Software as a service: What entrepreneurs should know

Many businesses rely on software solutions. You can use software to build a great website, manage finances or do whatever else. So many choices and so many solutions. One of the first major choices you may need to make is whether to buy Software-as-a-Service (SaaS) or traditional software.

Back in the early days of personal computing, you typically bought software on disks (and later CDs), brought it home, and installed it directly on your computer. Then, a few years later, you might have to buy an updated version of the software if you wanted to access new features and updates.

As the internet became commonplace and connection speeds improved, companies developed software that could run on cloud servers and users could access through the web. Now, instead of installing, say, Microsoft Office locally on your computer, you can access Office 365 through the cloud. This means Microsoft will run Office on their servers and pipe it to your PC.

With SaaS, instead of paying for software, you pay for access to the software. In practice, using SaaS can ensure access to the most up-to-date software version. You can access new features, and updates often address security risks. Likewise, with SaaS you don’t have to hire an IT team to maintain your software. Instead, the provider takes care of all the nuances.

Yet SaaS is often more expensive in the long run than buying software outright. You could spend roughly $150 for the traditional Office 2021 or $70 for a single SaaS yearly subscription of Office 365. Over the course of just three years, you could spend more than $200 on Office 365. Still, while you often pay more for SaaS, you also typically deal with fewer headaches, like those pesky updates.