Is SaaS software good for small startups?

saasThis was the title of a series of posts on the CFO centric website SaaS, which is Software as a Service is the newest tweak to the computer world and Internet.

Wikipedia defines SaaS as “…sometimes referred to as “on-demand software,” is a software delivery model in which software and its associated data are hosted centrally (typically in the (Internet) cloud) and are typically accessed by users using a thin client, normally using a web browser over the Internet.

SaaS has become a common delivery model for most business applications, including accounting, collaboration, customer relationship management (CRM), enterprise resource planning (ERP), invoicing, human resource management (HRM), content management (CM) and service desk management. SaaS has been incorporated into the strategy of all leading enterprise software companies.”

Those involved in the discussion as with all discussions were both pro, con and somewhere in-between. But what did come up is that:

a) SaaS is not always cost efficient,
b) Should your Internet connection go down, so has your ability to use your software,
c) SaaS software has been built for the Web, from the ground up versus re-tooling existing software to run on the Web,
d) Scalability quotient,
e) Cost of changing software due to lifecycle changes in your business maybe higher using this model

Whether you move to a SaaS model or not, before you purchase any software which will be used as a mission critical backbone to your business a full needs assessment should be made and then used as a litmus test of what he software package provides or does not provide based on that needs assessment.

Remember, as in all relationships (and living with a software package is a relationship) compromise is necessary.

For small businesses we recommend you look at Xero