What is SaaS? 10 FAQs About Software-as-a-Service

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By: Taylor Short and Lauren Spiller on January 5, 2022

Software-as-a-Service (SaaS)—also known as cloud based software—is now mainstream. Almost half (48%) of respondents in Gartner’s 2021 Emerging Technology Product Leader Survey who are putting funds toward data and analytics selected cloud based software as one of their top three areas of emerging technology investment.

And for good reason. Business applications delivered via a web browser lack painful installations or strict contracts, and are paid for overtime instead of all at once. This usually makes the systems more flexible and affordable enough for any budget.

Yet many of the business leaders we speak to everyday at Software Advice still have questions about SaaS and want to know why it could be a good choice for their company. Based on those conversations, here are the top 10 frequently asked questions about SaaS.

1. What is SaaS?

SaaS is a method of software delivery that allows data to be accessed from any device with an internet connection and a web browser. In this web-based model, software vendors host and maintain the servers, databases, and the code that makes up an application.https://www.youtube.com/embed/20QUNgFIrK0?enablejsapi=1&origin=https%3A%2F%2Fwww.softwareadvice.com

The cloud-based model is so common now that more than 60% of software seekers who call Software Advice only want web-based products—less than 2% specifically ask for on-premise software.

The traditional on-premise software delivery model differs from SaaS in two key ways:

  • SaaS deployments don’t require extensive hardware, which allows buyers to outsource most of the IT responsibilities typically required to troubleshoot and maintain the software in-house.
  • SaaS systems are typically paid within a subscription model, whereas on-premise software is usually purchased through a perpetual license, paid upfront.

On-premise users can also pay up to 20% per year in maintenance and support fees. The annual or monthly subscription fee for a SaaS system will typically include the software licensing, support, and most other fees.

2. SaaS versus on-premise: How do I choose?

The first step to answering this question is to determine the complexity of your business. Answer a few questions about your business to help you determine if SaaS is the best choice:

  • How specialized is your business compared to others in your industry?
  • Do off-the-shelf products offer the functionality you need?
  • What level of software customization do you anticipate needing?

Another factor to consider is your budget. As mentioned above, SaaS subscription payment models help companies with smaller budgets spread the total cost of ownership over time, so even small businesses can adopt robust, modern software.

It’s no longer the case that buyers have to choose between flexibility and functionality. Most cloud based software today can offer the exact same experience as an on-premise installation.

The bigger question is around data ownership. The vast majority of vendors still place data in the possession of the end user, but be sure to review the service contract to understand exactly how your data will be used.

A few industries are slower to embrace cloud solutions (for example, many manufacturers still opt for a traditional ERP deployment), but when searching for new technology, the cloud is the new default.

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