There’s a traditional notion of “why rent, when you can buy?” That conventional thinking could apply to a house, since you are “paying someone else’s mortgage.” Ownership can be perceived as more desirable than renting.
But there are additional costs to owning something – and besides, things change. In the business intelligence software world, cloud-based technology is driving a shift from buying to renting. While most business users used to license software from the company that created it, such as buying the latest version of Adobe Photoshop in a box, it is now increasingly popular to rent it instead. This is called Software-as-a-Service, or SaaS. It is a leased software model that is delivered and managed by a provider. It lives on the cloud, and is also referred to as “software on demand” or “pay as you go.” Gartner predicts that by 2020, which is just around the corner, all new entrants and 80% of historical vendors will offer subscription-based business models. SaaS is increasingly popular for office and communication software, payroll and accounting, customer relationship management (CRM), human resources management, and more.
At first considered a fad, SaaS is definitely here to stay. Here are five reasons why:
- Cost: A subscription saves money because you are just paying for the software you need. It automatically leapfrogs the up-front purchase and hardware installation costs. Instead, you just download the software. SaaS providers manage the IT infrastructure, along with costly maintenance tasks. Your monthly or annual subscription also covers support. This mode of paying can be helpful if you don’t want to drop a bundle in one fell swoop, since it allows you to spread out costs over time, instead of buying licenses outright. So you can still get the latest versions and support, even on a limited budget.
- Accessibility: All you need is a browser and Internet connection for SaaS, which works on a wide range of devices, including mobile devices. You don’t have to come into the office to use the software. You can access it anywhere you have an Internet connection.
- Flexibility: You can try before you buy, so you are not locked into anything you decide you don’t want. SaaS vendors can create interfaces to allow connections to internal applications, such as CRM apps. They can also create interfaces for other SaaS providers, so that SaaS solutions can be integrated.
- Scalability: You can change subscriptions as needed, which is handy if business accelerates, and suddenly more users need to access the program. And when your growing staff requires more software, you won’t require more hardware, as with the traditional model.
- Built-in conveniences: For starters, the SaaS delivery model is a space-saver. There is no hardware requirement, so you can free up a substantial amount of physical space. And housekeeping chores such as upgrades and security issues are in the service provider’s court. You can cross those off your to-do list. You can expect seamless upgrades for the most up-to-date software versions without having to re-set any preexisting features. So anything that was customized before an upgrade will carry over to future versions.
Cloud-based SaaS is a competitive business model, and with its cost saving efficiency, it is gaining rapidly on the traditional on-premise infrastructures. Why buy when you can rent?