SaaS: Pros and Cons

Software as a Service (SaaS) is a technique of software deployment whereby a provider licenses an application to customers for use as a service on demand. SaaS software vendors may host the application on their own web servers or download the application to the consumer device, disabling it after use or after the on-demand contract expires. The advantage of this is the transfer of the risks and responsibilities from the customer to the SaaS provider. There is also a potential benefit in cost for the customer as the “on demand” aspect of the billing only charges the customer for when the application is utilized. This also reduces the administrative burden of maintaining and tracking licenses across the organization for customers. Furthermore, cost savings may be realized due to a multitenancy approach to the architecture of the application and its data handling. While this entails a greater initial development effort for the provider, economies of scale are achieved by only requiring one instance of the application to service multiple customers.

So to itemize the benefits that SaaS offers:

• Cost: SaaS delivers application at a lower cost than delivering them in-house.


• Risks and responsibilities transferred: The risks and ownership of resources and capabilities required to deliver the applications are transferred from the customer to the provider. This is typically very attractive to smaller companies.


• Efficient resources utilization: Freed up from delivering technology, IT resources can utilize their time on issues that impact the organization and business urgently.


• Flexibility: The SaaS provider will typically offer flexible contracts and charging models. The customer will also be able to easily and with minimal risk try the service before committing to a contract. The ability to switch between providers is easier than with traditional outsourcing.

However, the following cons also exist:

• Limited customization: As the SaaS provider caters to multiple organizations, they may not be capable of customizing the application for each individual organization to the extent required by them.


• Scalability: Currently SaaS offers scalability to service smaller organizations but this is expected to improve as technology evolves.


• Reliance on another: while this is listed as a benefit, it can also be a risk as all control of the application is placed on the provider and if they fail, then the customer organization suffers.

While SaaS is not a magic solution, in my opinion it does offer some benefits for organizations that have specific conditions and requirements that match the benefits that SaaS has to offer.

SaaS does not replace in-house IT; however, research indicates that it could well represent 25% of the software market by 2010. Therefore, SaaS should be kept in mind as an alternative should the situation and conditions merit it.