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SaaS vs. Traditional License – What’s Best?

by F. Shan McAdoo, http://www.riverlogic.comTuesday, August 24, 2010

We work with large companies and dealing with them can often be problematic, as they have intrinsic business and technology issues. We may convince managers of our value proposition only to later run into “not on my network” from the CIO. Other times, an organization has a budget for a solution but not enough funds to support enterprise deployment.  Software as a Service (SaaS) removes these barriers and others for our clients and for us. A simple subscription business model provides an alternative: companies can ‘plug-in’ and subscribe to software/services built on shared infrastructure via the Internet.

SaaS is all about getting the computational power you need when you need it, and it relies on services with good integration abilities, well defined protocols, and carefully considered end-user needs. This model has been around for a very long time, so the practice of getting it up and running is mature.  The difference today is how SaaS models are part of modular services that plug and play with other services and can be purchased ‘by the drink’.

SaaS benefits businesses of all sizes and types. Clients are adopting SaaS not only because an application is available from any computer/device at any time, anywhere, but also because there is a low learning curve. Additionally, no license fees mean lower initial costs. Having a provider manage the IT infrastructure means lower IT costs for hardware, software, and resources. Upgrades are also managed by the provider. A true SaaS solution can scale indefinitely to meet growing business needs, as well as integrate with existing ERP systems/other business productivity systems. Best of all, CIOs are turning to hosted solutions to maintain IT budget costs, so overcoming their objections is becoming less of an issue.

That said, SaaS is not free from challenges.  A licensing model allows a user to install software and configure what he needs when he needs it. Support and upgrades can be considered more carefully and staged before deployment. In the SaaS world, a business subscribes to a vendor’s service, under the terms in which a vendor chooses to provide it; consequently, it is no longer under a company’s control when a service expires or when a service is upgraded.  SaaS offers many apparent advantages over a traditional licensing model; however, every company should carefully consider their options when integrating a new solution into their enterprise. SaaS can be very cost effective and useful when properly deployed. When not planned and implemented properly SaaS projects can be failures like any other. The key is in doing the necessary homework.

About the Author

F. Shan McAdoo, Senior Vice President of Technical Development

Mr. McAdoo has extensive experience in technology project management and coordinates all technology development projects for River Logic. Prior to joining River Logic, Mr. McAdoo held several senior level positions at leading software companies, including Oracle Corporation. Mr. McAdoo earned his Masters of Regional Planning at the University of Massachusetts in 1991.

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