Have You Heard About SaaS? Is it Right for You?

Updated: June 18, 2010

Let's start off with a little quiz. SaaS is: A) a discount airline offering direct flights to Finland, B) a turbo charged automobile well suited for the German Autobahn, C) Software as a Service, D) not as good as the hype would have you believe. If you answered "C", you get points for accuracy. If you answered "D", you have passed the quiz with honors! (Don't feel bad if you answered A or B)

Simply put, Software as a Service (SaaS) is a delivery method for software in which the applications are hosted by a third party, rather than reside on your servers. To access the software, you pay monthly subscriptions fees based on the number of users. Many midmarket businesses are opting for SaaS for their Enterprise Resource Planning (ERP) software, seeing it as a very attractive alternative to purchasing and installing ERP software. It's easy to see why this model is popular - no upfront software costs, fast implementation, no new hardware to purchase and maintain. But there are many critical factors to take into account if you are considering SaaS ERP solution for your business.

Someone else will own YOUR financial data!

There is no getting around this fact - if a third party is hosting your ERP software, then your General Ledger, your receivables, your confidential data is residing on a server owned by another company. Who truly owns the data? What happens to your data if that company goes bankrupt? These are risks you need to consider. Also, data will be traveling back and forth between your users and the hosting provider. What happens if your client list gets hacked?

There are costs down the road

Sure, $60 a month per user sounds great when compared to $2,250 per user to purchase ERP software, but make sure you are calculating the true cost. SaaS typically is on a named user basis; on premise ERP software is purchased on a concurrent user basis. Over three years, subscription based pricing probably will be more. Plus, with numerous low cost leasing options available in this market, purchasing ERP software does not necessarily mean you have to pay a lot upfront.

You still will have hardware to maintain

Many companies believe that SaaS will allow them to retire existing hardware. But a recent Forrester Research report found that most companies deploying a SaaS environment still need to maintain some on premise software to fill in gaps that the hosted solution doesn't address. And with the cost of hardware going down, are the hardware savings really that great?

Featured Research
  • The Role of Self-Service in Modern Contact Centers

    By 2020, 85% of customers' relationships with companies will be managed without any contact with human services representatives. What does that mean for your business? The data shows that companies need to offer effective self-service options in order to remain competitive. However, many contact centers are confused about how their core contact center software fits into self-service. more

  • 7 key questions to ask any ERP provider

    Having a fast-growing business is good. Having to overhaul your technology every time you need to scale is not. Upgrading to a more complete Enterprise Resource Planning (ERP) solution can help, but how do you ensure the solution you choose is exactly what you need? To help you with your search, we’ve pulled together 7 key questions every fast-growing business should ask before choosing a cloud-based ERP solution, including: more

  • How Finance Leadership Pays Off

    Oxford Economics recently surveyed 1,500 finance executives and it’s clear that small and midsize companies are growing significantly faster than larger companies. But, there are also big opportunities for finance to increase efficiency, boost financial performance, and work more strategically. Why is that? more

  • Professional Services Audience – Improve Profitability Infographic

    As a Professional Services Organization (PSO), you know the importance of customer satisfaction. In fact, 47% of PSO leaders say managing changing customer expectations is their top challenge. That’s why many firms are engaging smarter project management technology, even before deals are signed, to ensure project profitability. How are these leaders utilizing technology? Find out now. more

  • 9 Tips for a Compelling Video Presentation

    Face-to-face communication is the most effective way to collaborate and bring ideas to life in your business. Because of this, many businesses invest heavily in travel budgets so they can meet in person to create and nurture business opportunities. However, video technology has become more accessible, affordable, and user-friendly over the years. In fact, the enterprise video business market will reach $36.5 billion by 2018. more