Software as a Service (SaaS), which some people call Cloud Computing, is becoming more and more talked about as an alternative to on-premise server infrastructure. Many people consider SaaS and Cloud Computing to be the same thing; however, they are not to us techies. Cloud Computing is much more generic, covering several other technologies and services, of which SaaS is one. Cloud Computing generally implies any technologies and services that are accessed from the [Internet] Cloud. For example, a small company where all employees worked from home could purchase or lease a server and put it in a datacenter so that all employees could access server resources such as files, email, etc.

SaaS is the web form of traditional client/server software.  For example, ACT has traditionally been a client/server customer relationship management tool, and SaleForce started as a web-based (SaaS) CRM.

So what’s all the buzz about? Why use Cloud Computing/SaaS vs. on premise infrastructure? The reasons are vary based on technology strategy and money.

24/7 Reliability & Access From Anywhere

SaaS/Cloud computing is going to be housed in a datacenter usually staffed around the clock, with redundant power, air-conditioning, etc.

On Premise servers can be accessed from anywhere with a stable, high-bandwidth Internet connection, but most offices do not have the redundancy that a datacenter has, nor do that have 24/7 support staff. The latter is mitigated by engaging a managed IT service provider.

Less Than 20 Users / More Than 20 Users

Cost benefit analyses often reflects that SaaS/Cloud computing is most cost effective when the user count is less than 20. The reason is that after 20 user is reached, on-premise servers (even with support fees considered) will be cheaper over a 5 year lifespan (the average life a deployed server in production).

Reduced Up Front Cost

If everything is about cash flow, than you go SaaS/Cloud because there are usually no (or very little) start up costs (e.g. capital expenditures like servers, software licenses, etc.).

Flexibility & Customization

While SaaS vendors generally come out with updates far more frequently than server-based applications, they cannot be customized easily, or at all in some cases. Your business will generally align its processes around how the product functions versus making the SaaS behave how you want it to. This also means that there will be significantly less third-party add-ons, especially if the vendor as not make is APIs (application programming interface) available .

Mental Blocks & Culture

Hosting any kind of data or business process off-premise is a big leap of faith for business owners, especially ones not already comfortable with information technology. There can also be subtle changes in how web-based applications (SaaS) are used versus their client/server relatives. Check out: Culture is the Biggest Hurdle to Cloud Computing and CEOs come to terms with the Cloud

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Running Your Entire Business Virtually? Be Careful

It absolutely can be done. You can get rid of the office and pay for a hosted PBX (phone system), hosted server and whatever applications you need (SaaS). Here are some pitfalls to avoid:

-          Get professional help. It’s not as easy as you think. I promise.

-          Read licensing agreements thoroughly and see what access rights you have to your data/information and in what format. Check out: Could Google Docs Land You In Jail?

-          Make sure that you can back up files and data to local media that you control. Store it in a safe place, such as a fireproof safe or safety deposit box

-          Make sure that all employees working at home or on the road can be managed by metrics. For sales people it might be number of cold calls per day, sales closed, etc. For call centers and customer service it might be number of incidents closed per day. All of these employees should demonstrate good initiative and self-discipline (essential to avoiding the distractions a home can provide)