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RFID, Business Intelligence (BI), Mobile Computing, and the Cloud
and highly trained personnel already in place. The SaaS provider handles all
the maintenance, including execution of backups, training, and customizing
of the system.
• Lower support costs and complexity—Companies that make use of the SaaS
model do not need to hire additional IT personnel to implement new systems
and applications. SaaS providers can also run information systems more
efficiently because they do it on a large scale; they can spread fixed costs
over many users, thus achieving economies of scale that translate into a
lower total cost of ownership. In addition, an SaaS provider usually has an
easier time attracting, training, and retaining a talented workforce than a
small manufacturing company like Fitter.
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Disadvantages of Using SaaS
There are some potential downsides to using SaaS, and companies should consider these
carefully before choosing an SaaS provider:
• Security—Companies using SaaS are turning their information systems over
to a third party. They must be confident that the SaaS provider has a high
level of security. An SaaS provider will typically have data from multiple
clients on a single piece of hardware. Each customer’sdatamustbe
shielded from other customers. Although this is a legitimate area of concern
for clients looking to move to the SaaS model, the reality is that SaaS
providers often have better security systems in place than many small
companies do.
• Bandwidth/response time—The telecommunications channel from the SaaS
provider to its customers must be fast enough to handle multiple users, and
the SaaS must have sufficient hardware to provide the necessary computer
processing capabilities.
• Flexibility—TheSaaSprovidershouldbeflexibleinworking withits
users and satisfying their requests for software modifications and
enhancements.
• No frills—SaaS software providers can usually provide basic systems well,
but asking for unusual configurations may cause problems, and the SaaS
provider might not allow for third-party add-ons. Further, the provider
might not want to develop custom software, or it may not be affordable for
a small company.
• Technical, not business focus—An SaaS provider will understand the
technical aspects of the software it is delivering, but it may not have
sufficient business process knowledge, in which case the customer
will need to define the business processes and make configuration
decisions.

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