As companies grow, they are finding out that the traditional way of running a business is not working. Businesses sometimes have trouble managing their assets and employees, while others lack enough cash flow to stay afloat. The solution to these problems is the adoption of the SaaS business model.
Software as a Service is what stands for SaaS. This means that you don't actually buy the software outright; instead, you pay for access to it on a monthly or yearly basis. The most popular example of SaaS businesses would be Google Docs, where users can create, edit, and share documents with others through Google Drive.
However, the question of why would a business use SaaS is not always clear-cut. But in this blog post, we'll make it be.
What are SaaS advantages and disadvantages?
The rising popularity of this model of software delivery is evident - it offers significant cost savings and increased flexibility for businesses. The convenience of having access to everything you need without the hassle of installing programs or hardware while also being able to share information with others in your company has led many companies to adopt this new technology.
Small and medium-sized businesses (SMBs) are turning to software as a Service (SaaS) as a way to save money on IT expenditures. This model has become an attractive option for SMBs who want the benefits of big data without investing in costly hardware that only gets used occasionally. The shift away from traditional software licensing options, such as perpetual licenses or per-user licenses, has opened up new possibilities for SMBs to manage their business technology.
Benefits of SaaS for small business
SaaS is becoming the business model of choice for more companies for many reasons:
- By using a subscription model, the company will only have to pay for the services they need instead of buying expensive software licenses outright.
- It's easier to manage, update, and monitor your software from the cloud than it would be if you were hosting it on your own servers. This is because you have access to all the updates that come out with just a few clicks instead of having to install them yourself.
- Businesses that use SaaS as their business model don't have to worry about running the IT infrastructure in-house or hiring an IT person to manage it, which saves them money in the long run.
- It allows small businesses to compete with big corporations because they can easily afford the software needed without initial hardware investment.
- Suppose the company providing the service goes out of business. In that case, you don't lose any data or have to worry about transferring all of your files to another system - they will be available until you cancel your subscription.
- It's more user-friendly than traditional software. Great SaaS UX design makes interfaces simpler and easier to navigate. You can get a great user experience and improved graphics quality.
- It's much easier for businesses to scale their operations up or down as needed because they're not tied into long-term contracts.
What are the disadvantages of SaaS?
Now we know that SaaS has many advantages. However, there are still people who don't choose to use SaaS for their business. Why? It does come with some downsides that are worth considering before making your decision:
- You may experience a lack of control over data security and privacy practices, especially if the company doesn't have a strong security system in place. But it's possible to diminish the risks: by encrypting your data, storing it in multiple locations, and backing up the data regularly.
- When there is an issue with a SaaS system, such as a glitch with an update, you have to wait for the SaaS vendor to fix it.
- You may experience downtime when accessing information because of server maintenance or an outage with the internet connection.
- It isn't easy to customize features to suit specific business requirements.
- SaaS providers can make changes to the software without consulting you first. Or may change the terms of your contract at any time.
- You don't own the software - this means that if the company providing the SaaS goes out of business or changes its policy, you might lose your data.
SaaS in Cloud Computing
SaaS and cloud computing are often thought of as the same thing. Yes, they both offer a service delivered via the internet, but they are not the same.
Cloud computing and SaaS are two different types of technology. Cloud computing delivers computer resources like processing power, storage capacity, or other IT capabilities over the internet. So it's a technology that services can use to store their data, applications, and set up servers. The three main types of cloud computing services are IaaS, PaaS, and SaaS.
So SaaS as a service is just one type of cloud computing. While cloud computing is the delivery of computing resources over the internet, SaaS is a service that allows companies to use software without having to install it on their own servers.
SaaS purpose: What is SaaS commonly used for in a company
Small businesses don't always have the resources to invest in complicated software solutions, but with SaaS products, they can do everything they need without breaking the bank. With just a few clicks of the mouse, you can find all sorts of useful SaaS tools, like invoicing systems, project management software, or marketing automation platforms.
Examples of how businesses use SaaS products include:
- project management applications like Trello;
- payroll software for small businesses like FreshBooks;
- email marketing applications like Mailchimp;
- customer relationship management tools like Salesforce;
- CRM software that can help your team stay in touch with customers, manage leads, and improve sales performance;
- social media management applications that can help businesses monitor social media channels and respond as needed;
And many other products, for example, a SaaS tool that helps conduct a competitive analysis for UX design or a SaaS platform helping to create and distribute educational content.
A business can be a startup or an established company, and the benefits of using SaaS apps are still relevant to both.
An example is a startup company that utilized SaaS products to grow its business. They used Google Analytics to track and monitor their website traffic and conversion rates, which allowed them to make changes accordingly in order to increase sales. As they grew into a larger company, they utilized other SaaS products such as Cloud era for data management and Salesforce for customer relationship management.
Another example is a well-established company. They used Salesforce because it allows them to keep track of all the orders worldwide. As a result, they didn't have to rely on paper records or email messages to receive information about the users and orders.
SaaS opens new opportunities for software users
SaaS products are a new way for businesses to operate in the digital age. Although there may be some disadvantages to using SaaS, many business owners have found that it provides more benefits than drawbacks. They are scalable, flexible, and affordable. If you're interested in learning more about SaaS startups, we recommend checking out key metrics for SaaS startups. SaaS products are an excellent option for startups who want to focus on their core business without getting bogged down by the day-to-day management.