GXS Insights

What are the Business Benefits of SaaS?

The SaaS model can offer numerous benefits over traditional licensed software approaches:

• Easy to Switch Vendors─SaaS provides significantly more power and control to the corporate buyer than traditional software license models. SaaS applications are sold on a subscription basis for a monthly recurring fee. Unsatisfied clients can cancel their subscriptions and transfer to a different application vendor without the purchasing and licensing costs that would be assumed in a licensed software model.
• Pay Only for What You Use─Often, IT organizations will over estimate the actual software utilization by the end-user community. For example, an IT organization may forecast an active end-user community for a particular application to grow to 10,000 employees within a year. However, customization and implementation delays may result in only 500 employees actually using the software a year later. With SaaS, corporate buyers only pay for the active users of the system–not the forecasted user community.
• Lower Total Cost of Ownership─One of the historical complaints about licensed software models has been the unknown cost to deploy and operate.  With SaaS the total cost to operate the application is fixed.  SaaS vendors typically will bundle all of the necessary hardware, software and support services such as implementation, training, help desk, troubleshooting, upgrades, security, and business continuity into a single fee.  As a result, the overall total cost of ownership is known in advance.
• Time-to-Market─The SaaS vendor takes responsibility for the provisioning of hardware, software and network infrastructure at the data center. Additionally, SaaS applications typically have limited customization of features and the user interface. As a result, there are no delays resulting from the need for internal IT organizations to perform development, enhancement or deployment of the application.
• Easier Upgrades─SaaS vendors manage the upgrade process. New releases and feature enhancements are deployed centrally to the hosted applications. There are no client applications on end-user desktops to be upgraded. SaaS vendors typically deliver two to four major upgrades per year and several minor updates that the user gets automatically. Users of SaaS-based applications can always be certain that they are using the latest version of the software provided by the vendor.