Software as a Service (SaaS) subscriptions offer a different approach to acquiring and using software for your business.
If you’re unfamiliar with this model, you may be missing out on potential benefits.
Traditional software purchasing typically involves buying licences upfront and installing software on your local computers or servers. In contrast, SaaS operates on a subscription basis.
The provider hosts and maintains the software, and you access it via the internet, usually through a web browser.
This shift in software delivery impacts costs, accessibility, and IT management. If you’re not well-versed in SaaS, you might find it challenging to compare it effectively with traditional options.
There is also a risk of overspending if you do not really grasp the concept of how SaaS subscriptions work.
According to Ciodive companies wasted an average of $18 million on unused SaaS applications. This staggering figure shows you why understanding and managing your SaaS subscriptions effectively is important.
So today, we are going to deep dive into the topic of the SaaS subscription model, its key features, and how it differs from traditional software licencing.
We’ll explore its potential advantages, discuss management best practices, and consider important factors like compliance.
So without further ado, let’s get to it.
What is the SaaS subscription model?
The SaaS subscription model is an approach to software delivery and consumption.
Unlike traditional software that requires installation on local computers or servers, SaaS applications are hosted in the cloud and accessed via the internet. This model operates on a pay-as-you-go basis, where users subscribe to the software rather than purchasing it outright.
Key characteristics of SaaS subscriptions include:
- Flexibility and scalability: Users can easily adjust their subscription level based on their changing needs.
- Lower upfront costs: There’s no need for significant initial investments in hardware or software licenses.
- Vendor-managed infrastructure: The SaaS provider handles all maintenance, updates, and security, reducing the burden on in-house IT teams.
SaaS subscriptions typically include automatic updates and maintenance, ensuring that users always have access to the latest features and security patches without the need for manual upgrades.
More in Nexalab’s blog: SaaS vs. On-Premise: Which Software Deployment Model Should You Choose for Your Business?
Advantages of SaaS subscriptions over traditional software
The SaaS model offers several notable benefits over traditional software licencing.
- Cost savings and predictable expenses: SaaS subscriptions often result in a lower total cost of ownership compared to traditional software. The subscription model also provides more predictable expenses, making it easier for businesses to budget and plan their IT spending.
- Faster implementation and time-to-value: SaaS solutions can be deployed quickly, often in a matter of days or weeks, rather than the months typically required for on-premises software installations. This rapid implementation leads to faster realisation of business value.
- Automatic updates and access to the latest features: SaaS providers continuously update their software, ensuring that subscribers always have access to the latest features and security improvements without the need for disruptive upgrades.
- Scalability and flexibility: SaaS subscriptions can easily scale up or down based on your business needs. This flexibility is particularly valuable for growing businesses or those with seasonal fluctuations in demand.
- Reduced IT burden and maintenance costs: With SaaS, the vendor is responsible for maintaining the software and infrastructure, freeing up your IT team to focus on more strategic initiatives.
Best practices for SaaS subscription management
To take advantage of the benefits of SaaS subscriptions, you’ll want to implement effective management practices.
As your organisation depends more on cloud-based software, it becomes important to optimise your subscriptions, control costs, and ensure you’re getting the most value from each service.
Let’s explore some key strategies that can help you manage your SaaS subscriptions more effectively.
Regularly review and optimise subscriptions.
Conduct periodic audits of your SaaS subscriptions to identify unused or underutilised licences. This practice helps ensure that you’re not overpaying for services you don’t need. Consider right-sizing your subscriptions based on actual usage and business requirements.
Centralise subscription management with the SaaS Management Platform
When your SaaS subscription starts to get bigger, you might need to consider a SaaS management platform.
A SaaS management platform is software to manage all your SaaS subscriptions.
While it is ironically another SaaS to manage your SaaS, those kinds of software provide you with a centralised approach that provides better visibility and control over your subscription data, making it easier to track expenses, usage, and renewals.
Automate processes where possible
Implement automation to streamline onboarding and offboarding processes for SaaS applications. Set up alerts for upcoming renewals and expirations to avoid unexpected costs or service interruptions.
Establish governance policies
Define clear roles and responsibilities for SaaS subscription management within your organisation. Create guidelines for procurement, approval, and termination of SaaS services to ensure consistency and control over your software ecosystem.
Compliance considerations for SaaS subscriptions
While SaaS offers many benefits, it’s crucial to address compliance considerations to protect your organisation.
Data privacy and security should be at the forefront of your concerns. Ensure your SaaS vendors adhere to relevant data protection regulations such as GDPR or HIPAA.
Take the time to review their security practices and certifications to confirm they meet your organisation’s standards for data protection.
Contractual obligations and Service Level Agreements (SLAs) are another key area to focus on. Thoroughly understand the uptime guarantees provided by your SaaS vendors.
Review terms related to data ownership, retrieval, and deletion to protect your organisation’s interests. This due diligence can prevent potential issues down the line.
Don’t overlook licencing and usage rights. Verify compliance with licence terms and conditions for each SaaS subscription.
Consider implementing monitoring systems to prevent unauthorised access or overuse of licenced software. This not only ensures compliance but can also help you optimise your software spend.
Addressing these compliance considerations helps minimise risks associated with SaaS adoption.
It ensures your organisation remains protected while enjoying the benefits of cloud-based software. Remember, compliance isn’t just about avoiding penalties; it’s about maintaining the trust of your customers and partners.
More in Nexalab’s blog: Managed Services vs SaaS: Key Differences, the Pros, and the Cons for Your Business
Conclusion
The SaaS subscription model offers numerous advantages for businesses looking to optimize their software investments. Using SaaS allows businesses to take advantage of advanced technology, cost savings, and enhanced flexibility without having to worry about maintaining complicated IT infrastructure.
However, you need to manage your SaaS subscription efficiently.
Octobits by Nexalab is a comprehensive SaaS Management Platform (SMP) designed to help businesses optimise their software investments, reduce costs, and enhance productivity.
Octobits help you to centralise management of all your SaaS subscriptions in one intuitive dashboard, gain visibility into usage patterns and identify opportunities for optimisation, automate renewal alerts and streamline the offboarding process, and provide you with tools to monitor active and inactive users across your SaaS ecosystem. Contact Nexalab today to learn how Octobits can help your SaaS subscription management.
