The rising importance of the internet allowed the creation of many “Software as a Service” products, also known by the acronym SaaS or as software on-demand. It is a way of providing software applications to end users directly online, by accessing the service via an internet connection. A SaaS product can offer great benefits for companies, mainly in terms of cost reduction and flexibility. However, the disadvantages of a SaaS (such as lack of direct control) are substantial and should not be ignored by IT management.

What is Software as a Service (SaaS)?

This is a license and use model where the software is:

  • licensed by subscription, usually monthly, quarterly or yearly
  • centrally hosted in the cloud
  • accessible from a browser via an internet connection

On average, every company uses 16 SaaS applications, it was 8 in 2015 (Source: BetterCloud)

SaaS is an alternative to traditional software-on-premise installations that we have been accustomed to over the past few decades. It has become a very common method for many business applications, including:

  • communication tools
  • accounting programs
  • customer relations management
  • human resources management
  • resources planning
  • business performance management

Let’s list what the advantages and disadvantages of a solution like the SaaS can be; this allows us to evaluate the use of plug-and-play systems as a whole, rather than systems on specially created platforms.

17% of Saas providers offer a Freemium version (Source: Totango)

The advantages of a SaaS

SaaS offers many potential advantages over traditional business software installation models, including:

Lower initial costs: a SaaS is generally based on subscription and does not include initial licensing costs, which means lower initial costs. In addition, the SaaS provider manages the IT infrastructure that runs the software, which reduces the cost of maintaining hardware and software.

Quick configuration and implementation: a SaaS application is already installed and configured on the cloud. This minimizes the common delays resulting from traditional software distribution.

Simple updates: SaaS providers manage hardware and software updates, distribute updates centrally to hosted applications and remove this workload and user access and responsibility.

Accessibility: all you need to access a SaaS application is a browser and an internet connection, making SaaS more accessible than traditional company software.

Scalability: SaaS providers typically offer many subscription options and flexibility to change subscriptions as you want and when needed, for example when multiple users need access to the service.

A tool designed as a SaaS can help you get the most from a limited IT budget and gives you access to the latest technology and professional support. However, some potential disadvantages should also be considered before making a final decision.

Disadvantages of a SaaS

The SaaS model sometimes has some shortcomings, including:

Lack of control: an internal application gives companies a higher level of control than solutions hosted by a third party.

Data security concerns: access management and the confidentiality of sensitive information is an important consideration for the cloud and hosted services.

Connectivity Requirements: Because the SaaS model is based on web delivery, if the internet service does not work, you will lose access to your software or data. This occurs in two different situations: lack of connection from the user or problems / interruption of service by the supplier.

Performance: SaaS can run slower than local client or server applications, so keep in mind when the software is not hosted on a local machine.

These are some benefits and advantages that can be found in this type of solution. Effectiveness and cost-opportunity are two determining variables.

80% of CRM projects or intercompany applications require at least more than 9 releases to become productive, and even when they become operational they require a maintenance effort of more than 90% to initial estimates

We have seen some advantages and some disadvantages in choosing to use a SaaS. A plug-and-play system hosted in the cloud allows for a faster project start up, because configurations and customizations are minimal. However, this brakes user adoption because change and innovation are all moved to the end user.

59% of companies provide employees with the necessary tools, but without making them easily accessible (Source: VMware)

A gamification platform is instead a more complex structure, where different modules are integrated to provide a sufficiently customized tool. The strong push of these tools is given by the self-learning to which users are brought. The adoption rates are therefore higher and allow companies to innovate through digital tools able to bring a real transformation in productivity and project management without having to go through the design, which has always been risky and long, immediately obtaining the advantage of be operational and test opportunities first.