There’s been a lot written over the past few years about software as a service (SaaS). This used to be called the application service provider market, but then all the so-called ASPs tanked (largely due to market timing) so now the industry has chosen to call itself SaaS. The idea is simple: Instead of shelling out a chunk of money on expensive software that runs on your own servers and workstations you rent applications over the Internet. Many of these applications are also free.
This is indeed a great way for small businesses to save money, and if not to actually save money then to stretch out the payments as repeating monthly costs rather than a big up front cost. Many of these services are highly usable, have great features, and are inexpensive.
However, there are also many negatives and potential negatives that you need to take into account before you commit to the SaaS approach. Most writers and analysts don’t feel the need to tell this part of the story. With them it’s all about telling you what you want to hear (You can save money!) and not telling you the full story. A recent story in BusinessWeek Small Biz Magazine, “Tech: Let Us Serve You ,” does just this. The author of the article interviewed me for that story and I pointed out a number of these considerations, but they were not mentioned, probably because they didn’t fit the upbeat tone of the coverage.
Firstly — and this is mentioned in the Small Biz Magazine story — you will have to be online all the time in order to use these apps. Has your Internet connection ever gone down? Have you ever been on a plane and wanted to work? With SaaS, if you’re not connected then you are down. If your Internet access goes down, do you really want to stop taking orders, shipping orders, and invoicing?
What is the SaaS provider’s policy on storage? Most of these services dramatically increase cost once you have a certain amount of data stored on their servers. Before signing up, try to figure out how much data you will store on their servers. Ask if there are any fees involved. Many companies choose to move off of a SaaS provider and bring software in-house because that ends up being cheaper than paying for data storage.
The real potential gotcha is what happens when you try to leave. How do you get your data? Can you download it easily and import it into a local program? If it is a database, can you import it easily into another database? In many cases the answer is yes, but an answer of “no” will cause you to stay up at night. Think about it: Now all of your documents are on someone else’s server, and the more you use the server the more your costs go up, but you have no way of easily pulling the project in-house to save money. Sounds like a catch-22 to me.
So before you jump on the bandwagon do a little planning. Check policies and figure out if the usage model makes sense for you and your business.