SaaS or Cloud Hosted Software, which is Better?

Software as a Service (SaaS) and Cloud hosted computing are terms we are all hearing on a daily basis. These are two very different approaches to cloud technology, but what does it all mean?


I’ve personally heard many definitions, all dependent on personal perspectives. IDC®, a leading technology market intelligence firm, is predicting that businesses will be spending upwards of $266 Billion on Cloud technology by 2021. So there’s a good chance your business will be using cloud applications in the near future.


This Blog article will help define the differences of SaaS vs Cloud Hosted, along with advantages & disadvantages of each. This will provide a perspective for when you are looking at technology to run your business.


Benefits of Cloud-Computing?


Cloud computing was created to provide a subscription model for using and consuming computing power. The idea was formed to harness the aggregate power of an entire data center(s) and offer this power on a “pay as you go” model. The concept is to share a large computing infrastructure among many companies, thereby lowering the cost of consumption, and reducing costly IT infrastructure, oversight and maintenance.


Before this cloud computing business model, companies needed to buy their own computing servers, along with storage to run their businesses. They either built data rooms to run the serverTop Cloud Providers infrastructure or hosted their servers in 3rd party data centers.


In the Cloud environment, applications are typically accessed through browsers or apps on your computers, mobile phones, mobile devices & tablets.


Most Cloud providers have state-of-the-art security and infrastructure that is leveraged by their subscribers to secure their connections and data, beyond what is typically available on an individual company basis.


So let us get going and discuss the differences between SaaS & Cloud Hosted.


Cloud Hosted


Hosting got started back in the 1990’s when companies would buy the computing servers and infrastructure, and allow a 3rd party data center to host the servers elsewhere. This was done to lower costs of overhead. Applications would then be loaded on these servers and maintained by the Customer.


Cloud Hosted is a variant of the older hosting model, but no computing infrastructure needs to be purchased, as it is provided by the cloud hosting provider. Application software is then loaded by the Company or software provider, and then managed on an individual basis.


Payments are then made to the Cloud provider and/or Application software provider on a monthly or yearly basis.


Disadvantages of Cloud Hosted:


  1. Cloud hosted software is typically older server-based software that is hosted for the Customer on a Cloud instance.

  2. You may have backups, but if the cloud hosted server has an issue, it may not have been designed for immediate redundancy. This may take some time to get back up and running again.

  3. Typically does not have a disaster recovery strategy that is automated.

  4. May require a team to support the hosted cloud including IT Staff and Database Administrator.

  5. Security has to be designed and implemented by the Customer.

  6. Have to architect and design a strategy for growth.

  7. Software applications are typically not continuously updated, which could leave you behind in technology needed for new market requirements. May require expensive, time-consuming upgrades.


SaaS or Software as a Service (Multi-Tenant)


SaaS provides an updated technical and business model for providing cloud computing to Companies. SaaS software is typically newer, redesigned software that is architected specifically for running on the cloud. This newer model is typically offered on a multi-tenant basis, where multiple companies subscribe to the shared cloud platform, and the cloud platform is supported and updated by the SaaS software provider.


The newer SaaS platforms are typically designed from the ground-up to offer updated features, security and reliability requirements for its customers. IDC® is forecasting that of the $266 Billion in Cloud revenue (i.e. 2021), 60% will be attributed to SaaS based applications.


Payments are typically made on a monthly or yearly basis to the SaaS software provider.


Benefits of SaaS Multi-Tenant Platforms:


  1. SaaS solutions can be technically and financially attractive. The multi-tenant architecture provides a methodology for continuous updates and the shared infrastructure saves on cost.

  2. The SaaS platform is typically updated on a monthly basis, which ensures that all subscribers have access to the latest software without time consuming and expensive upgrades.

  3. Support is usually included with the SaaS subscription, which reduces costly maintenance plans and internal resource requirements.

  4. Redundancy is typically built into the SaaS architecture, which provides fail-over capability in case of a problem.

  5. There is usually a strategy for automated disaster recovery.

  6. Security is typically built-in to the architecture.

  7. Elastic architecture is usually designed into the platform for growth.

  8. SaaS technology is usually built from the ground up as a modern system to run on the cloud. SaaS technology allows the software to scale easily and globally.



SaaS or Cloud Hosted for Supply-Chain, which is better:


Chances are that you are already using some form of Cloud computing in your supply- chain. eCommerce, transportation & trading partner applications are already leveraging Cloud platforms globally. It’s important that you analyze your current software and work on a roadmap that makes sense for your company.


If you have older legacy applications and can’t move to newer software, Cloud Hosted may make more sense for your company. Your roadmap may even include integrating modern SaaS applications as part of a migration path to next generation software and capabilities.


If your Company is in the process of upgrading or adding capability, it may make more sense to start with a SaaS platform that meets your requirements.


SaaS for Warehouse Management & Order Fulfillment

Thousands of companies around the globe utilize warehouse management software (WMS) to run their supply-chains. The vast majority of WMS has been implemented on computer servers located at their warehouses, distribution centers or headquarters.


The server-based warehouse management systems have been expensive to implement & support, and are usually heavily modified to meet special requirements. As markets change and new demands for higher customer service levels and omni-channel fulfillment increase, these systems will be phased out and replaced with new technology.


The newer SaaS systems will offer significant value for several reasons:


  1. Quicker and easier to implement

  2. Continuously enhanced, eliminating costly and time-consuming upgrades

  3. Ability to deploy globally, in multiple languages

  4. Affordable for small, mid and large companies

  5. Built-in redundancy for maximum availability

  6. Typically, more secure than legacy systems

  7. Elastic architectures for growth

  8. Extendable both internally and externally

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