SaaS: Is Your Head in the Cloud?
Software as a service (SaaS) solutions have transformed the business landscape. When are they right for you?
by Rakesh Rajput, BAS Principal
The past decade has seen tremendous advancement in the tools and technology available and the speed at which they can be brought to bear to solve business challenges. Gone are the days when implementing new technology required standing up a large team to design, build, test, configure, and maintain the system or tool. Software as a service (SaaS) solutions have transformed the business landscape. With SaaS, businesses can rapidly stand up and configure a system to address strategic business goals. Rather than dedicating significant time and resources to maintaining the system, SaaS frees business resources to focus on what matters — using the tool to deliver business outcomes.
Before we go too far down this path, let’s take a moment to describe what we mean by SaaS. We’ll also look at the pros and cons of adopting a SaaS solution and then provide you with some questions to ask yourself to determine if SaaS is right for your organization.
The idea of the SaaS delivery model has been around for some time but only matured in the late 1990s. SaaS functions as a subscription (fee per user), with the idea being that the vendor of the application will provide storage, maintenance, updates, and security. There is no investment or guesswork when it comes to hardware, which serves as a reduced burden to IT. The vendor you choose houses the application and users access the application and data via the web.
Out-of-the-box SaaS generally comes with a tremendous amount of functionality. There are items you can configure with the click of a few buttons, for instance, changing the value or type of a field. There are also advanced customization options that allow you to code specific functionality, for example, building the custom look and feel for an email you plan to send to your customers. The degree of allowable customization and configuration will vary depending on the SaaS solution. The shallow learning curve and robust support provided by most SaaS vendors empower you to be the boss of change and to focus on deriving the greatest business value possible from the application.
SaaS tools are powerful and offer a high degree of convenience, but before you commit to action, you’ll want to do your due diligence in terms of the pros and cons of SaaS options. With SaaS, consider the following:
Pros
- Accessibility: Data available from anywhere with an internet connection
- Ease of implementation: No hardware to maintain or stand up
- No ongoing maintenance: Upgrades and maintenance performed by the vendor at scheduled intervals
- Support: Knowledgeable product specialists at the ready
- Integration: Extend functionality via the tool’s integration partners
- Resources: No additional resources required to set up hardware
Cons
- Control of hardware/software: You can access your client information/data, but ultimate control resides with the vendor.
- Upgrade flexibility: You can opt into when to upgrade, but really the vendor decides what changes based on their schedule.
- Ownership: Once your licenses expires, it puts data in jeopardy.
- Resources: While training is available to help configure the product, you will most likely need a resource who is well versed in navigating the configuration of the product.
Now that you’ve seen some of the pros/cons of SaaS, let’s focus on if it’s the right solution for your organization. Here are some questions to ask yourself to support your decision-making process:
What are the overall costs?
SaaS is essentially a lease for an agreed-upon amount of time. If you have 10 users at $35/per month per user your annual licensing costs would be $4,200 a year. You will most likely require an administrator to configure the system and may also need a software implementation team to get you off the ground.
Alternatively, on-premises software will have a one-time up-front fee with no additional licensing costs (unless additional licenses are required). For example, if you have 10 users at $1,000 per user, your cost would be $10,000. The system will need to be built from the ground up and will require a knowledgeable set of resources on the hardware and software side. Let’s not forget maintenance and operating costs since these will need to be factored in on an ongoing basis.
The cost effectiveness will depend on the needs of your organization. Historically, on-premises software costs more initially, but if we look at the entire lifecycle the costs may be similar. It will be important to do a multiyear comparison and weigh all cost factors when making a decision.
How fast do I need a solution?
The implementation of SaaS will be highly dependent on the amount of customization you will require. If you utilize out-of-the-box functionality you can start using it tomorrow. Customizations normally require a team to implement a transformational solution, with timeframes ranging from weeks to years depending on level of complexity. An easy analogy is the purchase of a model home. It’s built from a standard blueprint, but if you want to build stairs and a basement, you’ll need a contractor to customize these for you. The right implementation partner will provide a timeline, estimate, and clear understanding of what is available via configuration versus what will require code.
What if the server goes down?
SaaS providers build their software on a multi-tenant architecture. This means that you’re sharing assets with other customers. Think of it like leasing an office space in a large building. With shared resources there may be occasions when there is downtime due to either scheduled maintenance or unforeseen events. SaaS providers will provide metrics on availability/reliability of their uptime, and those metrics are generally greater than 99%.
The questions above are only a baseline for you to evaluate and weigh your options. We understand that your decision will have a huge impact on your organization. If you need another perspective and are looking for someone to help lead change, reach out to Slalom Orange County Business Advisory Services at slalomocbas@slalom.com or visit www.slalom.com.
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