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Whether you call it Software as a Service (SaaS), Managed Service Provider (MSP) or On-Demand Services, your organization uses the service running “in the cloud”. This blog will discuss these services, their benefits, drawbacks and operations. Are we biased? Yes. We believe that some services make sense for most organizations. Email security is one of those. However as Mark Twain said, “All generalizations are false, even this one.” Each Tuesday we will post information and questions about Software as a Service. Occasionally, we will have a "Guest Post" from either a consultant or vendor posting her/his thoughts on Managed Services generally as well as some degree of specificity based on her/his unique perspective. We encourage your insights, comments and feedback. Welcome.

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SaaS – Pros & Cons (Part 2 of 2)


In our last post, spoke about the pros of software-as-a-service (SaaS). This is one of the fastest growing segments of the IT industry and our post offers organizations a variety of reasons for adopting SaaS.

Now that we have an understanding of why companies choose SaaS solutions, and in the spirit of being fair and balanced, what are the cons of SaaS? What considerations limit organizations when it comes to SaaS? As always, every company should carefully evaluate a would-be provider’s resources against their comprehensive list of requirements, goals, and objectives. In this post, we’ll run down a list of the arguments against SaaS.

The Cons

  • Standard product for all customers: with enterprise resource planning (ERP) and customer relationship management (CRM) products, there has traditionally been a greater deployment investment with customizing the software to fit the business. Some SaaS products offer limited customization options. These possible limitations may require adopters to change their internal operations to fit the application.
  • Outages: the presence or absence of a guarantee on uptime should be an element considered when selecting an on-demand provider. Why so? Because there is always a possibility that an outage may occur, no matter how remote the possibility. Many SaaS providers will build “uptime guarantees” into their service level agreements (SLAs). That’s not to say that reliability won’t keep improving—such guarantees, as well as mounting competition, all but insures that outages will become increasingly rare.
  • Single tenant: some SaaS offerings are built on what is referred to as “single-tenant” architecture. This means that these offerings were built to a single company’s specifications and make available as a SaaS. Single tenant offerings are likely to encounter the same customization and cost problems as traditional software. Recent advancements in SaaS have given rise to a “multi-tenant” architecture, allowing the vendor the ability to maximize the efficiencies of scale using a shared application and shared hardware.
  • Accessibility: Just as much as it’s an argument for, accessibility can also be an argument against if one does not have access to a web browser.
  • Cookie cutter: an early criticism of SaaS is that the offerings were too generalized. They also couldn’t be customized like traditional software applications and even certain shrink-wrap applications. In the early days, extensibility and integration was clumsy. It’s important to note that many SaaS providers now offer customization platforms that are extremely robust and make integration and extensibility as easy as point-and-click.
  • Scale: the majority SaaS providers are aiming for the small-to-medium-business (SMB) market. Those SaaS applications may not scale to tens of thousands of concurrent users. As SaaS and business continue to evolve, this is likely to change.

Now that we’ve taken a look at both the pros and cons, what does this mean for SaaS or for companies considering adopting SaaS?

Let’s recap the pros in a single statement: SaaS service providers can offer better, cheaper, more reliable applications than companies can themselves.

What does this mean in real terms, especially when the cons are taken into consideration? Well, the good news is that as there has been a rapid increase in businesses adopting SaaS. This is a solid indication that the pros are outweighing the cons for a growing number of companies. This is especially true for the SMB segment of the market.

In order for SMBs to compete with Enterprise-level organizations, they will need the benefit of having the resources that have traditionally been available to only those enterprise companies. This is where SaaS comes in to level the playing field. SaaS solutions, especially integrated accounting/ERP, CRM, and ecommerce suites provide these enterprise resources to SMBs at an affordable price. SMBs no longer have to play catch-up or take a wait-and-see approach to addressing their business needs. They can now use SaaS applications to give their companies the same agility, flexibility, and global reach as their larger competitors.

What do you think? Did we miss a “Con” What are the benefits? What are the drawbacks? What’s your experience with SaaS? Where does SaaS make sense for you?

Posted on : May 27 2008
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Posted under Managed Services, SaaS |


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