MaintMaster blog - 5 September 2019

Economic benefits of using SaaS

Economic benefits of using SaaS

We are frequently asked about the difference between a SaaS and an on-the-premises service/ product. In today’s post we want to highlight the economic benefits of using a SaaS service.

No hidden costs
Roughly speaking, on-the-premises systems account for only 10 percent of the total cost of their product. A much larger portion (90 percent) relates to other costs, such as hardware, personnel and implementation. With SaaS solutions, however, about 70-90 percent of the total cost is due to the regular SaaS fee. Only 10-30 percent is accounted for by aspects like customizing and training. This means that in a SaaS environment, significantly fewer “hidden” costs can be expected.

Some price advantages for SaaS solutions:
– Low to zero configuration costs.
– Fast introduction. Compared to installing internal IT solutions, setup is quick and easy.
– No external customization costs
– No support costs (hotline)
– No system maintenance (maintenance contracts)
– Updates are included (especially, release changes)
– No staff costs and adjustment costs for external service providers and consultants

Investment/ Resources
– Operation and maintenance of IT resources disappear, upgrades are carried out by the provider, enabling additional users is possible in a minute.
– Fixed investment costs and risks become variable costs, with costs and benefits corresponding to the actual needs. Investments in excess capacity for peak loads are not needed. The uncommitted capital can, for example, be utilized for R&D investments, the introduction of new products, machines, tools or for the expansion of the team. Even small and medium-sized businesses can now afford enterprise software that once upon a time was reserved for big business.
– SaaS Total Costs: SaaS solutions frequently have financial benefits. These are realized primarily by eliminating high investments in hardware and licenses. The relatively fast implementation also has a cost-cutting effect. Overall, the costs of cloud-based offerings are also easier to estimate, as unexpected factors such as license upgrades or server maintenance and configurations are stamped out.

If we briefly summarize the economic benefits of SaaS services, we focus on 2 points:
1. Lower costs – As a company, you’ll avoid costs for providing your own updated servers, which is a cost for both purchasing and maintenance. If you have a service that should be available 24/7, you also need staff available, who’re ready on short notice if is any problem with the servers, either internally or externally. This can be avoided, if you use cloud-based services instead.
2. Flexible solution – You only pay for what you use, which means you pay for the active users and, together with the service, most other costs such as support/helpdesk are included.

What’s your opinion when it comes to SaaS? Feel free to contact any of us to share your thoughts! You find contact information here,