Cloud SaaS

Cost differentiations

Traditional installed software is typified by:

Cost differentiations

  • Upfront license fees.
  • Higher implementation costs.
  • Lengthy implementation timescales and processes.
  • Access issues by a mobile workforce.
  • On-going upgrade costs.
  • High on-going support costs.
  • Significant internal infrastructure. Hardware, software and support costs.
  • Future infrastructure upgrade costs not part of the initial contract and so adds risk.

Direct cost savings of Software as a Service (SaaS)

  • No upfront costs; the investment is operational expenditure (opex) not capital expenditures (capex).
  • Rapid speed to implementation improves business agility and flexibility.
  • Pay-as-you-go, which increases or decreases as you need to.
  • Apart from web access, no infrastructure requirement as the vendor hosts the data externally.
  • The customer does not need to worry about internal IT support, security, backups, Storage and such like.
  • Quick implementation typified by a simple ‘subscribe and use’ approach.
  • All staff can use the application no matter how mobile they are, just as long as they have access to the internet and an adequate browser.

Indirect cost savings of SaaS

  • Most SaaS applications are easy to use and, as such, enable good productivity with little investment in training.
  • Upgrades and enhancements are made in smaller, more frequent, releases which enables learning in a more digestible manner than the traditional three to four year upgrade.
  • Applications support is taken care of by the SaaS vendor so the customer does not need internal or outsourced IT staff for this.
  • Low monthly costs minimises the cost of a wrong decision because there are few upfront costs and, often, no fixed/minimum contract term.

Economies of scale are achieved by having a single version of the software, bugs and small enhancements are fixed quickly and for all.

  • SaaS users can work from anywhere, especially the home. This means the customer can save on physical offices, premises and commuting costs.
  • Single instance of the software means no differing versions, making support easier.
  • By hosting several customers’ data in one place, SaaS solutions can take advantage of network effects. The vendors can make use of the metadata of all the customers to assist in decisions about how to improve the application, resulting in better applications innovation over shorter time periods.
  • Vendors can integrate with other applications via web services-based API’s, thus saving integration, testing and customisation costs for customers.

Next article Data security and risk It is of paramount importance to the customer that data confidentiality, integrity and availability (CIA) is maintained wherever the data is hosted or accessed...


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