Two choices for moving business to the cloud
Systems that are delivered on-demand over an internet connection are called ‘Software In the Cloud.’ These free business leaders from many technology hassles and offer flexible purchasing options.
Business software in the cloud can be delivered 3 different ways:
- Software As A Service
- Hosted Software
- Custom Development Platforms
This post describes the top two Cloud Software choices for a business user.
1) Software As A Service
Software As A Service (SAAS) refers to systems that are designed to handle multiple companies on a single copy of the software. You sign up, pay a monthly subscription fee, and start work. Sounds easy, right?
Advantages:
Pay as you go. The sales pitch is that you only pay for the service that you use. It”s an attractive proposition which gives you flexibility if your plans change.
Ease of use. The software is usually designed to be intuitive and easy to learn. The idea is that you don”t need lots of support from the vendor.
No server hardware. All you pay for is an internet connection, and whatever desktop or laptop you use for your web browser.
Automatic updates. The software company delivers software updates when they are ready. All customers get the same version of the software, which lowers support costs.
Considerations:
Pricing changes. At the end of your subscription period, the renewal price may be considerably different from your initial sign-up costs.
Data access. You may need to extract your data, either for reporting or when you want to convert to something else. There are a couple of uh-oh moments possible – you may not be able to extract all the data because the program won’t let you, or you may be charged unpleasant fees if your subscription has expired.
Up-front costs. The vendor may charge you set-up fees, and you may spend money on training and data conversion. Also, as with any software conversion, you will have internal costs as people adapt to the new system.
Feature changes. The SAAS market doesn’t have an “installed base” to worry about, so the vendors can change features as they see fit. Some of these changes may require adjustments to your procedures or system interfaces. In the worst case, the vendor will remove a feature that you have come to rely on.
No capitalization. You will be making a monthly expense, not investing capital in a software asset. This has business effects like adjusting your stockholder’s Return On Capital calculation, and possibly allowing a manager to bypass normal reviews of major capital items.
Hosted Software
The software is run on somebody else’s servers, so you have lower up-front costs and other people manage the systems.
Advantages:
Payment options. Many hosting providers sell subscriptions with monthly or annual payments, while others expect you to purchase a perpetual license to the software.
Update control. You make the decision on when to update your software to the current versions.
Software management: Somebody else handles the technical details of managing databases, security and other difficult issues.
Considerations:
Selecting a host: It can be difficult to evaluate the differences between different hosting providers.
Up-front costs: The host will usually charge to install software. Your costs will be less than purchasing software, but installation of a major package can involve some initial expenses.
Training and support: You need to understand where your support is coming from, and how well it fits your needs. If you like the ‘personal touch’, are consultants available in your community?
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