SaaS simply means Software as a Service-- a method of software delivery that allows software access with an internet connection.

In stark contrast to traditional on premise architecture, SaaS consists of a web-based architecture where the vendor(SaaS company) maintains the servers, initiates instant updates, and maintains security and databases.

What's the difference between SaaS and an on premise solution?

With SaaS you have a pay-as-you-go model at hand. Enterprises that are low on budget can very well employ SaaS to avoid the upfront costs of hardware and software associated with on-premise.

But cost effectiveness isn't the sole good associated with a SaaS solution. In most cases each of the designated employees can access the tools via the cloud, which offers a great deal of convenience.

However, a major drawback with SaaS is that though it seems cheap in the beginning, you continue paying for the services year after year. It's not so with on-premise, which is but a one-time investment.

With everything in the cloud, SaaS seems secure but it's not quite as secure as on-premise.

Here are some things that you must watch out for and assess before investing both human and financial capital in cloud-based software.

1. The Trust Factor:

The trust factor plays a huge role in selecting a SaaS provider because you are going to keep all user data on their servers. To determine whether the SaaS solution is trustworthy or adheres to a standard like HIPAA, for instance, that governs the privacy of client data in certain industries, what you can do is check out their ratings on review sites or request proof of compliance. A SaaS review platform like Chekkt (somewhat like a Yelp for SaaSsoftware) is an ideal solution to solve this dilemma.

The site not only provides user ratings for various software but also features coupons and special deals every now and then. With over 1,200 vendors listed, there's something in it for everyone.

Chekkt does one thing exceptionally well. The site is a discovery platform. You may not know that you want particular software but with Chekkt discovering what you want becomes a child's play.

According to the founder, "In addition, we have built into Chekkt a Rating mechanism based on Crowdsourcing intended to help customers understand if the product is really good or not. Unlike the B2C market, in the world of B2B it's hard for customers to know whether they're getting a good product for their money, and our feedback mechanisms allows our community to rate the various services so that everyone knows what's good and what's not compared to the other products and features that are out there."

An important question that needs to be answered is who owns the data. Many enterprises fear opting to SaaS because of the fear that SaaS companies own their data. However, you can draw up a Service Level Agreement which explicitly states that it's the enterprise that owns the data.

2. Get a free trial

Most SaaS providers would have a free 30-day fully functional trial or something in that spirit that allows you get a feel of the platform.

For example, UserZoom, a usability testing and analytics SaaS for mobile apps gives you an in-depth demo on request.

The trial serves two purposes.

a. You begin to identify what your business currently lacks in terms of software.

b. You begin to understand what service level you will need to subscribe to, in order to meet the needs of your company. This can help you compare the long term costs of both in-house hardware and SaaS.

Applause, another SaaS for mobile apps has a pricing estimator that gives you the level of service that you should subscribe to. Demos will be increasingly vital as the monthly spend on the software increases.

3. Defining your goals and core needs

Opting for SaaS will be a wise choice only when you can define your business requirements. This step is necessary to avoid any problems with implementation and integration of SaaS software with your current hardware solutions.

Questions like these need to be answered in clear terms:

a. What are the infrastructure requirements for running your business and remaining profitable?

b. Exactly why do you need SaaS?

c. What's more important-- cost savings in the short term or long term?

Once you have defined what you need, you can move to the next steps.

4. Support

24/7 support is an absolute necessity especially for business that offer service to large B2C markets. If your SaaS provider is located in another country then their office hours would be different.

Imagine your customers complaining about a problem and you not being able to reach to your SaaS providers to rectify the problem in a timely manner.

As per Amazon's billionaire CEO Jeff Bezos, "If you make customers unhappy in the physical world, they might each tell six friends. If you make customers unhappy on the Internet, they can each tell 6,000."

You should also enquire if the provider guarantees 99.9% uptime; anything less than that spells trouble.

5. Documentation

The kind of documentation needed depends on the level of expertise already present in your company. Say your business doesn't have IT professionals and the SaaS provider you are employing sends documentation filled with technical jargon. Now, you need an IT team just to make sense of this mess.

In this scenario, the SaaS provider creates an additional problem. While some SaaS' offer additional consultation at a fee, you will need to have a plan regarding who manages the system.

6. An exit strategy

The SaaS provider should provide export of all data so that the enterprise can store it locally.This is especially important if the SaaS provider goes out of business; this is very important since there's really no company too big to fail.

Another thing to keep in mind is the kind of software that the SaaS uses. If it's open source, you will not have much trouble migrating the data. If it's proprietary software, it may cost an arm and leg and thousands of work hours to exit.

Concluding thoughts

While the SaaS model does come with a few risks depending on your business, in most cases, the benefits outweigh the challenges and considerations. In the worst case scenario where a project ends up being a complete failure, the SaaS model will allow businesses to quickly recover and move on. A bit of research, simple demonstration requests and free trials will help you to get a better feel of whether a service is the perfect fit for your business.