Many businesses, particularly small companies, struggle with their software requirements. The SaaS business model levels the playing field by making software available to all. How can it help your business? Check out here.
Does your business have the budget for software licenses? How about their yearly maintenance costs?
To stay competitive in the 21st-century global market, businesses need to invest in reliable IT systems. Unfortunately, many small companies struggle to catch up with the rapidly evolving software technologies. Acquiring and maintaining software is a significant expense that can drain your resources, especially small businesses. Software-as-a-Service (SaaS) makes the software accessible to every business size.
Over the past years, SaaS products soared to become the fastest-growing segment in the IT industry. And as many organizations adopt virtual work arrangements due to the pandemic, end-user public cloud services are forecast to grow 23.1% in 2021 to total $332.3 billion and by 2022 to reach $428 billion, according to Gartner.
Many businesses, especially in the logistics and distribution industries, are transitioning from on-premise IT systems to cloud-based SaaS products. Although SaaS solutions are expected to become a mainstay, many businesses remain unaware of this service delivery model.
What is SaaS Business Model?
SaaS is a software delivery model that enables end-users to use cloud-based software from any device through the Internet. If you need an IT solution, like Microsoft Office, you don’t need to purchase it right away. Instead, you rent the software, thus cutting the costs remarkably. It also offers more flexibility as end-users can access the software anytime, anywhere, as long as you have a stable internet connection.
What does this mean to your business? Unlike traditional on-premise IT solutions where the software is installed locally, SaaS is hosted on a central server by the SaaS provider. This practically outsources all the responsibilities of maintaining, troubleshooting, upgrading, and securing the software. It’s like renting an apartment, the owner spends on the upkeep of the property, but you get to use it.
Transferring software ownership reduces the associated costs. With traditional on-premises software, you pay upfront to purchase a license as well as recurring charges for its maintenance and upgrade. With SaaS, you pay a fixed subscription fee (whether monthly, annually, or any other agreed payment terms) that covers licenses, support, and additional costs. For small businesses, spreading out costs is more manageable than paying an upfront fee for the license plus a huge maintenance bill every year.
Advantages of SaaS
Much like the benefits of custom software development, SaaS offers numerous advantages for businesses and end-users. Aside from the benefits briefly discussed above, here are other benefits of Software-as-a-Service:
Lower upfront cost – SaaS products are subscription-based, so you don’t need to shell out a considerable amount on license fees. Likewise, since the provider hosts and manages the IT infrastructure, you can save on hardware and software maintenance fees.
Ready to go – SaaS solutions offer a quick setup and deployment feature. The software is already configured and installed on the cloud so that you can access and use it almost immediately. You can skip the lengthy deployment process typical with on-premises software.
Scalability – SaaS providers offer flexible subscription options depending on your business needs. Depending on your business requirements, you can scale up and down or add new SaaS offerings. This allows you to boost capacity and immediately handle the sudden influx of users.
Easy upgrades – SaaS solutions are regularly updated or upgraded by their developers. Unlike on-premises software where you buy upgrades and go through a lengthy installation process, SaaS products are upgraded automatically by their provider.
Disadvantages of SaaS
With SaaS solutions, you can maximize your limited IT budget while allowing you to improve business processes and stay competitive. But while SaaS has many benefits, there are also several SaaS software development challenges to consider when making a decision.
Internet-dependent – High-speed internet connection is necessary to access SaaS solutions. Unfortunately, speedy and reliable Internet may not be available in all areas, so this is a significant consideration when planning to adopt SaaS tools
Limited range of applications – Although SaaS products are growing fast, many applications are not yet available through this platform.
Privacy and security concerns – With SaaS, you need to share classified data with your provider, which is a significant concern for many customers. Although reliable SaaS providers have robust data security strategies, the risk of hacks and data breaches is still ever-present. This makes it crucial to choose the right provider.
Lack of control – SaaS products are hosted and owned by a third party, so you don’t have complete control over their upkeep. You cannot modify its features or defer upgrades but rely solely on the SaaS provider. This leaves vital business functions at the hands of a third party and can cause several issues.
Compatibility issues – If you already have an existing IT infrastructure and plan to use it alongside the SaaS tools, you have to make sure both systems are compatible. This is a common problem with Mac OS users since most SaaS products are optimized for Windows OS.
These pros and cons are among the things to consider when deciding whether SaaS is right for your business.