SaaS vs. In-House Application Development

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Software as a Service or Saas has been one of the most popular buzzwords in the tech world these year. Thanks to the popularity of several of its pioneers, the quick deployment, and the relative flexibility in pricing schemes, SaaS is being adopted by businesses of varying sizes, but mostly those of small and medium scale operations.

As the cost of hosting hardware and connectivity goes down and web-based services such as Google Docs, Zoho, or Picnick became more available, the idea of using the Web as an alternative to desktop productivity became more popular. These developments in the past couple of years have made doing everything online and storing nearly everything online made web-based services more popular, such that when SaaS first came into view, it became relatively easy to sell it both as an idea and as a practice that is necessity to business operations.

Still, much of businesses that have sizable IT departments prefer to do it “old skul” and create things in-house and going so far as hiring consultants to develop applications both on-shore and offshore. What gives?

Why develop applications in-house?

  • Businesses with large IT workforces and a number of consultants find more value in building products or services for their own internal use instead of “renting” licensed applications. Building their own applications allows them to customize the features and functionalities with each build according to their unique requirements. Moreover, they have more control over the quality of the applications prior to deployment to the enterprise at large.
  • No to “cookie cutter” agreements. SaaS agreements are hardly tailor-suited to meet unique business requirements of most clients. The service that one client sights up with is the same service that is being used by other clients.
  • Large enterprises prefer to keep customer and business information away from third–or fourth–parties. SaaS providers share applications and space with other businesses, usually competitors. While there may be more positives than negatives in this practice, the idea of sharing the same space with a business competitor does not sit well with businesses, especially those that deal with sensitive data.
  • Many large enterprises have to meet government regulations. The financial sector, for example, must meet regulations that govern how the industry should manage information about its assets and clients. Moreover, even without such regulations, financial industry players are not open to handing over their religiously protected data to third-parties, which is what SaaS providers are.

Why SaaS?

  • It’s plug-and-play…almost. Ultimately, what you need is a computer and an internet access. The ease of implementation or deployment of SaaS enables a business to focus immediately on its core business instead of build an application (or its subsequent IT team) from the ground up, or purchase an application and negotiate with a service provider to host it.
  • Flexible pricing models. This is ideal for businesses that do not have as much cash as big businesses. Most SaaS providers allow negotiated pricing in order to sign up a prospective client for the long term. Subsequently,
  • No need to hire new IT staff. For companies or departments that do not have a lot of cash, there is no need to build large teams to produce and maintain applications. Instead, most SaaS companies have the teams to maintain the services themselves, which makes sense, because they own and know their own service and applications better.

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