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On-Premise, Hosting and Saas, What Does It All Really Mean? (Part 3 of 3)

Kim Anselmo - Wednesday, April 02, 2014

Throughout this three-part blog series, I've discussed the pros and cons of on-premise and hosting solutions for your financial management software.  In this final blog I will discuss SaaS solutions and how they pertain to your organization.

SaaS = Rent

SaaS, which stands for Software-as-a-Service, is a concept in which you rent everything (like a shared office environment), including your computing equipment and your software. You typically pay a monthly, quarterly, or annual fee and simply use “the system.” Just like in a furnished rental office, you only pay a monthly fee and there is nothing to own or maintain. You access your “system” (you no longer own software licenses) through the internet and have no responsibility for the computing environment (the building) including any maintenance to your system. Your system provider (or your landlord) is responsible for upgrading your software, your hardware, for making sure everything is working and for expanding your computing resources (your building) as your needs increase. In this case you simply sign-in to your system (or walk into your office) and go to work.

The costs with a SaaS or rental model are typically consistent and predictable over a period of time. Most SaaS companies will charge a monthly, quarterly or annual fee for access to “the system” and there are no other costs to incur. And, just like the hosting model, you will have an ongoing, recurring cost as long as you use and access the system but your up-front investment costs are minimal.

So, Should You Own, Lease, or Rent? It Depends…

So which model is best? Is there a “best”? Which one is the least costly? And which one will allow the greatest flexibility as my business changes?

In many cases, there is no one best answer on whether or not to move your business software application to the “cloud”. Your business circumstances, management reporting requirements, and operational needs all impact your own-lease-rent decision – just like deciding on office or factory space. What has been learned in recent years is that changing business management systems is costly, time consuming, disruptive and not without risk. Having the ability to off-load much of the overhead and maintenance of on-premise computing provides businesses with more stable and reliable systems.

However, there are two considerations that might help bring some clarity. One is whether you have internal IT resources to devote to the task, and the other is the size of your organization today, and where you expect growth to take you tomorrow. A financial management software provider, can help you decide which type of environment will work best for your company’s needs now and in the future.


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