Why Buy Software when You Can Rent
Renting software is commonly referred to as Software as a service
(SaaS). SaaS is a model for using
software as a subscription service instead of buying the license and installing
the application files on a local computer from a CD, or increasingly as a
download from a vendor website. I am a
big believer in SaaS, but I tried to be somewhat objective.
According to a large technology analyst
firm, key characteristics of SaaS include:
- Network-based
access to, and management of, commercial software.
- Server management
from a central location rather than at each customer site.
Software delivered as a service generally is priced on a per-user basis
for each application, with billing managed by a major credit card or invoice.
Sometimes there are minimum user requirements, minimum subscription time
periods, as well as additional fees for setup, extra bandwidth and storage.
Who
it's for . . .
In the business-to-business arena, the SaaS
model is most often focused on the small-medium business segment. Unlike large
enterprises, smaller companies have:
- Little or no staff
devoted to information technology, and the employees they do have are often
stretched thin and are generalists in their knowledge and skills.
- Limited budgets,
particularly for capital expenditures.
- More fluid needs
for tools and people due to rapid growth and other changing requirements.
- Greater demands on
time, as most small business owners and their employees wear multiple hats.
- Growing propensity
to operate on a ‘virtual' model, with employees working from home, at remote
work sites, or from rented office space that is shared with other businesses.
The flexibility of software as a service is particularly attractive to small business owners
- No upfront
investment in money or time, and often no contracts.
- Ability to use
powerful business applications without having to acquire the specialized
infrastructure and staff needed to manage them.
- Power to mix and
match applications or add and remove users as needed
- Freedom to work from any location.
How
it works . . .
The SaaS model requires primarily a web browser and an internet
connection:
1.
The customer goes to a website and ‘buys' a
subscription - generally monthly - to the desired applications and number of
users. An account is usually set up with a major credit card for billing.
2.
The person who places the order (who generally
becomes an administrator) is given login credentials and a web URL for secure
access to the application.
3.
Every user added to the account receives his/her
own log-in credentials granting them web access to the application(s) for as
long as needed and as long as specified terms are met.
Most SaaS vendors provide a secure web
portal with additional services such as support, along with administrator
access for changing the number of users or applications and maintaining other
account information.
Compared
with traditional software licensing . . .
Using an application as a service has a similar look and feel as if
using it from a local PC or server, particularly with today's fast and reliable
bandwidth. Performance and availability generally are outlined and guaranteed
by a Service Level Agreement (SLA).
- Traditional software is purchased as a license,
with the application files delivered on a CD or downloaded from a website. As a
license, what is purchased is the right to use the application, either by one
user or on one computer.
- The buyer is
responsible for ongoing management such as backups, patches and upgrades. Most
software vendors offer annual maintenance fees and/or upgrade pricing for
existing customers.
- There are no
refunds for software no longer used or wanted.
Potential
disadvantages of the SaaS model . . .
- Some companies
wish to keep all software and hardware under internal control. They want to be
able to ‘see and touch' the hardware.
- Companies with
unique requirements or a need for significant customization may not be able to
utilize the model.
- The concept of
leasing or renting is not popular with some business owners who prefer
ownership, or who have had bad experiences in the past.
- Owning is
considered to be less costly than renting.
Demonstrated
advantages of the SaaS model . . .
- Since nothing
resides on a single hard drive (with a few exceptions in which files must be
installed locally), the application can be used from any internet connected PC,
providing greater flexibility.
- With pay-as-you-go
terms, you pay only for what you use.
- You're never
locked into a license, so there's no obsolescence and no buyer's remorse if something
doesn't work out the way you thought it would, or if requirements
change. While purchased software cannot be returned, software subscriptions may
be cancelled.
- Reap the
productivity rewards from an application whenever you want, without a
commitment or big upfront investment in money or an evaluation process.
- Add or remove
users as staffing needs change and applications as business needs change.
- Predict and budget
how much you will spend, and move the cost from a capital expenditure to a
business expense.
- Redirect financial
resources, people and time for other needs and priorities.
We're a reseller of SaaS applications through our online portal - ww.workplace2go.com
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