SaaS (Software as a Service) is something of a buzzword in the modern business world, but does that mean the technology is right for every modern business? Not necessarily. Traditional software may be more appropriate for many reasons.
Before we dive into the pros and cons, let’s distinguish these two options:
- SaaS: A software distribution model where applications are hosted by a vendor and accessed via the internet. You usually pay a subscription and receive vendor-managed maintenance.
- Traditional software (aka on-premise software): Installed on individual computers or servers within an organization, typically requiring a one-time purchase and self-managed maintenance.
Now you know the difference, this guide can help you make the best choice and stay aligned with your business’s operational strategies and future growth.
SaaS: The Modern Approach to Software
Pros of SaaS
- Cost-effectiveness: SaaS’s subscription model often means lower upfront costs so you may be able to access high-end software without a hefty initial investment. There may also be opportunities to negotiate on pricing as vendors are usually willing to tailor your contract depending on your business requirements. For example, you could pay less by excluding features that aren’t relevant.
- Accessibility: As SaaS tools are accessed over the internet, you and your team can use them anywhere. Not only is this highly convenient, but an online-only approach also offers flexibility for employees who work remotely. Cloud-based collaboration tools like Slack and Trello are just two examples that have revolutionized remote work.
- Automatic updates: Vendor management means that you’ll always have access to the latest features without additional costs or effort. This aids efficiency and helps keep your technology secure.
- Integration capabilities: SaaS tools often offer better integration capabilities with other cloud-based systems which can improve operational efficiency.
- UX: SaaS applications tend to be more user-friendly and require less technical know-how compared to traditional software (but not always).
Cons of SaaS
- Reliance on internet connectivity: While online access is useful in terms of flexibility, it also means that service could be disrupted due to connectivity issues.
- Potential for hidden costs: Subscription fees can accumulate as SaaS contracts often include built-in uplifts that charge subscribers more year-on-year. There may also be extra charges for certain features or additional storage.
Traditional Software: The Classic Solution
Pros of Traditional Software
- Offline functionality: The fact that traditional software can be used without internet connectivity may be considered a positive for some businesses, such as those operating in areas with unreliable internet access.
- One-time licensing: Traditional software can be better value for money in the long run compared to a SaaS subscription model which could result in recurring fees. However, cost savings depend on factors like the software’s lifespan and your company’s growth rate.
- Greater customization: Businesses have more control over the software’s functionality so it may be easier to tailor it to your organization’s specific needs. That said, many SaaS tools do offer customization capabilities.
- Security control: Your business has control over the software’s security features which can give you confidence that your data is as safe as it can be. Whereas with SaaS, you are relying on the vendor — though that’s not to say that there won’t be robust security measures in place.
Cons of Traditional Software
- Upfront costs: Traditional software tends to come with a higher initial investment compared to SaaS platforms. It may be more challenging for small businesses or startups to cover the cost upfront.
- Accessibility limitations: Traditional software is generally limited to the computers or servers it’s installed on. Therefore, remote employees would probably not be able to access it from their personal devices.
- Maintenance requirements: Your business would be responsible for updates and maintenance so this would require additional IT resources.
Key Business Considerations
While it’s useful to have an overview of the pros and cons of both options, they mean nothing unless you look at them within your specific business context. For example:
Your Business Size and Structure
Smaller or remote-based businesses might prefer SaaS for its flexibility and lower initial costs, while larger organizations might opt for traditional software for its customization potential.
Scalability Needs
SaaS offers easier scalability for growing businesses, whereas scaling traditional software can require more extensive planning and investment.
Security Concerns
While SaaS providers typically offer robust security, some businesses may prefer the control over security that traditional software provides, especially when handling sensitive data.
Assessing your business’s present and future needs, budget and culture will ultimately help you decide whether SaaS or traditional software is most appropriate in each circumstance.
