How to Know If SAAS Is Right for Your SMB

By Daniel Chalef  |  Posted 2011-02-01 Print this article Print

The adoption of cloud computing has brought renewed focus to the software as a service application delivery model. Some small and midsize businesses see software as a service as an equalizer that gives them the same application functionality as larger competitors, without the heavy investment in technology and resources. Here, Knowledge Center contributor Daniel Chalef discusses the benefits to small and midsize businesses of purchasing and deploying cloud-based, software as a service applications.

Many small and midsize businesses (SMBs) don't yet fully understand what software as a service (SAAS) is, how SAAS works and why SAAS makes business sense for them. In this article, I'll discuss the evolution of software delivery models, why applications in the cloud make sense for SMBs, and the various benefits of SAAS for SMBs (including low financial risk, easy deployment and ease of access from anywhere). After reading this article, you'll be able to assess whether or not cloud-based, SAAS applications are right for your SMB.

Traditional software delivery models

In the traditional software delivery model, you purchase software up-front under a perpetual use license agreement. You'll also typically pay an annual maintenance fee to cover bug fixes and minor enhancements. The software is deployed in the company's data center. This model is still employed by large enterprise application vendors, making these applications inaccessible to the SMB because of their cost and the scope of the implementation.

With the widespread adoption of the Internet, software vendors began to look at a different approach to delivering software solutions. You could license software from the vendor and then purchase additional services from an application service provider (ASP) to host it. You didn't need to make infrastructure investments, yet still had your own (single-tenant) version of the application. However, hosting fees, up-front license costs and ongoing support contracts still contributed to a high TCO for this model.

Daniel Chalef is founder and CEO at KnowledgeTree. Daniel is an entrepreneur, technologist and part-time guerrilla marketer whose career has included senior management, business analysis and engineering positions at software, Internet and telecommunications companies. As the CEO of KnowledgeTree, Daniel has led the company to its position as a recognized innovator. Daniel brings passion and enthusiasm to the KnowledgeTree team and is an avid commentator on industry trends. Previously, as CTO at Jam Warehouse and earlier in his career, Daniel headed up enterprise content management and workflow software implementation projects for premiere global retailers and consumer goods companies including Tesco PLC, Britvic PLC and Foschini Group. Daniel holds an honors degree in Business Science and Information Systems from the University of Cape Town, South Africa. Read Daniel's regular blog posts at and follow him on Twitter @danielchalef. He can also be reached at

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