Have You Heard About SaaS? Is It Right For You?

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Let’s start off with a little quiz. SaaS is: A) a discount airline offering direct flights to Finland, B) a turbo charged automobile well suited for the German Autobahn, C) Software as a Service, D) not as good as the hype would have you believe.  If you answered “C”, you get points for accuracy. If you answered “D”, you have passed the quiz with honors! (Don’t feel bad if you answered A or B)

Simply put, Software as a Service (SaaS) is a delivery method for software in which the applications are hosted by a third party, rather than reside on your servers.  To access the software, you pay monthly subscriptions fees based on the number of users. At first glance, this model seems very attractive - no upfront software costs, fast implementation, no new hardware to purchase and maintain. But there are many critical factors to take into account if you are considering a SaaS solution.

Someone else will own YOUR financial data!

There is no getting around this fact – if a third party is hosting your ERP software, then your General Ledger, your payables, your confidential data is residing on a server owned by another company. Who truly owns the data? What happens to your data if that company goes bankrupt?  These are risks you need to consider.

There are costs down the road

Sure, $60 a month per user sounds great when compared to $2,250 per user to purchase software, but make sure you are calculating the true cost. SaaS typically is on a named user basis; on premise ERP software like Microsoft Dynamics GP is purchased on a concurrent user basis. Over three years, subscription based pricing probably will be more. Plus, with low cost leasing options, purchasing Dynamics GP does not necessarily mean you have to pay a lot upfront.

You still will have hardware to maintain

Many companies believe that SaaS will allow them to retire existing hardware. But a recent Forrester Research report (The ROI Of Software-As-A-Service) found that most companies deploying a SaaS environment still need to maintain some on premise software to fill in gaps that the hosted solution doesn’t address. And with the cost of hardware going down, are the hardware savings really that great?

In the end, you will probably find that an on premise installation of a robust ERP solution like Dynamics GP is cheaper, more flexible, and better suited for your business.

by Intellitec, Pennsylvania Microsoft Dynamics GP Partner

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