The Pros and Cons of SaaS: Cost Savings Benefits vs. Security Concerns

Like any other IT solution, Software as a Service (SaaS) – the fastest-growing segment of cloud computing – has its pluses and minuses.

Results from a recent Gartner survey indicate that software spending will increase modestly worldwide through the 2014 budget year, with new on-premises software sales and SaaS driving this increased spending.

Gartner defines SaaS as “software that is owned, delivered and managed remotely by one or more providers. The provider delivers software based on one set of common code and data definitions that is consumed in a one-to-many model by all contracted customers at anytime on a pay-for-use basis or as a subscription based on use metrics.”

For businesses, there are many potential benefits to be gained from adopting the SaaS model, which are outlined in this report.

One of the main benefits associated with a SaaS model is cost savings, as organizations move away from the hefty capital outlay involved in installing, maintaining and upgrading on-premises IT infrastructure to the operational cost of a SaaS subscription.

Another pro to implementing a SaaS model is scalability. As an organization grows and needs to add more users, rather than investing in additional in-house server capacity and software licenses, the business can adjust its monthly SaaS subscription as needed.

On the “cons” side of the SaaS checklist are security, compliance and performance issues. The industry is still addressing these issues, which stand as obstacles to widespread SaaS adoption.

However, in March 2012, Gartner predicted worldwide SaaS revenue would reach $14.5 billion in 2012, a 17.9-percent increase from 2011 revenue of $12.3 billion. The IT research firm said SaaS-based delivery will experience “healthy growth” through 2015, when worldwide revenue is projected to reach $22.1 billion.

Meanwhile, recent research from The Enterprise Strategy Group (ESG) shows that even though businesses increasingly value SaaS applications, many enterprises are facing significant customer support challenges with their SaaS vendors, leading to low customer satisfaction and poor retention rates.

The lesson? Do your homework before implementing a cloud strategy within your organization.