Pros and Cons of SaaS

Software-as-a-Service (or SaaS for short) is the business model where you pay a subscription to use a software product instead of purchasing it.

You are already using SaaS products in your personal life by paying a Netflix subscription instead of buying Blurays or an Apple Music subscription instead of the iTunes albums you used to buy.

In your eCommerce business, you’re paying a subscription for an email marketing solution, CRM, or ERP, and never even considered building an in-house solution.

So why not use a SaaS for your shop?

But to understand what’s right for you, let’s look at the pros and cons better in more detail.

Pros

When going with a SaaS platform for your shop, or anything else as a fact, you are getting advantages related to initial and ongoing costs, time to market, as well as the value proposition.

Initial and ongoing costs

Cost is probably one of the most critical points in this comparison. With a custom-built shop, you’re looking at an up-front investment of at least $50k for a shop using traditional technologies and not too many custom features besides a bespoke design. It can quickly grow to double if you want some new technologies like PWA, and if you have custom features that you need, the sky is the limit.

The maintenance cost of custom-built solutions is easy to overlook because you think it’s “bought and paid for.” However, it’s typical for it to be at least $2000-$4000 monthly in development fees to patch & update your solution and fix various issues that come up.

Then, once every few years, it’s time for a rebuild with a major version upgrade or change of functionality, which will take you to another big initial cost.

With SaaS solutions, your up-front cost is small, and you pay monthly a flat rate that covers the license and continuous development of the platform, any minor or major version upgrades, and security patches, as well as monitoring and support.

Time to market

SaaS solutions are an order of magnitude less expensive compared to custom solutions, so it’s quite logical for the time spent building the shop to be shorter too.

With a custom-build solution, your time-to-market is typically between 3 and 9 months, but it can also be much longer for complex builds.

With a SaaS solution, you’ll be online in a couple of weeks or a couple of months.

That time difference has a direct contribution to your bottom line.

Value proposition

On your custom-built solution, your team will deliver the functionality possible in the agreed-upon budget. So if you pay developers for 200 days of development, you’ll get the functionality that they’re able to build in that time. When you need more or better functionality, that will result in added costs.

With SaaS solutions, you are paying for the license to use that software, and the company offering it makes money from collecting the license costs from thousands or tens of thousands of customers like you. That means that essentially you are crowdfunding the development of a solution, which results in exponentially more value for you and your peers.

Cons

There are also some cons to using a SaaS solution, which we’ll quickly go through and see how you can mitigate.

Highly Bespoke Customisations

If you need very custom functionality for your business and not having them is a deal-breaker, then a SaaS solution might not be the best choice for you, and you have no other way than to go for a custom-built shop.

In reality, it’s quite rare for requirements to be so specific and so unflexible, but in those cases, SaaS might not be the right choice for you.

Vendor Lockin

This concern means how captive you are with using that solution. You’re looking at a solution, and it’s a great fit today, but you want the safety of being able to move away sometime in the future.

Some solutions are quite hard to migrate away from, as it’s against their direct interest to make it easy. The best way to address this is by looking at how you can pull out your data from that solution and how hard is it to migrate it to a custom-built solution.

So this is not a point against SaaS in general, but a point against a specific SaaS solution. If the SaaS you’re looking at has this downside, look at other solutions to find a better match.

Conclusion

The world is changing, and prohibitively expensive products and solutions are becoming accessible through the sharing-economy.

Businesses are not building their CRMs but choosing SalesForce, not building ERPSs but choosing SAP, and with time, custom-building your shop will feel as wasteful as custom-building a CRM.

At Zento, we have a SaaS product that allows you to have a state-of-the-art Enterprise-grade shop, so if we’ve convinced you that SaaS is the future, reach out and let’s discuss how we can build you a shop.