Using online technology, online software and services - also known as ‘Cloud Computing’ solves many daily problems and irritations. It allows you to concentrate on your business and not running an IT, accounting, legal, or marketing department. It gives you the greatest possible freedom to pursue your entrepreneurial vision and having a life at the same time.

Cloud computing can broadly be defined as a computing technology that relies on off-premise central servers for the delivery and maintenance of applications. Through cloud computing, the hardware and software that businesses use is centralized and accessed over the internet. The ‘cloud’ refers to the offsite resources supplied by an outside entity.

Businesses do not own the software applications they use. They rent them or pay as they use them, so they don’t have to invest in servers or software licensing to use the applications they need. Subscribing to a SaaS provider – Software as a Service – means you don’t have the overhead required to implement traditional enterprise software. This overhead includes buying, maintaining and housing servers, then installing and maintaining the software.

SaaS offers financial flexibility. Instead of having to pay for a software license upfront, you can pay a monthly or annual subscription fee. If you decide to change applications, you don’t lose money invested in licensing. Some SaaS applications are metered and charge on a pay-per-use basis, so you pay for the exact amount of users or services you require.

In a fast changing environment, SaaS gives you access to the latest version and most up-to-date innovations. With conventional software, you have to wait for the newest release to implement the latest innovations. Even with a license, the cost and time of moving to the latest version may be prohibitive. Using SaaS enables you to take advantage of innovations as they are introduced. SaaS systems are easily scalable and can be increased or decreased in size to match changing conditions.

SaaS provides these advantages by creating economies of scale. Sharing costs and resources among a large number of businesses delivers cost savings.

With the time and cost savings, SaaS enables business owners and managers to focus on their core business objectives instead of IT issues. Another important advantage is the ability of users to access systems from any location.

Many companies offer SaaS applications. Salesforce.com is one of the most well-known and fastest growing companies offering SaaS. Salesforce CRM software is based on the cloud computing model and is used by over 50,000 companies of all sizes.

Marc Benioff, Chief Executive of Salesforce.com, believes that SaaS offers advantages in the current economic climate.

“People need to cut operating expenses, people need to cut capital expenses and people need to reduce their risk. Are you going to do that buying enterprise software? Probably not,” Benioff said.

“Companies still need to operate and manage their information, so this is a great opportunity to move away from the enterprise software model and the enterprise hardware model and the data center model, where you create it, control it, and deliver it yourself with this new shared model – that’s the power,” he said.

Several large companies are involved in the push for cloud computing. Amazon Web Services offers a number of services through cloud computing including storage, transaction and content delivery services.

Google Apps offers messaging, collaboration and email security applications over the internet. By paying an annual per user fee, businesses can use services such as resource scheduling in Google Calendar, Google video for private and secure video sharing, and e-mail archiving.

Common Concerns about SaaS

Although SaaS offers many advantages, there are legitimate questions that should be asked before signing up for any service.

Data security is at the top of the list. How do you know your data will be secure in someone else’s hands? Other common concerns include the availability of the application and keeping control of data.

Ask questions and review the provider’s written policies. Questions should cover the:
  • type of facilities and security arrangements in place
  • infrastructure and virus protection used
  • backup procedures and storage
  • privacy policies
  • level of data encryption to protect website transactions
  • hardware and power redundancy
  • qualifications of operations staff
  • hours and procedures of site monitoring.
Cloud Computing is set to continue its strong growth in the future. SaaS can offer many benefits to SMEs, including saving time and costs and increasing flexibility and scalability. Measure the costs as well as the benefits and take a close look at the service being offered.