As a small business owner you’re likely saucy, cheeky, lively, bold and full of spirit—the true definition of sass; but do you have that other SaaS? That is, has your small business leveraged Software as a Service to simplify, secure, and streamline business applications in the cloud?

Chances are the answer is yes. According to a recent study, within the US Small & Medium Business market, SaaS penetration (meaning the business used at least one SaaS application) was 27% in 2011, grew to 58% in 2014, reached 73% in 2016 and is expected to be at least 94% by the end of 2017. While currently mid-size businesses lead the way, the study found that small businesses plan a 140% increase in SaaS use for 2017. What does that mean in terms of dollars? An IDC survey forecast worldwide SaaS spending at $122.5 billion in 2017, with about 20% ($24.4 billion) coming from small businesses. That’s a lot of SaaS!

With such popularity and such high adoption rates, you’ve likely heard the term and you can likely name major players such as Salesforce (which has become almost synonymous with the term), but do you really know what makes a SaaS application, and why this model is advantageous for your small business?

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The Basics of SaaS

Software as a Service (SaaS) is one of the many aaS’ that makes up the world of “cloud computing.” It refers specifically to software purchased on a subscription model where the application itself, and the data you use with that application, is hosted, maintained, and serviced by a third-party (and not your internal IT team). The applications are accessed via the Internet using web browsers or mobile devices, removing the need for a small business to purchase and manage high-end workstations and complex network and server infrastructure in order to run robust applications and store large amounts of data.

 

The History of SaaS

While SaaS might seem like a 21st century invention that came about with fast Internet speeds, server virtualization, and the ever-shrinking size (and cost) of memory and data storage; the concept dates back to the very first computers in the 1960s. These monstrously expensive (and monstrously large) mainframes, though dwarfed power-wise by even the most basic smartphones of today, were impractical for even large businesses to own, and completely out of reach for smaller businesses. Thus, typewriter like “dumb” terminals were used in conjunction with telephone modems to allow businesses to utilize computing power on an as-needed basis. This access was provided on a time-sharing subscription basis that operated similarly to the subscription model used by SaaS software providers today– Which just goes to show that everything old is eventually new again. (The History of SaaS is an interesting read that walks you from the 1960s to the present.)

 

Advantages of SaaS for Small Business

For large businesses with IT and development departments, the decision to go with a SaaS solution is often a make/buy choice that weighs the advantages of creating and hosting a custom solution internally with the SaaS option.

Small businesses that typically do not have a large IT staff are more likely approaching SaaS as a rent/own decision. With that in mind, the following advantages of utilizing SaaS applications are particularly important for small businesses.

  • Cost savings due to:
    • Not having to make capital investments to purchase software outright (and not having to pay for upgrades).
    • Not having to manage and troubleshoot applications internally.
    • Being able to purchase less expensive workstations and network infrastructure.
  • Access to expert customer and technical support, often 24/7.
  • Peace of mind that your systems are monitored and maintained for 24/7 uptime.
  • Anytime/anywhere access to the application and to your data.
  • External storage (and often backup) of critical data, so that a disaster at your office location will not destroy your data.
  • Scalable systems that grow with your small business and that can scale up and down in reaction to actual usage.
  • Seamless collaboration and data sharing among your entire team, even when they are geographically diverse.
  • Increased speed to market when SaaS services are utilized to add functionality to your own products and services.
  • Self-serve independence for Users who can add/drop functionality as desired without the help of an IT specialist.
  • Improved cash flow—as subscription models provide predictable recurring billing without any surprises for repairs, upgrades, replacements or other capital expenditures.

 

SaaS Concerns for Small Business

Of course, there are some real business concerns with utilizing SaaS applications, and most have to do with loss of control over your systems and your data. There is clearly a degree of trust required to hand over your customer database (one of the most valuable assets your small business owns) to a third party; and it should not be done lightly.

Similarly, if your company utilizes a SaaS application that accesses data for which you have legal or regulatory security responsibility—such as PCI data related to credit card processing, healthcare data governed by HIPPA, or other sensitive Personally Identifiable Information (PII) the compromise of which will trigger a Data Breach as defined by State laws—you will need to ensure that the SaaS provider you select is properly certified, or that you can obtain certification for your company while using the SaaS application.

For example, PaySimple is a Level 1 PCI Compliant service provider in the payments industry. PaySimple customers rely on this certification to meet the requirements of their own PCI Certification. Were they to utilize a non-compliant SaaS provider for credit card processing, they would not be able to certify PCI Compliance and would likely need to pay a non-compliance penalty to their merchant account provider. If they were unfortunate enough to have a breach, they would face even greater penalties for utilizing a non-compliant SaaS application. (See this Tip Post to learn more about PCI Compliance.)

Service is another key concern for any SaaS solution. Unlike systems and software you own and administer in house, a SaaS application requires that you completely trust a service provider to keep the system up and running and to keep your data uncorrupted and available. An outage at a critical business moment could be catastrophic for your business (think websites that go down during a major online sale, or customer service systems that freeze during peak call periods). One way to address this is with a robust SLA (Service Level Agreement) that clearly outlines the amount of uptime you can expect, the type of warning you will get for maintenance outages, the speed at which your support requests will be addressed, and the penalties that the provider will pay in the event the SLA is not met. While a small rebate of monthly subscription fees won’t begin to make up for an outage at an inopportune time, an SLA will help set expectations.

Also important to consider is how often you and your team need to work offline while not connected to the Internet, as you’ll need an Internet connection to access any SaaS application. So, if your office happens to be located in a dead zone and all you can get is a slow Internet connection, SaaS may not be ideal for your company. If you do select a SaaS solution for a critical business application, you may want to consider upgrading your network bandwidth to ensure fast performance for all employees utilizing the system from your office at the same time.

The good news for small businesses is that broadband and wireless data is faster and more widely available than ever, and that even with concerns about security and service, with a SaaS solution you have a full-time expert technology team supporting your software. This team is likely larger and more experienced that a team you could hire yourself, and the budget allocated to security, management, and maintenance is far larger than one a small business could afford. Thus, chances are you’re getting more robust security and more stable systems with a SaaS solution that you would with an internal one.

 

Most Popular SaaS Applications for Small Business

While SaaS providers would like you to think that they have a solution for every possible business application (and with projected growth perhaps they will soon), there are certain applications that lend themselves to SaaS implementations.

According to a Techaisle survey, CRM, supply chain management, inventory management, marketing automation, customer service, ERP, and vertical applications are at the top of the “planning” list for small businesses because they, “address a common SMB business need…[and] work best when the system is accessible beyond the walls of the firm deploying the application, capitalizing on a key advantage of cloud vs. on-premise systems.”

In the CRM (Customer Relationship Management) market, Salesforce is the clear leader and one of the pioneers of the SaaS market. For a long time Salesforce was the #1 SaaS provider, but they were recently overtaken by Microsoft for that #1 spot, with its Office 365 productivity suite. Interestingly, companies like Microsoft and Oracle (another fast-growing SaaS provider) are fueling their growth by converting traditional “buy” customers to the subscription SaaS model for the same software application suites.

Google is another fast-growing major SaaS player. One of the very first wide-spread adoptions of a free SaaS service was Gmail. Google has built on that beginning to create the G Suite that includes not only email but a calendar, chat and hangout, a productivity suite with documents, spreadsheets, forms, slides, and a website builder, online storage, and a data vault. A basic version is free, which may meet the needs of a very small business.

See 10 Popular Software as a Service (SaaS) Examples for detailed information about other SaaS applications ideal for small business use including Dropbox for cloud storage, DocuSign for contract and other document management, and Slack for collaborative chat.

 

Putting SaaS to Work for Your Small Business

There is something comforting about buying a software application, running it on your computer, and knowing that you’ll own it and everything you create on it forever. (Or at least there is for an X-Gen like me; not sure about those Millennials.) But, there is something equally comforting about knowing that your data will be just fine if you accidentally drop that computer into the swimming pool (or your phone into the toilet…but that’s another story entirely).

So there’s definitely a tradeoff, and being able to successfully navigate that tradeoff to optimize your small business operations is the key to success with SaaS. Information technology research and advisory company Gartner provides a trove of resources to help you analyze your options and strategically implement SaaS. (These are aimed at big-company CIOs, but the advice is just as applicable to you as a small business owner. See:

 

Could your small business benefit from an end-to-end solution that enables you to market services, accept payments, and maintain strong customer relationships? If so, PaySimple is the SaaS solution you’ve been seeking.

Learn more about our powerful service commerce platform here, or take it for a spin yourself with a free trial.

Lisa Hephner

Lisa Hephner

My name is Lisa, and I'm the Vice President of Knowledge, responsible for the management of corporate, product, competitor, marketplace, legal, and regulatory knowledge, and creation and dissemination of knowledge tools using these assets to PaySimple prospects, customers, employees, and partners.

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