The model has been implemented for quite some time now, but its popularity was exponential lately when businesses started to look for better yet cheaper alternatives to traditional, often costly and hard to implement business softwares.
However, in my almost 3 years of actively advocating for SaaS and Open Source technologies, I found that many business owners are still not aware of this model.
Most companies don’t see the “hidden” costs associated with investing in traditional business softwares. Thus, in most cases, implementing and maintaining these softwares are always costly – especially when costs are extended over a period of 5 years.
Here are the top 10 reasons why businesses should seriously consider SaaS today:
1. SaaS software is on a subscription basis, usually monthly. There are no license investment requirements at the start, which may cost as much as 5000USD per user in traditional softwares. Expending the subscription fees monthly is easier to manage than requiring big amount of capital investment in acquiring a software.
2. There are no annual maintenance fees with SaaS while traditional softwares require up to 22% of the license cost per user every year for maintenance and support. And in most cases, all you get are news updates, patches list and announcements.
3. There are no costly server requirements with SaaS. The Applications are served by the SaaS provider “online” using the internet. The Servers are usually hosted in Data Centers, which can handle multiple users from different companies accessing the same single Database. A true SaaS software is multi-tenant, meaning shared by many companies. This allows SaaS providers to significantly “lower” the costs of “using” its Software by way of economies of scale.
4. There is very little, even no IT support personnel required with SaaS. One of the hidden costs in owning and maintaining traditional software is internal skilled personnel required to maintain servers, infrastructure and do support. Others opt to outsource this – but costs are prohibitive for many companies, especially the SME’s (small to medium enterprises). The SaaS model puts the burden with the SaaS provider to maintain the applications, database and servers in tip-top condition. Support is also available when required – either by phone, web or email. And all these are already included in the monthly subscription fees.
5. Regular backup and disaster recovery programs (DRP) are managed by the SaaS provider. Business continuity is part of the subscription fees. Redundant hardwares are provided, and data and transactions are backed up and replicated in multiple servers in real time. The necessary bandwidth are also provisioned. Investing on these infrastructures to perform such tasks would require a very large amount of money for many companies.
6. Implementing SaaS softwares are relatively easier and faster compared with traditional softwares which may take years to configure and implement. Some of the best features of SaaS softwares are easy and intuitive navigation, user friendly design, and workflow driven. LAMP Enterprise ERP, a full SaaS ERP software was developed with these features in mind.
7. SaaS Softwares, once implemented, require very minimal or even ZERO on-site support. Traditional softwares may require extended on-site support which are very costly. The mere application of program fixes/patches may require a skilled technical person. SaaS Softwares are shared by multiple users, thus, once an error is fixed in one client, it gets fixed for all.
8. SaaS softwares are more flexible and scalable, contrary to some opinions that they aren’t. The SaaS provider/developer owns the program source codes. Although SaaS softwares are designed with best practices and universal usability in mind, custom requirements which will benefit many users can be easily implemented.
9. SaaS upgrades and enhancement releases are included in the subscription fees. Traditional softwares normally require periodic upgrades for reasons like, the earlier application or database versions are no longer supported, or there is an upgrade in the core design, or several major module enhancements. These upgrades in many cases require re-implementation, often with disastrous consequences. In my experience, big traditional ERP softwares on the average require upgrade once every three years.
10. The monthly subscription fee for SaaS softwares is all-inclusive, meaning all available modules and modules which will be added in the future are already part of your subscription fees. Traditional softwares are normally licensed per module – and you need to pay a significant amount of money when you want to use some modules in the future. This is the reason why very few implementation sites of traditional softwares can be considered “completely integrated.”
Getting that Human Resource module or payroll, or CRM to complement with your existing financials, supply chain and operations installation may not be possible due to additional prohibitive cost requirements.
Another cost benefit of SaaS software is its use of Open Source technologies and platforms. A company doesn’t have to pay for extra database or operating system licenses if it chooses to adopt Open Source applications.
These are the potential benefits of adopting SaaS to power business processes. It is surprising to note though, notably in the Philippines where there are a lot of SME’s that only a very few business decision-makers, from business owners to top level managers (the CEO’s, CFO’s, VP’s) seemed to be aware of this revolution and evolution of business softwares.
Gone are the days where only the big and multinational companies can afford to implement and use a decent business software to integrate its multiple processes and functions. Now, with SaaS model, everyone, even the smaller guys, can afford to have one.