, you’re going to have to factor in the costs of using the SaaS as a recurring item in your budgets – it becomes an operational expenditure.
- Continuous, mandatory upgrades – even if you don’t want them: I know people who still use MS Office 2003. It’s 2014. When you purchase a single user license for a particular piece of software, you have the option of using it for so long as there are machines or emulators that can run it. With SaaS, that alternative is effectively gone. Once the provider has made the decision to upgrade or migrate to a completely revamped version (for reasons of security or compliance with evolving standards), the earlier version with which you fell in love is well and truly gone…
- Mandatory access to reliable internet connections: Do I really need to explain this?
- SaaS cannot replace strategic processes and services: SaaS is fantastic for transactional processes – tracking inventory and assets, generating reports, etc. What it cannot do is help you do your thinking, especially not in deciding who to hire, or what major investments to make. Those are decisions that you must own (it can give you the data analysis you need to make the decision though)!
Choosing the right SaaS provider
I think that you’ll agree that, on balance, SaaS is a great idea! How would you go about finding a good SaaS vendor though? Well, here are the things to check for:
- Technology: You owe it to your company to thoroughly research software offered by vendors so as to ensure that it will provide the functionality, usability, hosting, security, and access that you need.
- Local expertise: Considerations such as the language of business in your jurisdiction(s), financial regulations, security issues, and compliance with governance laws are complex. You must fully address all of these topics detail prior to buying and implementing SaaS software.
- Integration: You must make sure that the SaaS provider can actually integrate their product into your existing core software.
- Service offerings: Make sure that your SaaS providers has a full range of services – from service desk support through fully managed services.
- R&D roadmap: A good SaaS provider needs to have an R&D roadmap to demonstrate the commitment and ability to future-proof their service. It’s the only way they’ll future-proof your investment, after all.