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
  • Contact Center Software on a Budget

    Although contact center software is necessary for a modern contact center, it can be outrageously expensive. Many companies find that their budget bloats during the implementation process. more

  • How UC Can Help Your Business Survive the Holidays

    The holiday season is filled with frenzy and excitement for businesses and consumers alike. Consumers prepare gift lists, compare brands and prices, and begin shopping with a vigor that is not present most other times of the year. For many businesses, the holiday season accounts for a large profit bump at the end of each year, and companies strive to exceed their goals and keep customers happy during this rush late in the year. more

  • [Infographic] Switching Phone Systems

    There are a lot of possible reasons you might want to switch to a new phone system. The old one might cost too much or be too troublesome to operate and maintain. It might not be flexible enough. It might not be reliable enough. Or it just might not have the kinds of features and capabilities that you need in today’s competitive business climate. more

  • Business Intelligence Software Cost Guide

    Your choice in a BI (Business Intelligence) provider can lead you to make better, data-driven decisions for your business, resulting in significant ROI. Or it can cost hundreds of thousands of dollars with mixed results. more

  • The New 2016 ERP Comparison Guide

    Selecting an ERP solution is no easy undertaking. You have to select and configure a system that fits your exact business needs. The right system can make operations more streamlined, efficient, and agile. But choosing the right vendor can be difficult. more