Moving to a business model using software as a service (SaaS), users are provided access to application software and databases. Cloud providers manage the infrastructure and platforms that run the applications. SaaS is sometimes referred to as "on-demand software" and is usually priced on a pay-per-user basis .
SaaS allows a business the potential to reduce IT operational costs by outsourcing hardware and software maintenance and support to the cloud provider. This enables the business to reallocate IT operations costs away from hardware/software spending and personnel expenses onother goals.One drawback of SaaS is that the users' data is stored on the cloud provider's server. As a result, there could be unauthorized access to the data. For this reason, users are increasingly adopting intelligent third-party systems to help secure their data.
How Do I Choose Between SaaS & On-Premise?
The first step to answering this question is to determine the complexity of your business. We typically recommend SaaS to small to medium businesses with fairly straight forward business processes that are looking to reduce upfront expenses. Why? SaaS solutions are cost effective, but they are still working their way toward handling the complex requirements of large enterprise businesses. If there is one area that SaaS is still working to make up ground in terms of offerings, it’s delivering the same level of robust functionality that you find in on-premise systems.
Who Owns My Data?
A lot of buyers fear that SaaS vendors "own" their data. This is certainly something to be aware of when negotiating a service level agreement (SLA) with your SaaS vendor. In addition to setting system reliability standards, the SLA spells out parameters for issues, such as data ownership, security requirements and maintenance schedules. It’s an important and fairly complex document that we can’t cover sufficiently here.
To learn more about SLAs, check out this excellent post. What to look for in a Service Level Agreement
Is My Data Safe?
This is one of the biggest sticking points for companies that are considering SaaS. Security is an important consideration when allowing someone else to maintain your business-critical data, especially for companies with large data sets. However, with online banking and online payroll systems becoming the norm today, the security issue seems to be a bit of a red herring. Few things are more important than our bank accounts, yet most of us are comfortable with putting this information in the cloud even if we dont realize that most larger banks utilize the cloud in some respect.
In truth, data security is independent of whether the server is sitting right next to you or in a different city. Apples to apples, SaaS vendors are actually able to invest much more in security, backups and maintenance than any small to medium enterprise. For this reason, a web-based system typically has more security measures in place than an on-premise system. Furthermore, most SaaS vendors undergo stringent security procedures of SAS70 Type II audits that test the data center’s level of security.
What if My Vendor Goes Out of Business?
This is a legitimate concern as in the world of software, vendors come and go all the time – whether through industry consolidation or business failure. The data, however, is typically yours to keep. Most SaaS vendors prepay their data center hosting company to “keep the lights on.” This prepaid fee is meant to safeguard companies to ensure their data is accessible in the event something should happen with the vendor.
What Are the Internet / Operating System (OS) Limitations? The primary downside of all cloud computing is that it relies on a good Internet connection.
You’ll know better than anyone how this will affect you. How’s your Internet? While many believe on-premise systems to be more reliable, no system is fully immune to downtime. On-premise software is subject to electrical outages, hardware failures and a range of other risks. As a safeguard, some SaaS vendors have developed "offline" functionality that allows people to keep working in the event that Internet does go down. Once a solid connection is available again, all the data is synced to the system.
What’s the Difference Between SaaS and Cloud Computing?
It isn’t just semantics. The cloud refers to a set of incredibly complex infrastructure technology. At a fundamental level, it’s a collection of computers, servers, and databases that are connected together in a way that users can lease access to share their combined power. The computing power is scalable so that buyers can dynamically increase, or decrease, the amount of computing power they lease.
The cloud can refer to anything that’s hosted remotely and delivered via the Internet. While all cloud programs are run by underlying software, SaaS refers specifically to business software applications that are delivered via the cloud. Given the widespread growth of cloud accessibility, it’s been easier, faster and less expensive for SaaS developers to roll out applications as compared to traditional on-premise software development. Today, nearly every type of core business function – from human resources to enterprise resource planning – is available via SaaS.