It’s hard to be a savvy software buyer. There are dozens of solutions available, each with a different mix of tools, a different price tag, license agreement and support package. There’s another way to go beside the traditional licensing model: software as a service (SaaS). Instead of buying software to run on the company’s own computers, SaaS customers just pay to use software over the internet. A recent Supply & Demand Chain Executive article by Liz Herbert goes over the pros and cons of SaaS solutions:
With SaaS, line-of-business heads, ranging from the vice president of sales to the director of human resources (HR), can single-handedly own the purchase decision by taking advantage of free trial offers on Web sites to evaluate solutions and paying a monthly or quarterly rate low enough to stay off the corporate radar screen for requiring approvals. Additionally, the easier-to-use and easier-to-administer nature of most SaaS solutions means non-IT users can rely on point-and-click tools and wizards to set up and configure solutions.
SaaS is taking off most quickly in [...] HR, recruiting, customer relationship management (CRM), security and IT help desk. However, gaps in customization and integration capabilities make SaaS less appealing where deeper specialization or complex, real-time integration is required, such as certain components of supply chain management (SCM) software.
Cost components remain a core basis for making SaaS versus on-premise decisions [...] Implementation and administration costs for SaaS are typically lower than those for on-premise solutions. On the downside, the recurring cost [of subscriptions] compared with a higher upfront license fee followed by lower maintenance fees means that SaaS is often more expensive in the long run [...]
In many cases, SaaS is an easy solution that shouldn’t be overlooked. Ultimately, however, the decision to go with SaaS applications has to be on a case-by-case basis with analysis of the trade-offs outlined above.
