Cloud Discussions: Should small businesses jump in the SaaS bandwagon?

In my last post I tried to answer some of the questions I most frequently hear from small business owners concerning the Cloud. Amongst other things, I talked of SaaS solutions. This post will primarily focus on these SaaS solutions and when they should be applied to small businesses.

What are the SaaS pros and cons for small businesses?
Here are the pros :

• Less expensive : Since the solutions are made for hundreds or thousands of businesses, they are usually way less expensive than customized software solutions for example.
• Easy to evaluate : Generally, SaaS providers offer some trial versions allowing you to make sure the solution fits your needs before you purchase it.
• No hardware maintenance : Since the solution is hosted by the provider, you don't need to worry about the hardware implications. Although there will be some incidents (such as the Amazon and PlayStation Network fiasco of this past week), the SaaS providers generally offer very reliable, scalable backed-up and secure infrastructures.  Getting this kind of hardware infrastructure can be very expensive for small businesses.

And now some of the cons :

• Provider-dependent : SaaS obviously implies that you need to trust your provider.  If the software goes down for any reason, you need to trust the provider will correct the problem quickly. Its out of your control. This being said, since hundreds or thousands are, like you, depending on the provider, you can be sure that they'll fix it as quickly as they can.
• Fixed applications : Since these solutions are made for many businesses, they need to be generic. As a small business, you most probably differ from your competition process wise. Using a generic software solution, you'll probably need to adapt your processes to the software rather than the opposite. I'll get back to this a little later.
• Internet connection dependent : Since you need Internet to access your application, you're dependant on your Internet connection. If your operations depend on the software, its important for your connection to be reliable. One of the best solutions to counter this, is to have a redundant connection in case your primary connection fails.

Should all small business software be SaaS oriented?
In my humble opinion, it depends on the type of software. I will divide my answer between simple and complex software solutions .

• Simple Solutions : What I call simple software solutions are very precise solutions. For example, Google Apps offers a few very precise solutions such as email, calendar and document management. These solutions are made to interact with common day-to-day applications (Outlook for example) but also offers means to integrate them with other software solutions. Therefore, if you have a home made custom software or if you use other simple SaaS applications, its often possible to have them interact with one another.
• Complex Solutions : What I call complex software solutions I mean solutions that manage entire processes or operations of an enterprise. ERP or CRM solutions are good examples of what I call Complex Software Solutions.  For such solutions, I find SaaS isn't necessarily the best course of action for small businesses. I often repeat that small businesses differentiate themselves from their competition by putting in place different processes or having a different know-how or innovations. In such a context, it is less frequent to find a SaaS solution that will meet the small business exact needs (remember that SaaS is made to accommodate a maximum of clients). If you do find a SaaS solution that will meet your exact needs, then SaaS is probably the way to go for all the advantages mentioned earlier. I do want to note that it is sometimes possible to host a customized software outside your business. These are called ASP solutions rather than SaaS solutions.

Another important point that is not dependant on the size of the software solution is its evolution capability.  You probably know its difficult and expensive to change a software solution. Its therefore important to know whether or not the SaaS solution will serve you on a short, medium or long term basis.

Soooo?
Cloud computing is here to stay.  SaaS Solutions are an important part of the movement. These solutions are light, practical and less expensive.  Before deciding to use them though, its important to evaluate if these solutions will evolve with your business's growth and new realities.  There are no unique small business and each have a different reality.  SaaS solutions can be quite helpful for small businesses for they help them discharge and delegate many responsibilities that used to be quite heavy money-wise and administration-wise.

Before jumping in the bandwagon though, take the time to evaluate the pros and cons of using such a technology. You don't want to regret it two or three years later once you're dependent to the solution.