In computing days of yore, a company would buy a license for software and install it in their computer center, using vendor support and a team of systems programmers to get it up and running. In today’s Software as a Service paradigm, things work a little differently. There are clear benefits to SaaS, but also some important disadvantages to consider before moving to a SaaS application.
The most obvious benefit is the IT cost savings realized when there is no longer a need to invest in data center and hardware infrastructure. A recent study by Computer Economics of seven businesses that employ cloud services found an average 15% savings. Lower upfront costs makes SaaS especially attractive for new businesses, which can start up and scale up faster and cheaper. And speed is another crucial benefit. Maintaining a service contract with a cloud provider means there is no time required for an infrastructure implementation and no need to hire and pay an IT staff to support it.
There are benefits to the SaaS model for the SaaS provider as well. Since they control all the software, they spend less time with customers fixing problems across different platforms. They don’t need to hire teams of specialists for on premise integration or migration support either. These cost savings can be passed on to SaaS clients.
Since they are browser-based, SaaS applications are accessible almost anywhere through myriad devices. This gives employees access to the applications they need – at home and on the road. It also means that system disaster recovery is essentially outsourced. In the past, companies had to plan for and test disaster recovery systems on a regular basis, a significant time sink.
And SaaS also means that there is less reason to reinvent the wheel. Developers often spent their time building custom versions of conventional business applications in-house. Now, a wide range of readily available SaaS solutions mean that companies can focus on core competencies, not spend resources building and supporting custom software.
Businesses like to think that having their data on premise guarantees more security, although this may not always be true. But there’s no guarantee that data is completely secured in the cloud either; at best it becomes somebody else’s problem. When choosing a Software as a Service provider, organizations need a clear explanation of how security and encryption is handled.
Performance is another important consideration. With SaaS, your organization is at the mercy of the performance capability of the SaaS provider. For front facing applications, this could be a disaster. They may not be the best ones to move to SaaS. The Service Level Agreement you sign with the provider should include specific timeframes for downtime, response time, time to repair, service unavailability and scheduled maintenance.
In the past, if the supplier of a licensed product was bought or went out of business, it did not mean someone shut down the software. Not so for SaaS providers. Last year, cloud hosting company Nirvanix shutdown after giving only a few weeks’ notice to customers, who were faced with the impossible task of migrating their files off the platform. Ensuring that a provider’s terms of service gives adequate notice before a shutdown is not enough. Organizations need a plan B in case of shutdown. And while you may not need to plan for disaster recovery for a data center any longer, you will still need to ensure that your SaaS provider has their own business continuity plan in case of disaster. Another possible problem: with SaaS, companies also no longer have the luxury of scheduling software updates for when it best fits an organization’s timetable.
Integrating with a SaaS application does not necessarily run smoothly either. Not all providers have a robust set of APIs to integrate with existing software, meaning that retrofitting can be expensive. And end users may be unhappy with the lack of customization or gap in features when comparing a SaaS solution with an in-house application.
And speaking of in-house solutions, one significant problem is that the ease of getting started on a SaaS application can result in the uncontrolled distribution of cloud computer applications. Anyone who was in IT during the 1990’s remembers Access databases popping up like mushrooms all over their organization. The lack of business oversight of such applications not only poses legal and operational issues; ultimately, some department will be left with the unpleasant task of migrating data from rogue applications back into the enterprise – or risk losing it altogether.
Businesses are going to have to learn to move to the cloud, because that is where the future lies. But a clear-eyed approach to signing up for cloud-based applications is essential. Conventional wisdom tells us that problems are opportunities in disguise. When it comes to SaaS, the inverse is also true: opportunities may hide some real problems.
At Izenda, we are all about the next generation of business software. We help keep our clients ahead of the curve by providing ad-hoc reporting and visualizations that help businesses make better decisions from their data.