Ever since the first modern desktop computers began appearing in offices in the 1980s, software companies have battled for supremacy. After all, a computer’s only as useful as the software running on it.
That fight for dominance—and the ensuing success of the Windows operating system and the eponymous Office suite—turned Microsoft into a corporate juggernaut and household name.
However, Microsoft built its brand on the back of software licensing deals. In other words, they sold copies of software that users had to install on their computers to use.
Today, however, that software sales model is falling out of favor. In its place are a variety of cloud-delivered applications, collectively known as Software as a Service (SaaS) offerings.
It’s a change so profound that even Microsoft pivoted its Office software to transform it into a subscription service.
But the question remains: is SaaS a good idea for businesses or just the software companies behind the offerings? To answer that, here are the main pros and cons of SaaS for today’s businesses.
The Main Pros of SaaS
There are a variety of advantages that business users of SaaS solutions enjoy. They’re the main reason that SaaS is so readily displacing other traditional software products that dominated the business market for decades. Here are the main pros of SaaS for businesses.
Lower Total Cost of Ownership
The biggest advantage SaaS solutions confer upon businesses is cost savings. That’s because, in many cases, SaaS solutions have a lower total cost of ownership (TCO) than the traditional software it replaces.
With a SaaS solution, there’s no need to spend money on the infrastructure required, like servers and high-end PCs, by most on-premises software solutions.
Also, there’s no need to maintain in-house support staff for said software. Instead, a SaaS product runs remotely in the provider’s cloud infrastructure, and its provider sees to end-user support needs.
Reduced On-site Maintenance Needs
In the early days of business software, companies purchased a version of a given software package and used it until they saw a reason to upgrade.
Today, though, most locally-installed software packages require constant manual updates from local IT support engineers in order to keep them up-to-date and for patching security problems etc.
In a business environment, updates can wreak havoc if nobody is pre-testing and staging them to minimize downtime. That makes the maintenance needs of most locally-installed software complex and costly.
The same is true of customization. With traditional software, many businesses turned to internal development to add customizations to their software and to extend its functionality as needed.
Needless to say, that’s a costly and often difficult endeavor. With SaaS, businesses don’t have to worry about maintaining or updating any software and can usually turn to the software vendor to purchase needed features and upgrades.
Simplified Remote Access
Another major advantage of SaaS is that it allows businesses an easy way to support remote workers. Since SaaS solutions run in the cloud, they’re accessible from anywhere with an internet connection.
That means remote workers can access company data via a SaaS solution through a web browser on almost any internet-connected device.
With locally-installed software, businesses used to have to issue company-owned hardware to remote workers with the necessary software preinstalled. Or, they’d need to start-up a terminal server and a secure access route—like a VPN—to give remote workers access to needed tools and data.
SaaS solutions also offer far better scalability than traditional software products. With a typical SaaS solution, adding users is as easy as adding one via the software’s management interface and sending that user a link to the right portal along with their access credentials.
The SaaS vendor then adjusts the monthly charge for the software to account for the added user or users, and their cloud infrastructure simply absorbs the additional workload.
With traditional software solutions, businesses instead need to purchase new user licenses, install the needed software on the user’s machine, and get that machine connected to the business’s network resources.
And when the number of users outgrows the required infrastructure, businesses have to go through costly and disruptive hardware upgrades to remedy the problem.
Another major issue that SaaS solutions solve is that they reduce businesses’ need to develop bespoke software solutions on their own.
In the past, software developers often wouldn’t write software to serve the needs of a narrow corner of the business market. The costs of doing so far outweighed the possible profits.
With a SaaS model, however, niche software products are economically feasible and now proliferate. As a result, fewer businesses have to write their own custom software to suit their specific needs since there’s a high degree of probability that a SaaS provider’s already done so.
Enhanced Collaboration and Productivity
SaaS solutions also take a different approach to collaboration than stand-alone, locally-installed software typically does.
Since all users of a given SaaS product work within a single, shared interface and infrastructure, it’s far easier to add collaboration tools and features into the mix.
For example, a SaaS project management suite might include real-time text and video communications functionality or a common whiteboard feature that multiple users can access at once.
Such features make it easier for employees to work together, even if they’re in physically disparate locations. That, then, has a knock-on effect of improving productivity throughout the business.
Improved Disaster Recovery
The final major pro associated with SaaS solutions is that they facilitate much easier disaster recovery. Since they run in managed and well-protected cloud data center facilities, SaaS does a far better job of protecting business data than most on-site software solutions would.
In an on-site setting, businesses have to worry about data ending up stored on employees’ individual computers, as well as data stored throughout a server infrastructure.
That creates a challenging disaster recovery environment since it’s easy to exclude important data from backup schemes.
Plus, backed-up local data only works for disaster recovery if it’s stored offsite, which is an advantage SaaS solutions provide by default.
The Main Cons of SaaS
Although SaaS solutions have some significant advantages, they’re not a perfect fit in every situation. To elaborate, here are the main cons of SaaS for businesses.
The most obvious con associated with SaaS solutions is that they’re internet-dependent. That means a business that relies on SaaS products might grind to a halt if it suffers an internet service outage.
The same is true if the business has bandwidth issues, which can make SaaS products far less responsive.
On the contrary, locally-installed software might run independently on individual computers and rely on in-house servers for data storage.
Except in cases of hardware failure, those aren’t prone to outages and are fixable by the business itself, even when they do occur.
Security and Privacy Concerns
Another major downside of SaaS solutions is that they come with some significant security and privacy concerns. That’s because SaaS providers work with hundreds or thousands of business clients at any given time—which makes them an irresistible target for hackers.
Plus, businesses that use SaaS products often have very little visibility or control over how well—or how poorly—their data’s protected.
Worst of all, this isn’t only a problem that affects smaller SaaS providers that don’t have the resources to mount a sophisticated cyber defense.
Even SaaS platforms run by the likes of Google and Microsoft have their hands full trying to fend off malicious actors that threaten their customers’ data.
Less Control Over Customization
Although many SaaS providers will indeed work with customers, or at least hear them out when it comes to adding new features and customizations, that doesn’t mean every business gets what it wants and needs from a SaaS platform.
On the contrary, plenty of businesses end up paying subscription fees that cover countless features they don’t require and find SaaS solutions falling short in some critical areas.
In those situations, the providers aren’t always willing to devote development resources to solve a single customer’s problem.
However, many SaaS platforms do make a public API available for businesses to build their own software add-ons. The problem is that doing so robs a business of some of the advantages that drove them to SaaS in the first place, namely simplified management and lowered total cost of ownership.
SaaS Vendor Lock-in
The final major disadvantage of SaaS solutions is as old as the software industry itself: vendor lock-in. SaaS providers, like conventional software developers, have a vested interest in keeping customers once they have them.
That means that a business using a SaaS product could end up in a situation where there’s no easy path to switch vendors, should the need arise.
Often, obstacles like data formatting and portability are an issue, as is the need to retrain a workforce to use a new platform. In that scenario, the business gets stuck using the SaaS platform they have, even if its costs rise and its functionality falls out of alignment with the business’s needs.
The Final Word on SaaS
Today, SaaS solutions continue to gain market share relative to legacy software and licensing models. There are several compelling reasons for that, as the preceding article makes clear.
However, SaaS solutions aren’t a panacea and aren’t well suited for every business in every situation. By weighing the applicable pros and cons, however, businesses of all stripes can make a well-informed decision to choose the path that works best for them.