SaaS or Software as a Service (Cloud) is a hot topic of conversation everywhere.  Software as a Service is not remote hosting of your enterprise system, it is a subscription based service that hosts your business application in a multi-tenant data center somewhere.  There are many stated advantages and disadvantages to this model and I hope to cover most if not all of them in as unbiased a way as I can.  However I personally have not drank the Kool Aid at this point.

I have been in the world of IT/IS/Data Processing for quite a while.  My use of the term data processing kind of says it all.  I have heard it said that if you wait long enough, everything comes back into style and SaaS is one of those things I think of in this way.  Early on in my career there were many small businesses I dealt with that had their computer system in a time share.  Yes, I said time share.  I don’t mean they went to Aruba once a year to do their computing, what I mean is they had to share the computer with other businesses.  They had a slice of time or a slice of the computer that they could access from a modem and did their business computing from afar.  Well communication has improved exponentially since that time – but the idea is still the same.  So what are the advantages of selecting a SaaS environment?

1.       Lower initial cost to acquire.  With SaaS you are not purchasing software, hardware or licensing –  you are renting the use of the software under a subscription agreement.  What this means is that you have no initial cost for hardware because the software is hosted on someone else’s system.  You don’t have an initial cost for the licenses for the software or the maintenance of same because you don’t get any software you simply get a login to the software.  You don’t have to have an IT staff because all the maintenance such as backups, patches, tuning and such are someone else’s responsibility.

2.       Time to deploy.  With SaaS there is no waiting for hardware to arrive.  No waiting for the application and supporting database and communication methods to be installed and configured because it is all set up before you subscribe.  The only wait time is if you want your existing data to be inserted into the new environment.  The application is available immediately after the contract is signed and you receive your log in information.

3.       Scalability.  Because the hardware is hosted by someone else there is an ability to have immediate access to more user access and more storage without the ordering of hardware, license keys or waiting for the IT staff to make required changes to the infrastructure.

4.       Anywhere access.  Because the application is hosted in the cloud, the interface is open to external access and anyone with the appropriate log in can get to the application from anywhere there is internet access.

5.       Disaster resilience.  Because the application and related data is hosted elsewhere, if a disaster strikes your business location you can potentially be up and running quickly by simply accessing your application from another location.

6.       Stay current with upgrades and patches.  Because the hosting company is responsible for the application and related operating system and database management system, you will not need to consider when or if you should upgrade the patches  – and upgrades will happen automatically on a schedule with no additional cost to you as there can be with on premise installations.

These are the main advantages as I see them and as my research has supported.  However, some of the advantages are also disadvantages as I will explain in the next section.  So what are the disadvantages of selecting a SaaS environment?

1.       Security.  Probably the most significant issue with SaaS as well as hosted environments is security.  Your data is out there “somewhere” and someone else has complete access to it and control over its accessibility to the outside world.  Frankly that scares me.  With the hacking that has been in the news recently of very large corporations, it is hard for me to feel comfortable that my data would be safe “out there” where it is mingled with other companies’ data (sort of).

2.       Compliance.  One issue with companies that fall under SOX compliance is the accessibility and control of same.  Before embarking on a SaaS decision, make sure that your chosen vendor can prove that you will be in compliance using their service.

3.       Performance.  Since your data is stored in the cloud and accessed across the internet there are many communication issues that could cause performance to be lower than an on premise installation.

4.       Internet access.  Since your access is across an internet connection you are relying on your internet provider as well as your vendor’s internet connection speed and availability.

5.       Integration to other systems and devices.  Since the software is hosted on a server that you connect to only for the application, it is typical for the hosting company to not allow access to the data by any other software.  So integrating to an on premise application may not be possible.  For instance with the current release of some SaaS ERP applications, you cannot connect your printers directly to the software – everything has to be printed to PDF or other document format and printed from that application.

6.       Customization.  Since the hosting company controls the databases’ server access, customizations are difficult and sometimes not allowed.  In Infor’s case you can make customizations that can be done within the forms and IDOs, however, if you want to make changes to any database object (stored procedures for instance) you need to make the change externally and send them to Infor to be installed once they are reviewed and approved.

7.       Upgrades and patches.  Although this is in the advantage section as well, it can also be a disadvantage in that you don’t get to choose when you get an upgrade – you just get informed.  If you have any customizations, they may cease to function or the upgrade may not be effective because you need to apply the upgrade or patch to the customization as you would with on premise except without the time to do the reapply before the upgrade or patch is applied.

So those are the main advantages and disadvantages of SaaS.  Depending on your industry, application and requirements, SaaS may have more or different advantages or disadvantages.  The important thing is that like with any business decision – you need to do your research, carefully review your host vendors’ contract and services, and the cost versus an on premise solution.  Make sure you consider all issues related to the commitment and what your ability to change that commitment in the future may be.  That is, for instance, what if you decide SaaS is not for you sometime in the future? Can you take your data and move to some other system  – or SaaS or on premise application?

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