As governments and business sectors breathe a sigh of relief from surviving the stock storm at Wall Street, it is projected that many companies, from start-up small and medium enterprises to major multinationals, would be working on measures to protect their profitability and business interests from any possible changes in the financial climate.

One possible avenue for easy start-up and cost cutting is acquiring Software as a Service (SaaS), a progeny of IT outsourcing.

SaaS, or on-demand software, is defined as software-deployment processes where software applications are hosted as a service of which customers can avail through the Internet access. In other words, you’re outsourcing your business’ software requirements from an application service provider (ASP).

This IT innovation is touted to be the next best way of how software is getting acquired and used, changing how the ‘World’ works on the Web however, like any human endeavor, SaaS does have its pro’s and cons that any savvy business executive and entrepreneur should be aware of.

Here are some salient points that you might want to mull over carefully if you’re considering SaaS for your business.

In SaaS, you’re acquiring the assistance, staff and equipment of an application services provider through contract. The ASP fully owns (they could also be the developers) and operates the software as well as maintain the servers that support the software. The ASP provides the software and all related, relevant information to the client through the Internet. The ASP bills on a pre-arranged timely fee or through a “per-use” basis.

The advantages and the disadvantages of the SaaS models are:

Software integration issues can be eliminated from the client site and internal IT costs can be reduced to a predictable monthly fee but this is entirely dependent on how the service is set-up.

SaaS can reduce your company’s investments on IT hardware since your ASP have these at their site however since your access to SaaS is computer-based and Internet-dependent, you will still require workstations, routers and network hubs at your business site and these would require to be upgraded regularly for improved access.

Through SaaS, your business software systems are kept up to date, available, and managed for performance by experts from your ASP however this could mean higher bills later on as changes in the ASP market can occur and affect the type or level of service.

With SaaS, you can acquire customized software and IT solutions best-fit for your business needs particularly on critical business functions, but again this can be costly and your company’s control on those certain business functions can be limited as you rely more on your ASP.

SaaS can be quick to set-up for businesses in regards to catering to simple business functions, customized solutions are a different matter. At times there can be challenges for the ASP in providing for complex functions as integration with systems that may not be compatible with their own. Again that would spell some cost for you.

SaaS can pave the way for your business’ reliability, availability, scalability and security of its internal IT systems but there is still no iron-hard guarantee for a complete, certain elimination of risks. Common experience shows the Internet and its use is open to potential risks such as exposure of your company’s private data.

For many businesses, SaaS (along with virtualization and cloud computing) had been a great option which leads to great results. There are many excellent products and excellent ASPs out there that can help your business reach to new heights of efficiency and effectivity.

However, please consider that SaaS is not a silver bullet, nor a panacea for all your business woes.  Confirm first whether SaaS and the careful acquiring of an ASP are viable for your company needs. Then be aware every step of the way, that is sound advice for any venture in life, is it business or not business.

Outsourcing Solutions, Inc. – your outsourcing partner!


  1. “Application service provider.” 2 September 2008. Wikipedia: The Free Article. Accessed 22 September 2008. Link here
  2. “Software as a service.” 19 July 2005. Wikipedia: The Free Encyclopedia. Accessed 22 September 2008. Link here
  3. Ho, Victoria. “Governments must lay foundation for SaaS.” 17 September 2008. ZDNet Asia. Accessed 22 September 2008. Link here
  4. Ho, Victoria. “SaaS model here to stay, say vendors.” 15 September 2008. ZDNet Asia. Accessed 22 September 2008. Link here
  5. Marks, Gene. “Beware the Hype for Software as a Service.” 24 July 2008. Business Week. Accessed 22 September 2008. Link here


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