Software as a Service or SaaS can be defined as a services delivery model that is usually sponsored by several software vendors. The model is not usually referred to as “outsourcing”. However, it possesses many of the similar precautions related to contract of an IT outsourcing.

A real SaaS model visualizes both the software vendor and the service provider as the same. Here, a typical scalable metric based transactions, dollar volume or employees determine the charges. Instances, licensed users or machines do not play any role here. The software vendor controls or owns the infrastructure and capital investments. There is a license to the software underlying. However, this license is not at the front-and-center part of the whole relationship.

Here is an explanation on some of the benefits and risks associated with SaaS.

Benefits:

1. Low cost of entry:

SaaS is provided to companies in the form of a subscription model. It is usually billed on a monthly basis for each user. The service can be implemented quickly and it eliminates the costs related to the infrastructure and traditional applications. You also don’t require to pay huge upfront costs and exorbitant yearly license fees.

2. Zero infrastructure:

SaaS is hosted by the service provider. Hence, spending on infrastructure is not required. Clients can easily access and use the application on the internet via nay browser. You can also stay away from the headache of upgrading technology from time to time.

3. Multi-tenant efficiency:

Several customers together share the cost of software, expertise and infrastructure. This enhances the speed of implementation as well as the cost effectiveness over a standard ASP model.

4. Platform independence:

Solutions based on SaaS are centrally hosted with the service provider. There is no software that’s required to be installed at the premises of the customer. One can access the software on the World Wide Web through a browser only. Window, Mac or Linux user can use on demand applications.

5. No burden on IT staff:

The staff no more requires to manage upgrades or troubleshoot problems for generic software applications. This facilitates the company to direct limited in house IT resources towards more business oriented programs.

6. Easy to implement:

The solution is delivered through the internet and this feature eliminates the need to spend money and efforts on installation and set up at the end of the customers.

7. Enhanced accessibility and productivity:

Applications based on the internet lets you to save information on the world wide web. Hence, you can access it from anywhere you want. The knowledge or information related to your business is widely accessible to all your workers. This increases the productivity in collaborations. Team located far away can function in a better manner with the availability of the information.

8. Freedom of choice:

The SaaS model provides the customer, the freedom to switch from one provider to another.

With so many benefits to enjoy, we must not forget the flipsides SaaS comes with. The costs here are not able to come with additional economies for growth or good amount of during reduction due to shrinkage. Customers may have to face undue expenses for upgrades or professional services when a single vendor controls both the software and infrastructure related to it.

Flipsides:

The primary feature of SaaS delivery is standardization. This may prove to be a benefit or liability from the customer’s point of view. SaaS promotes standardization of baseline in conjunction with customizations usually resulting from business rule implementations and not from underlying transformation to the software.

SaaS is also subject to substantial institutional risk. When you sign on with a SaaS vendor, it indicates that the control is handed over to a third party wherein the control is related to production, its’ subject and the data lying within. The customer would not be left with any software if protection is not emphasized upon.

Hence SaaS relationships should include protections such as transition-in plans and transition-out plans. Data protection should also be considered seriously.

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