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SAAS or Software-as-a-Service: What businesses need to know

Software-as-a-Service (SaaS) is a new distribution model that is rapidly gaining popularity with businesses all over the world. A branch of cloud computing, SaaS lets businesses and consumers lease a particular piece of software from a third-party supplier, who delivers it over a network connection – most commonly the Internet. As with other examples of cloud computing, this provides a number of benefits in terms of flexibility, scalability and affordability, which is why it is hardly surprising that many businesses have been willing to embrace SaaS. In fact, global SaaS revenues are expected to grow 21 per cent across 2015, reaching $106 billion by next year.

The fact that businesses are no longer purchasing their software outright, as they did with previous distribution models, is mirrored by the growth of other cloud sectors and, indeed, other industries. Resource sharing is gaining more traction in both business and consumer markets, enabling much greater efficiencies to be achieved. With Software-as-a-Service, these efficiencies also lead to a number of other advantages that businesses all over the world stand to benefit from.

Business benefits

  • Affordability – Because SaaS sees businesses lease rather than own software, the pricing model is radically different. Instead of a one-off charge, organisations pay an ongoing subscription fee, usually on a month-by-month basis, dependent on the number of users. By eliminating their CAPEX costs, Software-as-a-Service has allowed smaller businesses to have access to applications that they may previously have been unable to afford. Because costs are paid in predictable monthly instalments, they are also easy to manage, which prevents IT budgets from getting overly complicated.
  • Time savings – Rather than businesses having to install, manage and configure software themselves, the cloud vendor handles all these administrative duties, meaning that staff can get on with more important aspects of their job. Also, because the third-party supplier is responsible for updates and patches, organisations do not have to worry about whether software is outdated. Updates are more frequent and incremental when using a cloud supplier, meaning more thorough software maintenance is achieved.
  • Mobility – A major benefit of cloud computing generally, SaaS offers businesses much greater mobility than with traditional software offerings. Because applications are accessed over an Internet connection, they can be used across any compatible device in any location. This means employees have the freedom to work wherever and whenever they need to, allowing them to be productive while on the move. With more and more devices entering the workplace, from smartphones to IoT products, the need to access software across multiple devices is growing.
  • Scalability – Another major benefit of Software-as-a-Service is the way in which it is easily and rapidly scalable. Instead of having to purchase more licenses and potentially upgrade your server capacity, businesses simply adjust their subscription if they need to scale the amount of software users up or down. This is hugely beneficial for businesses that experience rapid, unexpected growth or those that employ contract workers during periods of peak demand.

Disadvantages of SaaS

  • Outages – Unlike traditional, on-premise software offerings, SaaS will be affected by network disruptions. If your Internet connection fails, for example, you will not be able to access your software, which could be hugely disruptive to your business processes. Any technical issues that impact on your cloud supplier may also cause software outages. Businesses should make sure that their SaaS vendor has a service level agreement (SLA) that meets their needs.
  • Network infrastructure – If businesses are accessing their software via an Internet connection, they will also need to ensure that their network infrastructure is able to cope with the increased demand. If you have insufficient bandwidth to cope with your current number of SaaS users, you may experience slow speeds and a fall in productivity.
  • Security – Although businesses are generally more trusting of cloud packages than they were previously, some security concerns still remain. Predominantly they surround the transfer of data over an Internet connection, which leaves it open to interception by cyberattackers. However, many cloud suppliers employ extremely stringent security methods, such as end-to-end encryption, ensuring that any data associated with your SaaS package remains protected. Organisations should also note that the ease of accessing Software-as-a-Service tools is a key factor in the rise of shadow IT. Although there is nothing inherently wrong with employees accessing cloud applications without the knowledge of the IT department, it can lead to security issues and integration problems in the long term.
  • Compliance – Another problem with storing application data with an external cloud provider, is that it can lead to compliance issues. Depending on the type of information that your business works with, national regulations may state that data has to be stored on-premise.

Common SaaS examples

Software-as-a-Service now comes in many forms, enabling businesses from all industries to embrace it. However, there are certain business processes that are more suited to the SaaS model, particularly those that involve high volumes of data. Analytics programs, such as Google Analytics, and customer relationship management (CRM) tools are often supplied by cloud vendors as they have the storage and network infrastructure required to transfer, process and store the kind of traffic associated with big data.

Business collaboration tools are also predominantly delivered as a service. By storing applications like video conferencing, project management and storage in the cloud, employees based in different teams and locations can easily access documents and transfer information. Social enterprise packages, including both internal social networks and social media management tools, are also increasingly common SaaS examples.

Software-as-a-Service has brought about many changes to the business landscape. In particular, it has enabled greater competition by removing prohibitive upfront costs that may have prevented smaller firms from accessing critical software. Before adopting SaaS, businesses should first assess whether their chosen supplier can deliver the security and reliability that they need. If they can, then a world of benefits are on offer, which could give your organisation the competitive edge to overcome its rivals.

Image Credit: Alexander Supertramp / Shutterstock

Barclay has been writing about technology for a decade, starting out as a freelancer with IT Pro Portal covering everything from London’s start-up scene to comparisons of the best cloud storage services.  After that, he spent some time as the managing editor of an online outlet focusing on cloud computing, furthering his interest in virtualization, Big Data, and the Internet of Things.