For any start-up business, software is a crucial part of the daily running and delivery of business assets and organisation. Whether it’s HCM software for HR and talent management, or CPM software for corporate performance management, all businesses need some type of software to run efficiently. With so many different types of software available, costs can easily rise quickly. This article will explain how Software as a service (SaaS) can be used to reduce these upfront costs.
What is SaaS?
Software as a service is a business model whereby a business can purchase a software licence for an agreed period of time. The business then has full access to this software, and can be used as much as needed over the time period. Once this time period expires, the software licence is revoked, and the business can either pay to continue having access to the software, or stop the service. There is typically an up-front cost, as well an optional support fee, which provides a business with technical support for the software of choice.
How can SaaS reduce costs?
Due to the pricing models of most SaaS providers, the upfront cost is typically far lower than buying the software outright. As there are low costs for user provisioning (setting up a new customer on the server), many SaaS providers now use a freemium model. These providers offer free software with limited functionality and then charge to “unlock” the premium or advanced features. Some SaaS providers even offer software for free, but generate revenue through advertising. For a start-up business, this means that there are plenty of cost effective options available. If your business is looking to trail software, or only use it for a short period of time, then SaaS is a perfect option.
Is SaaS safe?
Due to the fact that a business will never own a copy of the executable file for the software, criticisms have been raised over the safety of SaaS. One of the most notable opponents of SaaS is Richard Stallman from the Free Software Foundation. Stallman states:
“SaaS inherently gives the server operator the power to change the software in use, or the users’ data being operated on.”
While this is a valid criticism, in recent years, SaaS software has began to move to an open source model. This allows for a business to have access to the original code for the software that they are using through SaaS. This eliminates the possibility of the software provider changing the core code.
SaaS vs Software Purchase
Although SaaS can be an excellent way to reduce start-up costs, purchasing software outright has the possibility of being cost effective long-term. Depending on your business, it may be wise to use SaaS as a trailing device. Use the software for a few months, and evaluate whether it is vital to your business. If you will only be using it for a few months a year, then SaaS is the way to go. However, if this software is vital for your business, then purchasing the software could be more cost-effective.
There is also the on boarding fee to consider. If you keep stopping and starting using SaaS, the initial fee could add up fast. With purchasing the software outright, you only have to pay once, and you have unlimited access to the software. This could prove to be more cost efficient, even if you have to initially pay a larger amount.
Is SaaS worth it?
Overall, SaaS is a very useful tool for any start-up business looking for efficient and cost effective software. While purchasing the software outright is still a valid option, SaaS is more versatile, making it an excellent way to attain software for your start-up business!
About the author: Talentia is a leading supplier of HR and Finance Software, consultation services and training.