What Makes Software-as-a-Service (SaaS) different to on-premise solutions?

Posted on Apr 01, 2022 by Stephen Brannan

Is SaaS really the right solution for us?

The real benefits of Software-as-a-Service (SaaS) when compared to on-premise (on-premise) solutions and OpEx (operational expenditure) software and are not always obvious, especially to the uninitiated.

There is a misconception out there that SaaS and OpEx (operational expenditure) are the same thing, with the two terms being used interchangeably. It’s a misidentification that’s understandable though, given that SaaS pricing models are almost exclusively OpEx - but just because software has an OpEx pricing model doesn’t automatically mean that it’s SaaS.

With real SaaS both the software code and the supporting infrastructure are centrally hosted and managed by the provider not by the customer, with the customer paying by subscription for the combined software and infrastructure support. Whilst on-premise installations are hosted and supported in-house with software and any supporting hardware purchased upfront or by using a combination of CapEx (capital expenditure) and OpEx.

Whether one deployment model works better for you than the other will depend on a number of factors, including the size and model of your budget, your project’s objectives, and potentially your company’s internal policies.

Below we take a deeper look at some of the things to consider when you’re deciding whether to choose SaaS or an on-premise solution.

Is SaaS Really the Right Solution?

Part of my role is to talk to clients about our SaaS solutions, and I find that clients’ familiarity with SaaS varies significantly from those who already use SaaS day-to-day to those for whom a SaaS is something outside their current experience, and everything in-between.

For those clients at the unfamiliar end of the spectrum, the most commonly asked question is probably something like, “Is SaaS really the right solution for us?” this is of course the most fundamental of questions and one it takes a bit of time to answer.

As both a SaaS provider and a traditional vendor, our approach is always to guide the client through the Pros and Cons as objectively as possible, helping the client make up their own mind about how to achieve the best possible outcome for the project.

As you would probably expect, there is no one size fits all answer to a question like this. Every business is different, every project is nuanced, and when it comes to technology solutions the details really do matter. To really understand what the best option is, we need to understand as much as we can about the specifics and complexities of the individual project, as well as the culture of the wider company. I hate to say it, but going 100% SaaS might not always be the right choice.

“What does my company do, and how do we do it?”

So, you’re considering using SaaS, but don’t know if it’s right for you, where do you start?

One option is to ask yourself, “What does my company do, and how do we do it?” It may seem a little basic, but it’s useful to know how similar your business is to others in and around the same industry. This knowledge helps to give us a good indication whether SaaS is going to work well for you.

SaaS is usually designed with robust and repeatable software features, which cater to targeted segments of the market. For that reason, SaaS services tend to work well for businesses whose activities and working practices broadly overlap with others in the same industry. If that sounds like you, then there’s likely to be a SaaS service available that offers the features you require.

Of course, the reverse is also true. If you’re an outlier or eccentric who likes to do things differently, then your search for a SaaS that includes specific options or bespoke integrations might be in vain. However, all is not lost. If you’re prepared to make a few changes SaaS could still be the answer.

The Need to Standardize

The primary technical factors in your evaluation process are likely to be the level of customization you need combined with the location of any integration points. It’s not that SaaS doesn’t offer customizations. It’s just that the customizations available are often within a defined framework without the option to include custom, client-specific code.

This lack of bespoke customizations may seem short-sighted, but the simple truth is that offering client-specific customisations in a SaaS significantly dilutes the benefits all clients receive. One of the real benefits of SaaS comes from the fact it’s repeatable by design, the integration points are well defined and it’s quick to deliver.

SaaS allows you to experiment, refine and scale-up new services in ways that you just can’t with on-premise deployments. To realise its benefits, we need to think about using customised on-premise systems to standardise and conform the flow of data to and from the SaaS using the formats and methods it supports. By delivering customization in the right place, you can end up with the best of both worlds - the ability to customize on-premise and the flexibility you get with SaaS.

Budgeting

When clients are deciding whether or not to use a SaaS solution, something they obviously need to take into account is the size and the model of the available budget.

As SaaS uses a subscription or pay-as-you-go model for payment, that can open up software features and functionality that were once out of reach for smaller businesses with lower or zero CapEx budgets.

Cost scaling is also a consideration here, as SaaS is generally charged per user, per transaction or for a defined amount of time. This allows clients to budget based on a defined outcome with a level of granularity that traditional CapEx and even OpEx projects generally can’t offer.

When evaluating the overall cost of alternative solutions there’s also the cost of support payments to think about. With traditional CapEx or OpEx projects, clients can be paying as much as 20% per year in support fees and maintenance costs. With SaaS, the subscription cost typically includes both access to the service and ongoing support.

Clients also need to factor in the cost for the maintenance of the system itself. In on-premise deployments clients are usually responsible for the networking, infrastructure management and software upgrades. Even if you’re paying a support fee to the vendor for hardware warranty and ongoing software updates, you still have a significant overhead to consider, including the time and the resources needed to manage how and when maintenance and upgrades take place.

With SaaS, you typically outsource the majority of your IT responsibilities with maintenance and upgrades becoming the sole responsibility of the SaaS provider.

Conclusion

“SaaS solutions offers users real flexibility.”

It’s probably obvious by now that the decision whether to choose SaaS or on-premise is going to be different for every business case. However, a SaaS solution can certainly offer business benefits that you can’t find with on-premise deployments. As new SaaS services come online, you can react quickly to test new market opportunities at your own pace. If an opportunity proves successful it can easily be grown at scale. If it’s not, the service can easily be spun down.

SaaS also works well for those who aren’t hands-on with the Cloud but don’t want to choose on-premise, as you get immediate access to those new cloud technologies and business models without the steep learning curve you’d find if you had to do it for yourself.

There’s no debating that an on-premise solution gives you the opportunity to build in customizations for today, but a SaaS solution can give you a platform for the customization needed next week, next month and next year.

evertz.io is a cloud-native Software as a Service (SaaS) platform that uses hyper-scalable serverless microservices to deliver OpEx and “pay-as-you-go” video services for the media and entertainment industries. Companies use evertz.io to accelerate their deployments, scale their services and improve the monetization of their content. evertz.io is a trusted technology partner with the resources, experience, and knowledge to move businesses forward.

If you have a question, would like to set up a demonstration or arrange an evaluation, please get in touch: sales@evertz.com

Stephen Brannan
Senior Solutions Architect