5 Things Every Entrepreneur Must Know About SaaS (Software as a Service)

The idea of Software as a Service is not as new as you might think. It has been around from as early as 1961. Renowned computer scientist John McCarthy, in a speech to MIT students, prophesized this:

“Computation may someday be organized as a public utility.” — John McCarthy

It is relevant to point out that McCarthy won the Turing award for his contribution to the development of Artificial Intelligence. As ludicrous as it sounded at the time, his prophecy came true less than half a century later.

Today, some of the most valuable companies on the planet offer software services to individuals and organizations.

So, What is Software as a Service?

Also known as SaaS, Software as a Service is a type of cloud-based computing. Instead of downloading software to use on a computer on the premises, you instead use applications on a remote server.

For example, rather than download and use Microsoft Excel to keep your spreadsheets, you instead use Google’s online sheet. In this scenario, Google is providing its sheet software to you as a service.

You will still enjoy [almost] all the benefits of MS Excel but via your internet browser.

SaaS and SaaP

The software you buy and download to use on a local computer is also referred to as Software as a Product or SaaP.

In our previous example, the Microsoft Office suite, which comes bundled with Excel, is a software product. You buy the product aforehand, download, and install it on your machine.

SaaS is often subscription-based. This means the service providers can charge you a recurring fee to use their service. To use Google sheets for your business, you would be required to pay a subscription fee.

Types of SaaS

There are all kinds of cloud-based software services on offer today. With the right resources, you can do almost anything you can do on a locally installed software with a cloud-based service.

There are, of course, unbridgeable differences between SaaS and SaaP. Each of these software models also come with their own pros and cons. However, these are not within the scope of this article.

Are you an entrepreneur just getting familiarized with Software as a Service? Here are five of the most important things you need to know about SaaS.

1. SaaS is more cost-effective than SaaP for businesses

The whole idea of running a business profitably is to minimize overhead costs. SaaS tends to cost less because businesses can choose from different subscription packages.

Most services are structured in a way that you can nitpick the features your business need. You would not need to pay for features that you will not use.

Additionally, when your business does not need a service or feature, even temporarily, you can cancel or suspend the subscription.

There is also the matter of initial costs.

Most businesses choose SaaS because they do not need to buy hardware or special platform software to get started. You will not need to invest more for extra storage or pay an IT company to configure the software for your business. The best SaaS vendors today use APIs to configure client programs remotely.

In summation, SaaS will save your business money in the long run.

2. SaaS is scalable and Flexible

One of the greatest challenges that many businesses face with SaaP is its scalability limitation. As a business grows and its scope of business broadens, their software must be highly flexible and scalable.

Businesses grow at different rates and in different directions. The software they use must not be the stumbling block to their growth. Traditional software packages often limit applications to pre-defined sizes of organizations, number of users, or customers.

With SaaS, a growing business can easily upgrade their subscription to the next upper level. Should the growth stagnate or rollback, they can move down the subscription level to cut costs.

SaaS minimizes wastage and accommodates businesses of all sizes and types. It is also flexible enough to account for business fluctuations such as low and high seasons.

3. It is easy to capture data and provide it for analytics

When your business’ software is a service, all data passes through a centralized platform. This means it is already captured and ready for analytics tools.

Do you need to use reporting, visualization, and intelligence tools to provide insights into your business operations? If yes, you will not need to make further investments just to capture data. Your SaaS vendor has that covered. This means less hassle for you in streamlining your workflow and analyzing business processes and performances.

Most SaaS paid subscriptions offer data capture and analysis as an added service. You must, however, scrutinize the data models and tools your vendor supports aforehand.

4. Software is updated and patched centrally with no interruptions

Software development is an ongoing process, not a one-off event. When you buy an off-the-shelf program to use in your business, the vendor offers no guarantees of updates and patches. You get what you buy, bugs, glitches, and all.

Because SaaS runs on the cloud, the vendor will constantly update and patch it centrally with negligible process interruption.

This is one of the greatest advantages of SaaS if you are weighing between it and SaaP. If you are concerned about security, then you have to go with SaaS. You can have peace of mind knowing that any software vulnerabilities will be patched probably even before you learn about them.

With on-premise software, the process of reporting vulnerabilities, downloading, and installing patches is tedious and less secure.

5. Yes, you still own your SaaS data

Just because your vendor processes and stores your business data does not mean they own it. Your data will still belong to you. However, you must read the vendor’s SLA (Service Level Agreement) to confirm data ownership before signing up for the service.

The typical SaaS contract will also have in-built contingencies on how clients can access and retrieve their data should the vendor go out of business. This is a necessary safety net that allows you to download all your business data and save it locally or back it up elsewhere when the need arises.

The safety of your business data in the cloud is paramount. As such, before signing the dotted SLA line, double-check the following:

• That the vendor assumes responsibility for supporting, updating software to secure your data.
• That you, the client, have access to your data at all and any times. The service uptime should be no lower than 99%.
• That the service guarantees absolute control over your data. This means you can export copies of your data and remove the originals from the cloud when you need to.

In Summation

In this age of real-time data and heightened data security, the choice between SaaS and SaaP should not be difficult for businesses. However, every entrepreneur needs to know why SaaS is everyone’s favorite choice. There is a lot more to know about this ‘new’ software model, but these five are the most important for entrepreneurs just getting started.