In a previous post, we mentioned that there’s nothing worse than having an unexplained acronym thrown at you by an industry insider. So I’m going to start this post by defining SaaS – “software as a service,” something that you may hear people refer to in the same breath that they say they are “moving to the cloud.”  Traditionally, clients purchased software and installed it on their client-owned hardware. This is like buying a house: the owner is now responsible for the maintenance, upkeep and repairs. Moving to a cloud-based solution is like renting a house. Though you get the same end-user experience (you get to use the software, or you get to live in the home), you share the responsibility for the upkeep of the product with someone else, in this case, the SaaS host. When a client uses SaaS hosting they use the software over the internet, while the hardware hosting the program is owned by the hosting company. This eliminates the need for purchasing the software and related costly infrastructure.

From a financial perspective, SaaS arrangements also offer clients some benefits.

  1. Moving to cloud-based solutions reduces the upfront investment needed for new software and the supporting infrastructure.  It’s possible that a SaaS arrangement may change the required budgetary approval for the expenditure from a capital to an operational cost.  This shift may facilitate the approval process for investing in new software.
  2. The cost of maintenance and upgrades for both hardware and software are included in the monthly SaaS charge.  Applying this concept to the rented house analogy, not only does the renter get the use of a home, the house is continually maintained and improved over the contract term. This allows you to always have use of fully functioning software without having to worry about hidden support costs.
  3. Ongoing costs under SaaS contracts are predictable and can be anticipated in annual operating budgets.

Other financial advantages include:

  1. Infrastructure staffing costs may be reduced.  In addition to the cost, risk may be reduced because the service is provided by a team of dedicated professionals.
  2. Future infrastructure investments required to maintain, upgrade or replace the environment are eliminated.
  3. Space needed for infrastructure is reduced.

Moving to cloud-based solutions might not be right for every client.  However, the option should be considered when evaluating K-12 software purchase decisions.

One thought on “Cloud Considerations: Renting vs. Buying

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