Software as a service (SaaS) is transforming business technology.
More small and medium-sized companies are now able to access affordable Business Intelligence solutions that were previously only available to large corporations. This access has levelled the competitive playing field. As adoption of SaaS is growing, companies with established on-premises BI software are taking a serious look at SaaS. However, there are pros and cons to each approach and we will evaluate the key considerations.
Understanding the Total Cost of Ownership (TOC) of the platform is a primary consideration. A cost comparison which examines the internal costs of infrastructure, licensing and support compared with external hosting in the cloud should be assessed.
With SaaS, the overall total cost of ownership is generally lower due to several factors. First, some SaaS solutions are multitenant platforms which allow multiple users to share the software’s underlying infrastructure. Even though it may be a shared platform, users retain their separate, private information. Second, SaaS BI platforms don’t require the business to have the hardware, servers, or IT resources to get the software up and running.
Because SaaS is a pay as you go service that is priced on a monthly or annual basis, you only pay for what you need. The predictable cost of the subscription allows for more accurate budgeting. Lastly, there is little need for internal resources for support. The vendors have the responsibility for maintaining the software, upgrading it, ensuring that it is reliable, and keeping the software and its data secure.
With on-premises BI, there are many upfront costs including hardware, software licensing, operating and support staff expenses that entail a much higher entry cost than SaaS. However, that upfront expense is a one-time investment that can eventually pay for itself. The recurring fees of SaaS can ultimately surpass the initial investment of an on-premises solution. Even so, there are ongoing secondary costs to on-premises BI to consider such as server maintenance, disaster recovery, and expensive and time-consuming software maintenance and upgrades.
Implementation and Adoption
Because SaaS BI platforms are automated and ready-to-use, they have far less implementation time- typically a matter of days. SaaS is accessible via familiar web browsers, resulting in reduced learning curves and higher adoption rates. Because SaaS solutions are self-service, intuitive and approachable, they are accessible to all users. Implementation of an on-premise BI infrastructure, on the other hand, typically takes months and requires employees trained to extract insights.
Integration and Scalability
Although some SaaS platforms may have limited integration, most are designed to support some customization. SaaS vendors create API’s to allow connections to internal applications such as CRMs and ERPs. SaaS solutions are also scalable and allow integration with other SaaS platforms. On the other hand, on-premise platforms are much simpler to integrate over the intranet, and data transfer between systems is usually faster.
When scaling with a SaaS vendor, a company merely needs to adjust the subscription. Scaling on-premises solutions requires long-term planning and the use of additional resources. However, this is the most flexible option for platform customization.
Because the software is hosted in the cloud and accessible via the internet, SaaS platforms are accessible through web browsers on mobile devices. This gives users access to real-time data. On-premises solutions are anchored to a server, limiting access on mobile devices. Additionally, traditional servers go down and hard drives fail.
While IT professionals have concerns about the security of SaaS vendors, most vendors have far more resources available to invest in security than a typical business, and provide a much higher level of security than the business could provide itself. As data is being automatically backed up by a vendor, there is a better chance of disaster recovery. However, every company is different so it is critical to know the risk tolerance of your vendor. While on-premises platforms are generally seen as less risky, additional resources and software are required to ensure security.
While there are several factors to consider when deciding on a BI solution, generally, if the pros and cons are examined, the benefits of a SaaS BI solution overshadows the challenges. Usually a company will find that a subscription to a SaaS BI product is less expensive overall.