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Software as a Service: Advantages and Disadvantages of SaaS

By September 4, 2018January 12th, 2019No Comments

For years, software procurement has become more and more established on the market via Software as a Service, SaaS for short. The sustained positive economic development, the willingness to invest in new IT solutions as well as the growing pressure of competition will continue to push rental software into the focus of SMEs – along with the advantages and disadvantages of SaaS.

Software, licenses, maintenance, hardware – an all-inclusive package costs companies thousands of dollars a month or annually. Software as a Service (SaaS), unlike the traditional software delivery process, offers some advantages; but also disadvantages. Therefore,  for every company, it is not worth entering the new world of software. In a nutshell, the three following pillars undoubtedly are among the benefits of SaaS usage: cost savings, high flexibility of the system, and ease of implementation and handling. At the same time, however, these pillars contain negative aspects that should be considered by SMEs. The pillars also stand for the economic advantage of such cloud solutions.

What is SaaS? Software as a Service is a subset of cloud computing, The SaaS model is based on the principle that an external IT service provider operates the software and the IT infrastructure and used by the customer as a service. For the use of online services, an Internet-enabled computer and the Internet connection to the external IT service provider is required. Access to the software is usually realized via a web browser. For use and operation, the service user pays a usage-based fee. The SaaS model partially saves the customer the initial and operating costs. The service provider assumes the complete IT administration and other services such as maintenance and updates. For this purpose, the IT infrastructure, including all administrative tasks, is outsourced. Source: Wikipedia

SaaS cost savings

For software as a service, the cost advantage is a weighty argument. Companies want a transparent statement of the expected costs before switching from in-house software licenses to a SaaS IT service.

In most cases, providers are transparent enough from the beginning to show all the costs. It should be noted that typically internal IT departments spend 60-80 percent of the existing budget for the maintenance of in-house systems. Follow-up costs for maintenance and servicing also have unpredictable sizes. It’s worth taking a look at the SaaS concept, especially for start-ups. Thus, in the start-up phase of the respective company, enormous investments are made (infrastructure, development of know-how, license purchases), which should initially be avoided.

Through detailed billing, the respective tenant of the software receives an overview of the variable and fixed costs incurred by the company. Specifically, the variable costs are interesting because, on the one hand, they describe additional costs, but also stand for modern and necessary flexibility. By avoiding their own capital risk and flexibility, SaaS allows a greater focus on their own core competencies and thus a needs-based adaptation of their own IT skills and resources – and thus more time for their own customers. In a nutshell: the software has to be efficient.

Benefits SaaS for users

• Focus on core business
• Liquidity
• High selection of providers
• Costs are scalable
• Based on a consumption-based pay-as-you-go model
• Allows for short implementation
times • Allows for reduced complexity
• Relieves customers from the hassle of maintaining software
• The risk lies with the provider
• Short notice periods

Disadvantages SaaS for users

• Dependence on the service provider
• Requires the supplier’s evaluation of respectability, reliability
• Requires comprehensive contractual regulation of all aspects of service provision, content, and services
• Requires a clear contractual regulation of data transfer at project startup and data return at the end of the contract
• Contribution adjustments, connection charges
• Standardization Innovation – no solution tailored to the customer
• Data security, encryption
• Internal adjustments
• Short notice periods for providers

SaaS Flexibility

Basically, the flexibility is much higher with an on-demand solution than with a self-operated, developed and maintained on-premise solution. The term, flexibility should however not be the only flexible application, and adaptive subscription models described; the presentation and export of data as well as the usability should also be considered. So the software will continue to serve the employee in the future. If the company can use the software flexibly regardless of the order, the employee is not additionally restricted in the sequence; only then is the use flexible and advisable. No matter how a company decides: SaaS models are particularly suitable for growth phases. The individual applications and functions can be used independently of each other. They can be added or removed as needed. An adaptation to new conditions is cost-effective and without loss of time, Important: Updates of the software should be taken over without additional costs by the provider.

Saas implementation and SaaS handling

The simplicity of this arises from the fact that the company does not need its own IT infrastructure. No development time, no coordination with other IT systems – the provider usually ensures the smooth running; for a permanently running system. Only an Internet connection and PC are necessary for access to SaaS. Advantage: It is also possible to work outside the opening hours and to access the system from the outside. Companies should make sure that the connection is always encrypted. The degree of encryption should, therefore, be compared with other providers.

In terms of handling, the provider should guarantee that communication is possible internally and externally via the same platform. In addition, the backup of data should be regulated naturally and automatically. Nice way and a sign of flexibility: adjustments and extensions should be made by the company itself. In terms of usability, it is of enormous importance that older employees are also picked up.

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