In recent years, businesses of all kinds are experiencing several digital changes with the growth of the software as a service (SaaS) market. The long-term and easy-to-predict profits are what attract many companies to this model. According to forecasts, SaaS is expected to reach a value of $171.9 billion by the end of the year 2022, representing its highest annual growth since 2021. In addition, SaaS will grow at a rate exceeding 17% per year by 2022.
Many businesses can benefit from SaaS primarily from its reduced cost and flexibility advantages. Organizations can also take advantage of enhanced productivity and low ownership costs of enterprise software using enterprise SaaS, which provides on-demand infrastructures and development environments. No doubt, Enterprise SaaS can benefit any organization, but it isn't foolproof.
Therefore, businesses also need to be aware of a few disadvantages before deciding whether to use Enterprise SaaS for their business. While SaaS does have many advantages, there are also considerable disadvantages, such as a lack of control, integration & compatibility issue, and security concerns.
Well! This article will explain what is SaaS and what are its advantages and disadvantages for your business. In addition, this guide will help you understand whether you should use SaaS for your business or not. So, without adding much more ado, let’s start with the basics- the definition of SaaS.
What Is SaaS: The Definition?
SaaS, also known as Software as a Service is a subscription-based cloud computing model which allows you to access software online instead of purchasing and installing it on your computer. Therefore, SaaS is available to every user, regardless of where they are and what device they use through the internet.
More and more businesses are taking advantage of SaaS solutions as soon as they become more comfortable using the cloud. Even though some end users can self-provision SaaS technology on their own while others require third parties to implement, customize, and secure SaaS to meet their unique business requirements.
However, understanding the different components commonly used in cloud computing is essential to analyzing, evaluating, and designing cloud computing solutions. Here are a few examples of cloud computing services:
- Infrastructure as a service (IaaS)
- Platform as a service (PaaS)
- Software as a service (SaaS)
Organizations can benefit from SaaS due to its flexibility, cost-saving potential, and the cloud environment it provides for innovative application development. In addition, the SaaS model allows employees to focus on more important tasks instead of doing boring tasks like installing, managing, and updating software manually.
Apart from that, businesses can deploy SaaS in the following three different ways:
Private Cloud:
Unlike traditional software, cloud software is based on an infrastructure shared across numerous users within a single organization. In the private cloud, an organization may own, manage and operate its infrastructure on- or off-premises, or may contract with a third party to do so.
Public Cloud:
The infrastructure that supports cloud software is made available to the public for use. Cloud providers may own, manage, and operate the infrastructure on their premises, or it also may be owned, managed, and operated by businesses, academics, or governments.
Hybrid Cloud:
In times of high demand, cloud software can switch to another type of infrastructure. With a hybrid cloud, it is possible to port data and applications using standardized or proprietary technology.
Now that you have understood what SaaS is and the different ways to use it for your business, let's move on to the next step, such as the advantages and disadvantages of SaaS.
Advantages of SaaS (Software as a Service)
With SaaS, developers can generate recurring revenue faster than on-premises software and benefit from faster deployment times. And small businesses can take advantage of fair SaaS pricing models while disrupting existing markets using SaaS. The following are the top benefits of using SaaS for your business;
Quick To Set Up
You should be able to incorporate SaaS into your business processes as easily as possible. SaaS can be deployed and developed immediately since it is pre-existing. Furthermore, the setup process is easy, quick, and straightforward. SaaS allows businesses to make quicker decisions because of its much faster setup and implementation process.
Reduced Costs
The most profitable aspect of cloud migration is the reduced infrastructure investment and operating costs. You would save money on equipment purchases and maintenance by using cloud infrastructure. As your business expands, you no longer need to spend money building your own data centers, utilities, and facilities. Up-front or annual subscriptions to SaaS companies often offer substantial discounts, reducing the overall cost.
It will enable businesses to decide whether the service is right for them without making a large upfront payment. The software provider is responsible for maintaining the software and infrastructure. As a result, the company does not have to maintain an IT department or the infrastructure to support the software system. Thus, it would have been a cost if they had set up a similar operation on their own.
Scalability
There are various subscription options available with SaaS products. A simple subscription without all the bells and whistles might be just what you need as your business starts. These subscriptions consist of some basic and some more advanced features. Therefore, you can change your subscription depending on your business's needs as it grows.
When it comes to scaling, Software as a Service product makes it easier, regardless of whether you need to add new users or upgrade to a better product. It is not as easy to scale software in the future when you first purchase it; you have to add a user and enable a feature before you scale and grow. The cost of scaling is usually expressed, as the need to purchase additional software, which slows down your business.
Accessibility
SaaS applications are easy to access and use because all you need are three things:
- An internet-enabled device
- An internet connection
- A browser
To access and use a SaaS application, you simply need to have the following. The software does not have to be downloaded or anything like that. Traditional business software is difficult to use compared with SaaS products. These applications are excellent because they can be accessed from anywhere.
Providing that you have a device that connects to the internet and has an internet connection, you can work from anywhere. Therefore, if you need to work remotely in the future, this opens up a world of possibilities.
Updates & Maintenance
Maintenance is included in the SaaS provider's service for the hardware and software. Product updates included are in this process. SaaS companies need to roll out upgrades constantly to keep up with the marketplace, which benefits their customers. SaaS providers handle this workload and responsibility so that consumers can allocate their time to other things.
The provider is responsible for the workload. With the SaaS company implementing updates efficiently and frequently, the customer doesn't have to worry about anything since they have the expertise and experience with that software.
High Reliability
SaaS systems are highly reliable, which is a huge advantage for businesses. Cloud service providers store all your data in their data centers. When the system is down or a disaster strikes, the software will continue to function regardless of where it is located. Thus, you just need a stable, reliable, and well-established internet connection, and you're good to go.
Data and analytics
It is easy to collect data through a single platform for analysis because everything is managed through the same platform. Software as a Service users can often gain more useful insights into corporate operations through reporting, intelligence tools, and visualizations.
These tools help optimize workflows and reduce overall costs. Unlike traditional access, which can be costly and negatively impact pricing and access for vendors, a subscription model eliminates piracy concerns.
Easy To Upgrade
Many businesses find it difficult to maintain their business software systems. Unlike traditional software, SaaS does not require a license. SaaS systems do not require users to worry about updates. Vendors are responsible for upgrading their products.
Your business will be able to manage its growth easily with software and hardware updates provided by them. Thus, the upgrade package does not need to be purchased. Software updates are available without much effort for users.
Disadvantages of SaaS (Software as a Service)
Despite its advantages, there are some disadvantages of SaaS as well. You can decide whether a SaaS solution is right for your business based on understanding its disadvantages and challenges. These drawbacks include;
Lack of control
With in-house applications, you can have complete control over your business processes. The software you are using is limited when you use hosted solutions from third parties. For instance, SaaS products provided by third parties do not allow you to choose whether to use the latest update.
Thus, you cannot defer the update since it is pushed automatically. Bigger businesses may find this less of a problem, but smaller ones might not care so much.
Software Integration
When hosting multiple apps with an external SaaS provider, there may be a problem with integration with existing in-house software. Data structures and APIs in internal software may not be compatible with those in external software. Therefore, SaaS applications should always be tested for compatibility for better results.
Performance
A reliable internet connection is essential to SaaS, which is usually run over the internet. Unlike a local application installed on the device, internet-based applications have performance issues beyond the user's control. Unless the consumer ensures that their internet service and devices can meet the demands of the software, there will be problems with the software. And it is up to them if the internet fails to work.
Compliance Difficulty
Government authorities strictly enforce data protection regulations. To use the SaaS product successfully, consumers must understand the rules and regulations that may apply to their industry. And if consumers fail to do their due diligence in research, they will be held responsible for not being compliant.
Consumers may encounter limitations if a product doesn't meet the security standards of a particular industry, even if it sounds perfect in theory.
Security Concerns
Cloud computing allows vendors to store all business data on their servers. Due to this, vendors are more likely to have easy access to the company's business data. Therefore, the result could be unauthorized access, theft of personal information, and confidentiality issues.
Therefore, businesses must safeguard their data and take precautions. Keeping sensitive and confidential business information safe may require them to hire dedicated SaaS experts from a reliable SaaS software development company in India.
Compatibility
While using a software service may be the most suitable solution to a consumer's needs, it is very meaningless if the customer's systems are incompatible with the service. The customer must inform themselves about the compatibility of the software.
These issues will likely result in an additional cost to the customer if additional services are required to resolve the issue. SaaS is a convenient option for companies without an IT department. If SaaS is supposed to be a convenient option, this can be time-consuming and tedious.
Lackluster Application Support
Over the past few years, SaaS has become increasingly popular among businesses. Although there are some hosted platforms, available for some applications, there are others without. So, businesses that use several software solutions may find this to be a big problem. Thus, hosting applications on-site is the only solution available to them.
What Is the Future of SaaS Technology?
Companies are designing and developing new technologies which will allow them to supply that demand for cloud computing in the future. SaaS will have a very bright future in business. SaaS systems, particularly adaptive intelligence, are likely to incorporate AI more and more as AI solutions spread.
According to some industry analysts, mobile devices will be a significant part of the future of SaaS. The SaaS market in fields such as logistics, transport, and retail is likely to be dominated by artificial intelligence (AI). SaaS models are as likely to evolve with technology as they survive.
However, ready-made tools and out-of-the-box solutions will never disappear. Both suppliers and users can benefit from SaaS because it offers a variety of benefits. Cloud computing solutions that fit current and future needs will continue to be in demand from companies with qualified IT professionals.
Conclusion
Hence, cloud computing is becoming increasingly popular as organizations will continue to develop and design cutting-edge technologies. As a result of the growing SaaS market, startups will expand more into multiple niches across numerous categories, and established players acquire and integrate the best products and services. Thus, it is clear that SaaS will benefit providers and users in multiple ways.
In a nutshell, it is expected that SaaS models will evolve along with advanced technology. However, the SaaS industry has already achieved significant success. Therefore, the business community can expect this platform to grow more in the future. In addition, the evolved model will have fewer disadvantages and more advantages, resulting in better value for money and improved ROI.