Software as a Service (SaaS) solutions are massively gaining in popularity and many are opting for them instead of having software solutions deployed directly. In your opinion, what are the benefits and pitfalls?

Organisations and businesses come to a crossroad as they grow. As the pressures on their IT infrastructures and services increase, most small and medium business (SMB) are faced with the choice of hosting these services in-house or looking outside the organisation to have the job done for them. What are the options for small and medium sized businesses?

Not every business or organisation has the same needs so what is of benefit to one may not be the right solution for the other. There are advantages and disadvantages to using software or hosted services and these are listed below.

Benefits of using software in-house:
1. Total manageability and visibility over data and infrastructure.
2. Processes remain in-house and secure.
3. Software can be configured to suit company’s needs.
4. No 3rd party handling of data.
5. Only authorized people have access – need to know basis.
6. Lower costs and shorter time-frame to achieve Total Cost of Ownership (TCO).

Downside of using software in-house:
1. Multiple packages can be a headache to maintain and update.
2. IT personnel required to maintain network and services.
3. Some systems require in-depth technical knowledge.
4. In the absence of IT personnel, cost of external IT support comes into play.

Benefits of a hosted services:
1. A hosted service provider can achieve economies of scale for the larger companies experiencing rapid growth but with lower capital risks.

2. Providers operate multiple data centers that are physically secure.
3. Companies can utilize the features and functionality of best-of-breed services.
4. Hosting provider can reduce compliancy costs for companies.
5. Pay-as-you-go pricing for these services.
6. Convenience of someone else managing the processes.
7. Unnecessary network traffic is eliminated.

Downside of hosted services:
1. Loss of local control over critical infrastructure
2. Delivery reliability because the service provider is another "hop" in the chain.
3. All data is in the hands of 3rd parties creating a possible security risk.
4. Even though data may be secure, the human element cannot be ignored.
5. Inability to take decisions and implement immediately.
6. Long-term cost may prove more expensive than purchasing a software solution.
7. Lock-in – once you start putting your data in other people’s hands it’s hard to get it out and put it somewhere else without major time and effort.

For many companies, the answer requires a thorough understanding of their business needs and the long-term benefits in term of costs, security, productivity and reliability.