SaaS Advantages - The Customers Perspective

Why would you or your company consider using software deployed as a service, i.e. Software as a Service (SaaS)? There are numerous resources and discussions on the web about the advantages and disadvantages of utilizing SaaS as an alternative to purchasing a perpetual license. If you would like further insight on SaaS and its evolution, please see The difference between “ASP”, “OnDemand”, and “SaaS”.

Ultimately, the customer has the upper hand! These days, competition within the software industry is fiercer than ever. Software products and services are plentiful. With the abundant number of available solutions, clients are likely to find software for their needs delivered in both the traditional “product” model and the on demand SaaS “pay and use now” model. In some cases, SaaS providers have a hybrid model allowing customers the ability to choose from SaaS or software as a product. With this approach, clients can move from one delivery model to the other as the need arises. This hybrid approach may seem slick, but challenges arise and clients may find additional costs associated with data migration, scalability, and additional user training.

Why should the customer choose SaaS?

Choosing SaaS instead of a perpetual license has many advantages for both the small and large business. Small businesses typically can earn the highest return on investment utilizing SaaS. They benefit from technology that, originally, only larger businesses could afford or develop. Below are the top five reasons why a customer of any size can benefit from software as a service. Each of the benefits listed below are integrated. For example, the customer is up and running quickly. This is a benefit on its own, but at the same time, a fast deployment will reduce cost of system implementation for the customer. In summary, SaaS allows customers to speed implementation, minimize implementation expense and risk and overcomes in-house IT infrastructure.

1. Price!

The traditional delivery of software is almost always considered a capital or “upfront” investment. With the SaaS model, the customer pays as they consume the software. This helps by removing the barrier of entry for individuals who would not ordinarily be able to afford the software. The new pricing model also helps organizations using SaaS to appropriately budget software costs for future consumption. Unlike traditional software that can have significant hidden costs (additional modules, large setup fees, or additional hardware) the SaaS model has few up-front unknowns. (Note: Customers should still be aware of integration and scalability costs!) The number one benefit of SaaS is that the cost associated with building (or purchasing) and maintaining the SaaS solution is spread over a number of customers. This leads to shared costs and subsequent reduction in the cost of the software per customer.

2. Up and running quickly!

With SaaS or OnDemand software, onsite hardware or software installation is not required (in some situations minor installations may be required). Customers are up in running in hours or weeks instead of months or years (hence the name “OnDemand”). Following a configuration period, the user is typically “up and running”. Due to the nature of the SaaS delivery, users can typically run a free trial before purchase. A free trial can cut down on the amount of time it takes to complete the due diligence phase of purchasing software, which leads to a shortened implementation timeline.

3. Low risk!

Since users rent versus own the software, they are typically in a “pay-as-you-go” or “per transaction” pricing structure. There are almost always Service Level Agreements (SLA) that allow the customer to back out of the contract if the SaaS provider does not meet the agreed upon service requirements. If the software turns out not to fit the customer, the customer can “opt out” before they spend too much money. (Be aware that even with SaaS, there are several additional costs such as change management, training, integration, and setup).

4. Reduced IT headcount!

Due to the nature of SaaS, customers can use the software with thin client technology. This means that software no longer needs to be installed on PCs, which significantly cuts down on IT involvement. For the most part, customers do not have to worry about hardware, database support, scalability, uptime, reliability, or platforms. Since the SaaS provider is responsible for hosting, managing, and enhancing the software application, the customer can reduce and reallocate (or remove) the amount of IT staff and dollars to other areas. IT professionals, much like surgeons, are usually highly compensated and very specialized. By building software to fit the SaaS model, customers can eliminate specialized IT infrastructure for the application and its respective supporting applications. SaaS providers often have more application experience than in-house staff, leading to more quality software applications. Since the SaaS provider is responsible for providing these resources, each resource can be highly utilized and paid for over several customers.

5. Security & Data backup!

SaaS providers utilize more stringent security measures than the customer would. The SaaS model means that costs are shared amongst all the users, therefore there are typically more resources and funds to allocate to security than if one organization had to do this on their own. This applies to data backup, since the SaaS provider is also responsible for ensuring the safety of the data. There are more resources, so regular audits and detailed plans are used to ensure the safety of the data.

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