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Choosing SaaS as a Distribution Model - Pros and Cons

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Choosing SaaS as a Distribution Model - Pros and Cons

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During last several years Software as a Service (SaaS) model of software product delivery becomes more and more popular. Now you can find plenty of CRM, ECM, marketing, time and management, accounting, project management and so on software distributed only in the form of on demand software.

So you are a software provider and you have some great idea and you are ready to start development of new software that is supposed to bring you a fortune. You start writing requirement specification, and one of the points you need to determine is business model of your software distribution. SaaS or on-premises? Let's look at pros and cons from the point of view of your potential customer. First decide what you would choose if being a customer yourself and it will help you to make a choice as software provider. 

Pros:

  • Customer saves money. Yes, even if they pay every month, at the end it becomes more profitable than buying license, spending money on tech person to install it, customize, maintain, client should also find and pay for data centre to keep his data, etc. With SaaS you just pay some fee every month or three months, and software provider does all the rest – customize, maintain, update and so on.
  • Your client saves time. With SaaS all you need to start work is login and password from provider, that's easy as one-two-three.
  • Customer saves his employees' time. First of all time of IT staff, as with SaaS they get completely ready to use software without installation, code generations, customization and so on.
  • Nearly unlimited access. Users may be at work, at home, on Hawaii, all they need is computer or tablet or smart phone with Internet connection – and here you are necessary software is ready to be used. It is especially convenient for distributed companies or companies with many affiliates.
  • Such software is absolutely scalable. When business grows and you need to add more users, you just move to more advanced package. There is no need to buy more licenses or install new software.
  • Regular updates. Providers of SaaS usually never stop updating and improving there software in order to keep their subscribers. And to get an update is very easy, usually just a couple of clicks, and you already use new version.

Cons:

  • Security. This is the main concern of SaaS users. As a client have to give all his data to the third party, he is usually very careful when choosing a SaaS provider.
  • Customer is bound to one provider. If you use some software for a long time, you keep all your data on providers servers, it would be quite difficult to move to another SaaS if necessary.
  • Outage. Unfortunately, it may occur. In such case a customer has to rely on provider in order to fix everything. Usually providers put this in the contract and in case they can't fix the problem quickly they return payment.
  • Internet connection. This is the only but very necessary point for using SaaS. Check that your Internet provider is reliable and able to proceed big amounts of data.

Software as a service

SaaS may be a real advantage for a company, but it also can become a disaster. In order to make the right choice you need to specify your customers' characteristics and understand what would be most preferable for them. 

If your customer is a small or growing company they would most likely choose SaaS as more flexible and scalable solution. The same would do a company with remote workers or many offices. 

Also from the point of view of software provider, SaaS gives possibility to release trial version of product and easily update it later. It is also more convenient to get several subscribers and get profit from subscription payments every month, rather than earn bigger amount but from time to time when an occasional new customer appears.

As conclusion I may say that, SaaS gives a lot of flexibility to both provider and consumer, thus being good solution for developing companies from both sides.

Have you ever used SaaS yourself as consumer? What is better for you? Why?

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