Debunking the hype surrounding SaaS

Software as a Service is attracting much attention from the market, but is SaaS really a better option than owning your own infrastructure?

Hosted software solutions such as Software as a Service (SaaS) are attracting much interest, especially for enterprise resource management (ERP) and customer relationship management (CRM) customers who are attracted to claims of cost savings and the ability to gain application services as a operational expense as opposed to hosting their own infrastructure. While hosted solutions make good sense in theory, close inspection reveals myriad potential problems for the approach that are often overlooked at first glance. There is also something to be said for owning your own infrastructure and maintaining full control thereof.

The immediate perceived advantage of the SaaS approach is in the rental model of payment whereby typically there is no upfront capital outlay and the service is paid for monthly over a lease period, with a positive effect on cash flow for the business. SaaS can also be turned on or off rapidly and there is usually no need to roll out complicated resource-hungry applications to desktop computers or buy expensive hardware and software for the server component that usually houses the shared database.

SaaS services can be accessed  by anyone with Internet connectivity and a browser, from anywhere in the world and is increasingly being utilised from mobile devices. Technical resources at the organisation are also minimised because SaaS is driven by the third party company hosting the solution.

Pros and cons 

When considering these advantages, hosted solutions look compelling and seem to make business sense, especially for small to medium sized enterprises – but while the advantages of SaaS are widely publicised, the disadvantages are seldom explored. For one, it’s possible to gain many of the advantages offered by SaaS without handing over to a third party what is likely to be one of the most valuable assets to your business other than the staff; your customer database. Most good ERP and CRM solutions allow you the flexibility of hosting your own solution with Web browser access or running it as a local application. Hosting your own solution and enabling it for web access has numerous benefits over the SaaS approach. For one, owning the software yourself allows you to do what you like with it. And only you have the power to turn it off.

Owning your own software also offers protection from the possible disaster that could occur should the SaaS hosting company goes out of business or decide to no longer support the service they’ve been providing you with.

Data Protection

It is also possible that the hosting company may go down for an indefinite period of time. Many of the SaaS hosting companies currently in the market host their infrastructure in California and have had some nasty scares recently when their servers shut down due to earthquakes. In terms of security one is also able to maintain a higher level of control over your own environment than that of an offshore company where you are unlikely to have any recourse to legal action to both prevent your data from being stolen or abused, or take action should this happen.

If a customer chooses to terminate their service with a SaaS provider they also stand to lose data stored on hosted systems. In some cases this could mean losing valuable databases, unless an agreement is in place that guarantees that this data will be handed over on termination of service. While a browser view of an application may be convenient, it is still limiting and may not suit organisational requirements, whereas a full-featured local application  is almost certainly better suited to the task. It is also possible to make owned applications available via Web access should that be required.

In terms of the South African context, bandwidth and reliability of connections also pose problems for SaaS, which, in most cases, relies on Internet connectivity. Most SaaS solutions have also been developed in first-world countries where bandwidth is reliable and generally available in larger throughputs than locally. As a result, the same services deployed in South Africa perform dismally on local infrastructure. Also, should your Internet connection go down, you will also lose access to your application with the resulting impact on business.

It is not hard to see why the market is initially attracted to hosted application services, however when considering the broader impact of deploying SaaS it becomes clear that owned solutions will continue to provide a more sensible approach.