Did you know that over the last seven years, the SaaS industry has grown by nearly 500%? And nearly 70% of total company software is SaaS? Microsoft 365, HubSpot and Salesforce, are just a few names and new solutions are popping up daily.
Even though SaaS tools are important and enhance business growth, there are concerns around cybersecurity and the cloud. For this reason, it’s important to review SaaS from an IT management perspective and how it impacts various levels of your business.
In this blog, we’ll explore how SaaS affects everything from IT operations to decision-making for IT Directors, CEOs and CFOs. Make sure to share with someone cross-departmentally!
Understanding SaaS
SaaS or Software as a Service are cloud-based solutions offered through a subscription model to users like your employes via the Internet. The rise of SaaS solutions has changed the modern work force as businesses move away from legacy systems to new cloud computing environments.
SaaS is one of the three main categories of cloud computing. The other two are Infrastructure as a Service (IaaS) and Platform as a Service (PaaS). These solutions are typically sold through an independent software vendor (ISV) or through a larger entity like Microsoft where the entity is both the cloud and software vendor.
It’s been reported that SaaS products will reach over $200 billion dollars in sales by the end of this year (2024). The biggest trends to keep an eye out for are AI, migration to PaaS, and the growing need for API connections. The benefit to companies like yours has an impact on all major departments and include:
- Reduced Burden on Internal IT Teams
- Massive Scalability
- Strategic Budgeting and Planning
The Benefits of SaaS for IT Directors
Let’s start with internal IT where we’ll explore operational efficiencies and integration capabilities of SaaS tools. SaaS solutions allow you to streamline IT operations, reduce the burden on your internal team, and allow for a more agile IT environment. How does this look?
SaaS solutions help reduce internal workload because a company can access applications and services hosted on a server not managed internally. There’s no need to manage applications or invest in the hardware to run them. This also means that patches and updates are automatically handled by the SaaS vendor freeing up you, the IT Director, to focus on more strategic business goals.
But before you jump straight into an implementation, you’ll want to consider some key factors. Folks in other departments may think that because they have a SaaS solution at home like Netflix, that a service in the office can be plug and play.
You’ll need to have high-level conversations with your team to explain the following:
- Why the tool is being rolled out and what the benefits are for the end users
- What sort of challenges may your customer face while rolling out the implementation
- What resources will you need to roll out the implementation
- Is the SaaS tool you’re considering compatible with internal systems
- Finally, how long will you need to keep legacy systems running to cover the transition
SaaS from the CEO’s Perspective
Speaking of high-level conversations, let’s dive into how SaaS can enable rapid growth, save on costs, all while providing actionable insights and data for strategic planning and decision making.
With SaaS solutions, you’ll be able to easily manage fluctuating demands without the need for hefty upfront costs associated with traditional IT infrastructure and overhead. This one benefit alone allows you to respond quickly to market changes, keeping your business competitive. Why is this?
It’s because SaaS products offer Pay-as-You-Go models and have built in tools to measure KPIs. With reduced overhead costs, your operations become more streamlined, and you can better allocate funds to more strategic long-term goals that your IT Director can manage. Plus, you’ll be taking actionable steps based on trends and patterns you’ve identified through the raw data collected by the SaaS tool.
Financial Implications for CFOs
For those in the finance department, we haven’t forgotten about you. SaaS tools improve your budgeting and forecasting, help with cost-benefit analysis, and even risk management.
Almost all SaaS solutions work off a subscription-based model, which means more accurate budgeting and forecasting for you.
The most common pricing models include:
- Flat-Rate
- Tiered Pricing
- Usage-Based
- Per-User Pricing
These subscription-based models make it much easier to manage budgeting, not to mention you’re lowering your cost of entry into adopting new tools. With subscription-based pricing, you’ll also receive continuous improvements from the vendor including updates and new features at no additional cost.
One big trend that has happened since the rise of SaaS, is moving away from tracking SaaS as a CapEx to an OpEx. This is because with SaaS tools, you no longer need to make large investments in physical hardware like servers and other networking equipment. Much of your SaaS expenditure will come in the form of monthly or yearly fees.
Shifting from CapEx to OpEx does allow you to spread IT costs over time and allows for more predictability, flexibility, and less ownership responsibilities.
Here are a few things to be aware of when shopping around:
- Research providers to get a clear understanding of the total cost associated with each vendor
- Negotiate contract terms to bring value to your company like discounts for early payments
- Remove auto-renewal clauses that lock you into unwanted future contracts
- Consider negotiating user-based pricing to help your business from overpaying for features and services
Key Considerations for SaaS Implementation
When shopping for a SaaS solution, keep in mind the vendor’s reliability, compliance and data privacy, and how you will future proof your SaaS strategy.
Pay attention to whether the vendor has security procedures in place and if they’re aligned with industry standards. Ask what sort of customer support they offer, and does the vendor have an SLA or Service Level Agreement. What’s in the SLA, and does the service meet your expectations or meet a business goal.
When implementing a new cloud tool, make sure to have internal conversation with all departments to make sure all SaaS products are accounted for and not a shadow IT item. You’ll want to set up security features like Multi-factor authentication, Single Sign On, and employ data encryption. Plus, have a cybersecurity plan in place and always revisit security standards with your team.
Putting it all Together
There’s no denying that SaaS solutions are a powerful tool and continue to evolve along with business needs. Your company should be moving away from legacy systems and into more modern cloud-based solutions to remain competitive. Your company’s strategy with SaaS should be a group effort discussed from the top down.
Implementing SaaS solutions into your business will enhance overall performance by cutting costs and improving the customer experience. You’ll be able to make better decisions with enhanced data and easily expand your own services globally, if that’s the goal.
But there can be some challenges associated with moving from legacy systems to modern cloud computing environments. It does take time and money to migrate away from the old to the new. Not to mention, you must get buy-in from your team who are probably used to using those old-outdated tools.
Moving to the Cloud?
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