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SaaS vs. SaaP: The Difference Between Owning and Leasing

Ruth Hughes, CMRP & CDG Founder & CEO

One of the more interesting developments in enterprise technology is the emergence of “software as a service” (SaaS) as a viable alternative to the conventional concept of “software as a product” (SaaP). The SaaP philosophy is one most readers should already be familiar with: when you purchase software, be it Microsoft Office or Super Mario Bros., it’s theoretically yours for life. SaaP programs are paid for at the point of purchase and subsequently installed on or run from your own computers, servers, or other on-premise hardware. While most vendors offer a separate technical support agreement for purchase, providing access to updates, bug fixes, and other support, generally once you buy a SaaP solution the responsibility is on you and your IT department to ensure it runs smoothly.

Increasing bandwidth, standardization in web technology, and proliferation of broadband internet access has lead to the rapid growth of SaaS solutions. Instead of running a program from your own premises, SaaS software is hosted entirely by the provider. Unlike SaaP, your computers don’t do any of the heavy lifting. Instead, your hardware simply serves as an interface for software running in the vendor’s data center that could be thousands of miles away. SaaS is a textbook example of cloud computing, providing resources and functionality without being tied to any specific location. Further, instead of a one-time purchase of software, the SaaS model involves a subscription-style pricing arrangement. If SaaP is buying a car outright, SaaS is akin to leasing it. You’re free to use it so long as you make the payments, but once the agreement is over the car goes back to the dealer. With SaaS solutions, you can only use the software as long as you’re paying the subscription fee.

SaaP and SaaS each come with their own strengths and weaknesses. Consider the following when deciding which solution is best suited for your business:

Software as a Service: Simplicity and Convenience Inside the Cloud

Cloud-based SaaS solutions are, above all else, designed for simplicity and ease of use. Implementation is a breeze compared to SaaP solutions since the bulk of the process is handled on the vendor’s end. You’ll also avoid the up-front costs of purchasing your own hardware and server software. Further, instead of relying on your in-house IT department to deploy and maintain the software, SaaS can offer more specialized support from expert technicians well-versed in the relevant applications. You’ll no longer have to worry about tricky installations, incompatible updates, and other IT aggravations. So long as you have an internet connection and a valid subscription, you’ll always have access to the tools that drive your business. In the event something does go wrong, SaaS solutions, such as MVP Plant, create automated daily backups to keep your operational data safely in the Cloud. Finally, the subscription-based nature of the relationship should ensure that the vendor will strive to keep you satisfied. As opposed to the one-and-done nature of SaaP purchases, a SaaS vendor must continually earn your subscription.

SaaS does come with a few cons, however. With cloud-based, SaaS solutions you ultimately don’t own the software utilized by your business. As the name implies, you are paying for a service, not purchasing a product. Further, as a SaaS customer, you are sacrificing a level of customization and control in exchange for expedience and ease-of-use. You won’t have the same ability to tweak and tune the software to your needs as you would with a traditional SaaP implementation, since the hardware and software driving your business might be thousands of miles away.

Software as a Product: Owning and Operating On-Premises Applications

While the definition of software ownership is more complex than one might imagine, SaaP does provide you with a license in perpetuity to own and use your software. While a SaaP solution might cost much more up-front than a SaaS implementation, it’s possible to capitalize the cost of the software using your capital budget rather than your expense budget. It’s a larger initial investment, but one that in the long-term could prove less expensive than an annual subscription service. Since SaaP software is installed on your on internal network and hardware, it can provide more in-depth customization options than SaaS solutions. You can modify it to fit your needs, choose when and how to install updates, and otherwise maintain a level of control that’s unavailable with an off-premise SaaS software suite.

SaaP’s customization comes at the cost of convenience. Different SaaP solutions may come with specific hardware requirements or specialized skills and capabilities required of your IT department. On-premise software suites can necessitate a great deal of IT time and labor expense to implement and maintain, since you will be ultimately responsible for managing the system, making backups, and providing internal technical support. SaaS systems, on the other hand, place that burden on the vendor. Lastly, SaaP can be a more expensive initial investment than SaaS, as you’ll have to bear the hefty initial software cost as well as any specialized hardware needed to get it up and running.

Find the Software that Fits

SaaS has been a proven business service delivery model for over a decade, allowing businesses to focus their energy and resources away from IT struggles and into their core competencies. Still, it’s not a one-size-fits-all solution, and there are many scenarios in which an on-premise SaaP implementation could prove a better fit. Understanding the difference between the two concepts and carefully weighing the costs and benefits of each will allow you to choose the best solution for the unique needs of your business.

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