Recently I’ve been presenting a number of “SaaS 101” events and have been reminded of how many people lump SaaS and ASP into the same box. It seemed well overdue for a report to be created that compared and contrasted on premise, hosted/ASP and SaaS and gave buyers some guidance around the different methodologies.

Luckily Intacct liked our idea and came on board by supporting the creation of the whitepaper – obviously a lot of time and effort goes into writing a 20+ page report, it’s great when vendors facilitate that work without any expectation of input into the content itself. The report itself can be downloaded here. I’d love to hear your thoughts on the report.

Anyway, we wanted to create a definitive report that would be relevant no matter what class of application was being looked at, while there is significant detail further on in the report, we came up with a simple checklist of pros and cons for the three different delivery methods:

On-premises Software


  • Greater end-to-end control of their software
  • Maintain IP within the organization
  • Implement significant customization


  • Generally higher cost
  • Requires you to build and maintain your own IT infrastructure
  • Must provide technical support, upgrades, and version control
  • Upgrades may break any previous customizations

Hosted/ASP Software


  • Pushes infrastructure costs to the provider
  • Potentially lower cost than on-premises deployment


  • Very limited customization
  • Upgrades may break any previous customizations
  • Support and service is typically an expensive extra charge
  • Integration with third-party applications can be difficult/expensive
  • Single tenancy limits the cost-reduction opportunities
  • Customers have some security concerns
  • Generally poor usability

Software as a Service


  • Core architecture makes it the most economical choice
  • Ability to provision almost instantly
  • Pushes infrastructure, service, and support costs to the vendor
  • Integration is quick and easy using application programming interfaces (APIs)
  • Customization available
  • Upgrades are automatically applied to all users – all customers work with the
  • same application
  • Encourages alignment of people/process/system


  • Customers have some security concerns

For those who like things in pictorial form, the image below makes life even easier:


Ben Kepes

Ben Kepes is a technology evangelist, an investor, a commentator and a business adviser. Ben covers the convergence of technology, mobile, ubiquity and agility, all enabled by the Cloud. His areas of interest extend to enterprise software, software integration, financial/accounting software, platforms and infrastructure as well as articulating technology simply for everyday users.

  • Good analysis. We have build an online decision tool to choose between on-premise and SaaS we used similar ideas.

  • Hi Ben,

    This is a topic that often comes up when I’m evaluating solution options; here’s a few of my thoughts.

    Since you’ve got lots on the Pros of SaaS, in order to provide a bit more balance there are some additional Cons I would add to the ASP and SaaS options (which will have differing levels of risk based on who the vendor is):
    1. If the vendor goes out of business, then you may have a significant problem with little or no warning.
    2. Depending on where the data is hosted you may be subject to different laws.
    3. From an information/data security perspective you are placing trust in another organisation. On the flip-side for many organisations, this may however be better than what they would have anyway.
    4. With SaaS you are moreso at the mercy of the vendor’s roadmap changing with little or no notice. Whilst this can be a positive in terms of functionality delivered, I’ve seen this one go the other way in recent weeks whereby a vendor “changed the rules” and as a result this has raised a number of audit/risk challenges.
    5. Depending on your timezone, scheduled downtime (if required) may not be at an optimal time.
    6. Potential for increased latency depending on the location of the service. This may however end up being closer to your customers so may in fact be a positive.
    7. Integration may be confined to API limits that are not suitable.

    In terms of “Customization available” being a pro, there is a difference between configuration and customization and often customization will end up in an upgrade nightmare. The complete lack of customization with many SaaS products is in fact a pro in my view since it constrains an organisation to use the product as it was intended.


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