Advantages and Disadvantages of SaaS (Software as a Service)

Software as a Service is a type of software in which applications are hosted by a vendor or service provider over a network (typically the internet). Also known as ‘on-demand software’, SaaS is a distribution model where software and all of its data are hosted on the cloud. This data is typically accessed by users through a web browser. While this type of software is becoming more and more popular to consumers, it is important to learn the advantages and disadvantages of using it to run your business.

Advantages

  • With SaaS, businesses do not need to handle the installation, and getting applications up and running is easier than enterprise software.
  • SaaS also has automated updates and patch management so IT support costs should be lower than with enterprise software. UPDATE: Since originally posting this page, we have had several people tell us they like controlling when their updates run. They mention they don’t like being forced to update (like Windows 10 does).
  • Less hardware is often required because the software is hosted remotely.

Disadvantages

  • With Total Office Manager, if the internet goes down, it is an inconvenience. With SaaS, if the internet goes down, the software is 100% useless. You are not able to run your business.
  • SaaS is usually going to be very expensive over the long run. Prices can range from $100 to $300 per office users and around $75.00 per mobile user – per month. That may not seem like a lot but the money really adds up fast.
  • In the case of a QuickBooks add-on, you still do not have accounting, payroll, and job costing. That’s more software to learn, integrate, and pay for. Accounting is the basis of business decisions. The complete absence of fully integrated accounting software is a major disadvantage. You are still going to need QuickBooks, which is a couple of thousand dollars per year.
  • Most users already have a server and desktop computers networked together. All of that is required no matter what. Installing and maintaining Total Office Manager will not require much of anything that you do not already have. Speaking of security. Hackers go after the big SaaS companies. Hackers don’t care about small contractors. Salesforce has already been hacked. I am not saying they are not secure, but anyone can be hacked if the prize is big enough. I am only saying that SaaS offers NO security benefits. Search “salesforce hacked” if you are interested in more information.
  • If you want to switch from a SaaS program to another software program, can you get your data back out? What would that cost? Total Office Manager’s data is held in Microsoft SQL Server. This database is the industry standard and any computer programmer will be able to deal with it. You will have peace of mind knowing that our valuable private data is safely stored on OUR computer. A backup could easily fit on your keychain.
  • Data is dependent on the internet. If your connection fails, you are at risk of losing work. If you cannot access the internet for any reason, your business cannot function.
  • No protection against price increases. Most SaaS companies make no mention of the fact that they can change their monthly prices at any time. You may be paying $5000 one month and $6000 another month. Be sure to ask for a written guarantee that protects you from ridiculous price increases. At Aptora, we increase our support and maintenance fees no more than 3% per year and we guarantee it in writing.
  • No monthly fees (typically). Enterprise software can be purchased with a one-time fee and you own the program. If you pay monthly payments for a web based application over the course of a few years, it really starts to add up and can end up costing you more than if you were to own the software out-right.
  • Total Office Manager is an asset and adds value to your business. When you sell your company, the new owner can use your software. With SaaS, the prospective buyer might see your monthly SaaS payments as a liability.

Conclusion

While SaaS programs may seem like the easiest option, because they are easy to set up and maintain – it is imperative to think about what is important, your data and your money.

It’s Your Data

Your data drives your business, without financial or customer information it would be very difficult to run your company. Because this information is so important, it’s imperative to keep it safe and know how to access it anytime you need it – even if you don’t have internet access.

Huge Savings

SaaS software can be unbelievably expensive. SaaS is a monthly liability payment like your utilities. If you don’t pay, it will not work.

When you buy Total Office Manager, you own it. It is an asset on your balance sheet, not a monthly payment.

SaaS versus Total Office Manager Example

Consider the following example from a SaaS application. We will call that program Service Monster.

Thinking of Buying Something Similar To Service Monster?

Most SaaS programs for the service industry do not include full blown accounting so they require QuickBooks to function.

Most companies will need to purchase QuickBooks Enterprise. Five users cost $3400 a year for their top package (which is recommended for anything but the smallest companies). That’s $17,000 for five years or $34,000 for ten years.

And Here is the Shocking Part

At the time this was written, Service Monster’s pricing is typically around $17,700 for five users per year. Yes, you read that right. A mobile add-on is another $65.00 per user per month. That’s another $3,900 per year (five users).

Total Cost of Ownership

– Consider five mobile users in the field and five users in the office

– Annual support and updates

First Year Five Years Ten Years
Total Office Manager

& Mobile

$15,000 $25,800 $39,300
QB Enterprise, Service Monster & Mobile $25,000 $125,000 $250,000

By owning Total Office Manager, you could save $210,700 over ten years. That’s enough money to pay the in state tuition and books for a bachelor’s degree. . . for five kids!