by Wyatt Walter

Created on: August 08, 2009   Last Updated: August 09, 2009

Software as a Service (SaaS) is a method of delivering software to customers as an on-demand service rather than the traditional method of delivery software as an on-site installation with upfront costs. Unlike traditional software licensing where one buys a license and can use the software until the next upgrade, SaaS typically involves yearly or monthly fees to allow access to the software and once the end user terminates the agreement and stops paying the fee, they no longer have access to the software. Typically the software will reside either on the software creator's servers or on a partner's servers, not at the customer's site.

Advantages of SaaS are lower entry-point costs as well as low maintenance for the customer and portability. Since the software is hosted and supported by either the maker of the software or a reseller, a majority of the support, maintenance and deployment is taken care of by the service provider which means smaller investments in IT staff and hardware is needed by the customer. In theory, the service vendor should have experts in the software which allows them to support more clients with fewer people than if each customer had to hire new staff or train existing staff to support the software.

Since, by nature, the software is being delivered from a location off-site from the customer, it will be network-based which means it can be accessed anywhere. This is especially advantageous in a world where workers are becoming more and more mobile. The most popular type is web-based software which is even better for customers because they don't have to depend upon any given workstation or platform to access the software they need.

Disadvantages to SaaS would include a loss of control and never-ending costs of software. When choosing to allow another company to host your software, you no longer have control over your own data and are helpless when the service provider suffers an outage. While some companies do not want to have to have control over their data, for others this is a liability. For most this is not a huge problem, but when deciding whether to host software on-site on your own hardware or on a service providers' servers, that is something to consider. At the end of the day, you cannot walk down to the data center and kick the servers if they are down too much for your organization.

The never-ending costs of SaaS could also be a disadvantage to some. While the lower cost of entry is certainly an advantage, one has to keep paying for the software year-after-year if you want to keep using the software. The monthly or yearly costs may be low enough to justify for your organization, but it's something to keep in mind before deciding.

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