Why You Should Migrate From Legacy Systems to SaaS Solutions in 2024

• By Field Equip
• 08-07-2024
• Software

Software as a Service, better known as SaaS, is one term that has created quite a buzz among businesses operating across various industries in the last few years.

Be it a small company or a large multi-million dollar organization, every business implementing a SaaS model stands to benefit in terms of operational efficiency, productivity, reduced costs, optimal resource utilization, and many more.

To put things in perspective, the SaaS market is expected to reach $232 billion by 2024, and more than 70% of companies use SaaS applications to meet their business goals.

While more and more businesses are implementing SaaS into their work regimen, 35.5% of organizations continue to use on-premise software due to various reasons.

This blog is composed to provide readers with in-depth information on SaaS applications and how these offer a wider range of benefits to business owners as compared to legacy systems (on-premise software).

Without further ado, let’s hit the ground running!

What is SaaS (software as a service)?

In simple terms, software as a service is a cloud-based software delivery model that allows easy access to the application by the end user via the Internet without the need to install and maintain the app.

SaaS applications are ready to use via the Internet and the user must pay subscription fees and log in to use the software. The cloud provider provides software and hardware support, including security, performance, and availability.

Stat Fact: The annual pricing plan of SaaS is the most popular billing option.

What is on-premises software?

On-premises software, also termed legacy software, is a traditional software/hardware application many companies use and calls for extensive hardware and software maintenance. On-premise software runs on the business’s own IT infrastructure and is hosted locally.

This type of traditional software needs to be installed and run on company-owned servers. It only serves a limited purpose to the company and its older technology makes it increasingly insufficient in this digital age of dynamic technological advances.

SaaS vs. On-Premise Software: 5 Key Differences

There are several key differences between legacy systems and SaaS applications. These differences help you determine which solution best fits your business needs, like budget, security requirements, objectives, company culture, etc.

Read on to get more information on the major differences between the two.

Difference 1. Scalability

On-premises software systems are scalable, but you must invest significant time and money to upgrade your hardware and software. You cannot scale instantly and must acquire additional servers and other resources.

On the other hand, SaaS solutions are highly scalable and you only need to upgrade to a more premium subscription plan to get instant access to additional resources. Seamless and rapid SaaS scalability helps businesses adapt to a spike in traffic easily.

Difference 2. Cost

On-premises solutions are generally costlier to run and maintain because enterprises deploying legacy software procure the hardware and pay for its setup, installation, and maintenance. They also need to hire in-house IT professionals for maintenance and support.

SaaS applications are relatively less costly, as you only need to pay subscription fees without having to incur additional costs of acquiring and maintaining the IT infrastructure, as with on-premises software.

Difference 3. Customization

Since you have complete control and ownership of the IT infrastructure and software you use, you have the added flexibility of planning and implementing the software customization process. However, you need to pay upfront costs related to customization.

SaaS solutions offer upgraded features with different subscription plans and the user only needs to choose and pay for the preferred subscription plan. Also, many SaaS vendors offer configuration options to customers, which enables you to customize your SaaS software as per your requirements.

Difference 4: Security and Compliance

In an on-premises solution, you need to have a committed IT team that regularly updates and monitors the latest security and compliance measures launched in the market. You can customize your IT configurations, but there are heavy costs associated with setting up your cyber security walls.

SaaS solutions are considered safer, less risky data storage solutions. Most SaaS vendors give high priority to securing customers’ business data, and their team of cyber security experts keep a close eye on potential security breaches and takes effective steps to minimize them.

Stat Fact: The North American market has the highest SaaS adoption rate.

Difference 5: Implementation and Access

The on-premises software implementation and access take longer because the enterprise owning it needs to have a proper planning and execution process. Also, it needs to procure hardware to host an in-house legacy application while ensuring regular maintenance and updates.

Contrary to on-premises software, SaaS applications offer instant access to end users. No matter where you are located, you can start using the service right away. However, businesses deploying SaaS applications need to grant access only to authorized team members to prevent unauthorized access and potential data breaches.

Why Do Some Companies Still Use Legacy Systems?

It’s surprising that since “digital modernization” is the buzzword today, 35.5% of organizations still use legacy systems as their main operating system.

Yes, it’s challenging to maintain legacy systems and they are becoming increasingly obsolete, Some businesses will continue to stick to them for various reasons.

Reason 1: SaaS Migration Can Be Expensive

Migrating to SaaS often calls for the significant upgradation and modernization of old software and hardware programs, which remains cost-prohibitive for some businesses.

Also, older systems are quite complex and more costly to maintain as compared to commonly used applications today. With time, as more advanced products are introduced onto the market, fewer experts of older systems are found in the market.

As a result of the scarcity, these experts charge more to provide support or digitalize legacy systems. Ironically, while some businesses avoid SaaS migration due to high costs, older systems often prove more expensive to maintain.

Reason 2: Lack Of In-house Tech Talent

If you’re running a small company on a limited budget, you might not have the required in-house talent to undertake SaaS migration. And if your legacy system continues to run and meet your requirements, you won’t deem it necessary to invest on hiring IT pros.

Reason 3: Challenging Data Migration

While high “digitalization” cost remain one of the factors, data migration can take a lot of time. Data migration can cause your system to remain “dysfunctional” for some time, which means your customers or clients can face inconvenience while disrupting daily services.

Also, in case of improper data migration, there’s a risk of your business losing the vital data of your customers.

Reason 4: Resistance To Change

It’s human nature to resist change and the same applies to SaaS migration from legacy systems. If your workforce is comfortable using the current old system, it’s likely your team doesn’t want to fix something that isn’t broken.

While some people in your organization might want to get rid of the current legacy system, many from your workforce might find it difficult to understand and adapt to a new SaaS application.

What Are The Important Characteristics of SaaS Applications?

Some key characteristics of software-as-a-service (SaaS) applications are as follows:

• Multi-tenancy model. Multi-tenancy is a software architecture where a single, shared infrastructure and centrally maintained code base serve as a common platform for multiple customers or tenants. This model offers some flexibility to tenants to customize some parts of the application while vendors save development time.
• Customization. SaaS users can smoothly customize applications to suit their business needs without influencing the shared infrastructure. The SaaS model supports each company’s unique, customized changes.
• Single sign-on. Single sign-on (SSP) enables businesses to have a single set of credentials for all team members to access multiple applications. The user signs in once and gets access to all the applications with the required authorization to use them.
• Automated provisioning. Automated provisioning allows users to access their SaaS applications on the go, which is a must-have feature in today’s dynamic age. It helps businesses offer a strong onboarding experience, improve employee retention, and gain competitive advantage.
• Subscription-based billing. Subscription-based pricing models of SaaS applications allow users to purchase them on demand and stop using them when not required anymore. Subscribers can pay bills monthly or annually, and the bill gets invoiced.
• Easy availability. SaaS organizations operate in more than 100 countries, which translates to widespread availability. SaaS applications are shared by various tenants and their availability is fairly high across the globe. Most SaaS applications are focused on providing a high degree of cloud service-level agreement to their customers.

Pros and Cons of SaaS Applications You Must Know About

Now that you’ve understood what SaaS applications are and their unique characteristics, let’s take a look at the advantages and disadvantages to make the picture more clear.

While SaaS applications differ in terms of functionality and features, there are some common pros and cons to most, if not all, SaaS applications.

Let’s look at the pros first.

Advantage 1: Low upfront costs

SaaS applications are based on subscription-based pricing models and do not require upfront licensing fees. The SaaS provider is wholly responsible for managing the IT infrastructure, which includes software and hardware maintenance. The end user only needs to pay one-time subscription charges (annual or monthly).

Advantage 2: Easy to implement

SaaS applications are relatively easier to implement as it do not involve any installation; they are installed and configured beforehand and the user just needs to pay and log in to get going. This saves time on generally lengthy legacy software deployment.

Advantage 3: Regular, automatic upgrades

SaaS applications offer regular upgrades and enhancements, which benefit the users through additional functionality they get as SaaS providers actively act on the customers’ feedback and requirements. Your IT department is freed up and has more time to focus on other critical business processes.

Advantage 4. Scalability

SaaS applications offer businesses much-needed "flexibility,” as you can scale your SaaS model as your business grows. You get various subscription options and can change them when required, as per your business requirements.

Advantage 5. Third-party integrations

Many SaaS applications offer third-party integrations, so your team members don’t have to use various applications separately. If you already use other third-party apps for analytics and data processing, seamless integration provides streamlined workflows and enhanced visibility to your team.

SaaS can help your business maximize ROI on IT infrastructure while giving easy access to advanced functionality and professional customer support services. However, just like with anything else, you should also consider some downsides of SaaS before making a final decision.

Disadvantage 1: Less control

As compared to traditional, in-house software, the SaaS user has less control over the way applications are designed and updated, as the service provider is completely in charge of the software. In other words, you have to accept whatever changes are made to your SaaS product by the provider.

Disadvantage 2: Security concerns

Since data is stored on external servers, SaaS providers must ensure the safety of customer data by preventing unauthorized access. privacy of sensitive information remains one of the biggest concerns of businesses using SaaS applications.

Disadvantage 3: Fluctuating Internet speeds

Fluctuating internet speeds can lead to reduced performance. If your internet connection is not working properly, you may not be able to access your software or data, which can disrupt your daily work.

SaaS Applications: Popular Examples

FieldEquip

FieldEquip counts among the most robust and scalable field service management available today. Designed to help rental equipment and asset-centric businesses achieve comprehensive digitalization for enhanced operational efficiency, FieldEquip captures every field activity as field technicians and workers can capture information with mobile devices. This innovative SaaS solution is a must-have for companies looking to break away from traditional, outdated legacy systems and error-prone manual entries.

Zoom

As of 2023, Zoom has 504,900 customers across the globe. Zoom is a popular SaaS product that became a go-to video and audio conferencing tool during COVID-19 and its popularity continues to grow. It’s easy to use and offers free usage to users while offering a host of features in its subscription plans.

Shopify

Shopify is a CMS (content management system) that allows small and medium-sized businesses to create their own e-commerce website. Based out of Canada, Shopify allows less tech-savvy people to set up e-commerce websites offering a host of SEO features, apps, integrations, and multiple payment gateways.

Dropbox

Founded in 2007, Dropbox is a popular cloud storage service that allows users to store and organize files and data on the cloud and access them from any device and any location. This SaaS application also offers features such as file sync, sharing, and collaboration.

The Final Word

While on-premises software and SaaS solutions continue to co-exist in the realm of the business world, the benefits of SaaS far outweigh the limitations and regressing benefits of traditional software solutions.

In this dynamic age, the sooner you migrate to SaaS technology, the better it is for your business in terms of efficiency, employee engagement, productivity, and competitive edge.

Though migrating to SaaS can be expensive for businesses on a limited budget, its benefits in the long term far outweigh the already declining performance of legacy systems.