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Understanding SaaS: Benefits and Challenges

Understanding SaaS: Benefits and Challenges

Most traditional software is purchased as a license by paying an upfront cost of the whole package. This means you pay a hefty price once and keep using the software by installing it onto a computer. A typical software license is usually limited to one user or device, whether it is a standalone purchase or bundled with the hardware.

On the other hand, businesses or users can subscribe to SaaS software on a monthly/annual, etc. basis without having to pay large amounts of money as upfront cost aka license fee. Another advantage SaaS has over traditional software distribution methods is that users can end a subscription when they no longer need the services.

This saves them from endless contracts and licensing jargon. Since everything is cloud-based, apps are updated in the cloud, saving valuable businesses resources that otherwise would have been spent on updating individual computers.

Who uses SaaS?

SaaS applications run in the cloud and are essentially leased software hosted and maintained by the creator. Compared to on-premise software, SaaS applications are still fairly limited and mainly concentrated in HRM, CRM, sales, procurement and collaboration, and communication. However, cloud technology is rapidly gaining momentum and transforming IT. With a low cost of entry, many small and medium businesses have started reaping the benefits of cloud-based technology.

SaaS Delivery

SaaS applications are mostly delivered through a web browser or a thin client terminal. The subscribers pay for SaaS services (mostly on a monthly or annual basis), which are priced on different usage parameters such as the number of transactions or the number of users accessing the app.

The users can change app configuration settings and customize it according to their own requirements. However, the service providers usually do not allow customizing app code or core features, which makes locally-installed software a better option for enterprises that want complete control over their data and software.

Some of the most popular SaaS apps include Microsoft Office 365 and Google Apps, while the prominent providers include Oracle, Salesforce, Intuit, SAP and Microsoft. Enterprises can use SaaS for different purposes, including accounting and invoicing, sales tracking, performance monitoring, planning, communications and a lot more.

Why SaaS (Advantages)?

No Hardware and Maintenance

The biggest advantage SaaS software distribution has over traditional software delivery methods is that it saves organizations from having to heavily invest in hardware and install, configure and run apps locally. Other than the cost advantage, organizations also don’t have to worry about maintenance, support and licensing stuff.

The cloud provider delivers all the processing power needed so businesses can stay focused on delivering quality services instead of worrying about the technical stuff. The apps are ready to use as soon as a subscription is confirmed, which translates into quick deployment and rapid prototyping.


SaaS solutions can be accessed through a web browser on almost any device, which results in great cross-platform compatibility. This allows users to access information from anywhere even using their mobile devices, which boosts productivity and efficiency.

Flexible Payments and Scalability

Businesses can subscribe to a SaaS offering and pay-as-they-go, while in most cases they can handpick the features and only pay for the required features. Users can easily and quickly add storage or more services without having to invest in hardware or software. SaaS apps are highly scalable, allowing businesses to access more features and services as they grow.

Automatic Updates

Since everything is hosted in the cloud, there are no local updates and the service provider is responsible for automatic deployment of updates. This also saves businesses from the hassle of testing updates before deploying them. Another advantage SaaS has over traditional delivery methods is that an update is rolled out to all customers/clients at once instead of manually updating each machine, which can take a lot of time and resources.

White Labeling and Customization

Enterprises can also choose white label SaaS solutions and customize them according to their own or client’s unique requirements. While not all providers offer white labeling, many do, which allows budding tech companies to add value and deliver better services.

Ability to Switch Between Providers

In theory, it’s easy to switch SaaS providers, which means businesses can switch to a provider that offers better services and meets their requirements. An organization can terminate a SaaS subscription at any time if they are not satisfied with the provider or don’t want the services anymore. However, in the real world, things aren’t as smooth as on paper as SaaS providers can make it difficult to switch to another provider.

App Integration

SaaS applications can be integrated with other platforms and systems using APIs. This allows organizations to integrate their own systems with the SaaS provider using their APIs. There is no shortage of SaaS providers, which encourages businesses to choose offerings that have better integration with other systems and leverage their existing IT investment.

SAAS Challenges and Risks (Disadvantages)

Less Control

Like everything else, SaaS also has its own set of advantages and disadvantages. The most obvious drawback of the newer technology is that businesses have to heavily rely on 3rd-party vendors to deliver services and provide a secure environment. If a business didn’t consider the quality of services and the provider’s reputation, it might end up experiencing service disruptions or security breaches.

That’s why it’s highly recommended to understand the SLA (Service Level Agreement), which enables you to ensure that it’s enforced. In some cases, a provider might move on to a new version of an app, while businesses might not be ready for it or not willing to incur the costs related to upgrading and training. Moving very large files from a new provider can also be an issue for some businesses, but it can be dealt with fairly easily.

Service Disruption and Security Breach

Although SaaS service providers try their best to keep everything in top-notch shape, there might be instances when applications become unavailable. The uptime promises vary from provider to provider, while some offer security patches, new features, and other updates more regularly than others.

This means businesses don’t have complete control over everything and have to rely on providers for continuous uptime. Enterprise data safety and integrity can be compromised if the service provider experiences a security breach, which can translate into huge financial loss.

Latency and Performance Issues

It’s possible that SaaS users are located far from where the data centers are located, causing latency and performance issues. Enterprises that don’t have a broad cloud strategy and acquire SaaS apps without proper consultation might end up wasting money and managing data poorly, which means even more work and IT hours.

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