In recent years, swift technological developments have changed the business and information technology domain. For non-technical business owners who are struggling to stay up-to-date with the latest technological advances, this is both good news and bad news. There are two solutions that businesses can outsource to save themselves from confusion. These are managed services and software as a service (SaaS) model.
Organizations of all sizes are adopting these solutions to beat the costs and hassles of managing their IT systems and using traditional packaged applications. There are essential differences between these two outsourced models. In this article, we will be tackling these differences between managed services vs. SaaS that every organization needs to understand and some tips on which model works best for an organization’s specific needs.
Managed Services vs. SaaS: Defining the terms
Managed IT services are IT tasks provided by a third-party vendor to a customer — this can be businesses of all sizes. The managed service provider has the responsibility to maintain the IT operations of the organization that avails the service. There are different types of managed services, but it all boils down to the transfer of IT management from the customer to the service provider.
On the other hand, the software as a service model is a category of cloud computing alongside infrastructure as a service and platform as a service model. The SaaS model involves software distribution in which a third-party vendor hosts, maintains and upgrades applications that are available to customers via the Internet. If an organization has ever utilized any software from the cloud, then it has used SaaS.
The software as a service model might be a good fit for businesses that have full commitment to staff their IT infrastructure but need outsourced applications to have cutting edge services and be on the next level. In short, the businesses that will get the most advantage out of SaaS are those that have existing IT infrastructure. On the other hand, managed IT service providers collaborate with their customers and provide IT expertise and pre-built IT infrastructure. There are also managed service providers that fully maintain and control their customers’ IT operations so that these customers will focus on more critical business projects and processes.
Managed Services vs. SaaS: The Cost
Many companies love the SaaS model because it provides a low-cost alternative to traditional software solutions. It offers businesses the flexibility to scale up or down and implement the latest products without having to experience expensive processes. On the other hand, managed IT services are more expensive. Although the methods are costly, managed services offer far more comprehensive operations and solutions. Managed service providers can provide support in integrating, maintaining, and upgrading software to give a better flow of work.
There are different types of pricing models for managed IT services and SaaS. Let’s start with managed services pricing models that are most popular for businesses. These are the following: Per-user, per-device, monitoring only, and tiered pricing models.
- Per-User pricing model typically charges a monthly flat rate per end user. It covers IT support on all user devices and is a straightforward pricing model that can help minimize the guesswork.
- Another pricing model for managed IT services is the per-device option. This provides a flat rate for each type of supported device. For example, a basic per-device pricing model may assign a monthly flat rate of $99 per managed network, $29 per network printer, $299 per server, and $69 per desktop. This pricing model makes the pricing structure simple and more comfortable to give customers a quotation or estimate of the cost.
- Monitoring only pricing model is another option for utilizing managed services. Managed service providers are in charge only of monitoring the network and alerting their customers. Customers are billed for remediation tasks identified through monitoring.
- Lastly, one of the most popular pricing models is the tiered pricing option. This model sells bundled packages of IT services. The price increases as the business avail more services. This option is the most flexible pricing model for managed IT services.
The software as a service solution also has different pricing models popular to businesses, and these are as follows: flat rate, usage-based, tiered, and per-user pricing models.
- The simplest pricing model for SaaS is the flat rate option. SaaS providers offer a single price, a single product, and a single set of features. This is billed monthly and has similarities to the software licensing model before the cloud existed.
- Usage-Based pricing model is also known as Pay as You Go model. This pricing option relates to the cost of SaaS products to its users. If businesses use more of the product, the bill increases and if they use smaller, the fee decreases.
- Another option is the tiered pricing model. This allows for multiple-package offers, with different combinations of features charged at various price points.
- Lastly, the per-user pricing model is the go-to SaaS pricing option. It’s popular because of its simplicity. A single user spends a monthly flat rate; add another user, and the cost doubles and so on.
Managed Services vs. SaaS: Services offered
The most common services offered when using managed IT services are remote monitoring and management of servers, desktops, and mobile devices. Remote monitoring and management are usually the foundational services provided by managed service providers. However, there are also other services offered. One popular option is the managed security services since businesses demand IT security support from their managed service providers. In accordance with this, service providers have been developing practices when it comes to IT security. They have also been partnering with third-party vendors that specialize in cybersecurity.
On the other hand, SaaS offers two standard service models: the hosted application management model and the software on-demand model. In a hosted application management model, the provider hosts the customer’s software and with the use of the Internet, delivers the software to approved end-users. In the software on-demand model, the SaaS provider offers customers access to a single copy of a software that the provider created particularly for SaaS distribution. The source code of the software is the same for all the users. When there are new functionalities or features, these are rolled out to all the users.
There are specific SaaS applications for essential business activities and tasks, such as sales management, customer relationship management, email, financial management, billing, and collaboration.
Managed Services vs SaaS: Security
Every business investment carries certain risks. Perhaps the most significant asset to any organization is the assurance of cybersecurity.
Managed IT services offer different benefits to keep an organization’s data secure. These benefits include constant remote monitoring and the creation of relevant reports to inform the organization about the state of its system. Another security benefit is the supply of compliance assistance, risk assessment and correlation analyses to keep a steady overview of the activities of the network.
With SaaS, on the other hand, the customers don’t have complete control over their data since the data is hosted in the cloud. Although a customer has the advantage of accessing SaaS applications anywhere with the use of the Internet, the customer must perform a security review of the application before subscribing, especially when it is deployed on a public cloud.
Managed Services vs SaaS: Stability and Predictability
One of the most promising things that managed IT services offer is their stability. Unlike the break/fix model where an IT professional is only available when there is an issue, managed IT service providers have a 24/7 availability and prevent all issues from happening.
In the SaaS model, on the other hand, data portability can be the problem. The situation can become unpredictable and unstable. What happens to an organization’s data stored in the cloud if the SaaS providers go bankrupt? Unfortunately, this is one of the risks an organization needs to take when opting for a SaaS solution.
Managed Services vs SaaS: Scalability
Businesses grow, and their needs change. At some point, the solution business has invested in may be necessarily changed or updated. Scalability and flexibility are vital to any business using different IT solutions.
With managed IT services, an organization doesn’t have to worry about switching up approach as it gets bigger because a managed service provider is already setup to do just that seamlessly. They can address day-to-day IT issues, maintain and monitor the network or system, and help an organization plan for future needs when it comes to technology.
SaaS solutions usually reside in scalable cloud environments that can integrate with other SaaS offerings. Using SaaS, users don’t have to buy another server or software as compared to traditional models. SaaS applications are scalable by enabling an organization to choose the delivery model and changing it when the requirements of the business change. With SaaS, it is easier to turn on an additional set of components, integrate to other systems, and get new application users.
Managed Services vs SaaS: Updates and Upgrades
For managed IT services, there are basics services offered for upgrading the system. This includes software updates, patches, and upgrades for servers and desktops. Any machines covered by the agreement with the service provider have an automatic u pdates run on schedule. Organizations availing these services don’t have to worry about the time it takes to check for updates and apply necessary patches. Updating and upgrading happens automatically using managed IT services.
For SaaS model, upgrades are also done automatically by the service provider. The SaaS provider ensures that organizations they are partnering with have the most up-to-date version of the software. This is done without having to recustomize or reimplement any of the preset features. Service level agreements between the SaaS provider and the availing organization typically includes frequent, automatic, and frequent upgrades as part of the subscription.
Managed Services vs SaaS: Availability and Accessibility
With the right managed IT service provider, 24/7 help is available, which means all-day and all-night services are provided. This also includes weekends, holidays, and in the middle of the night. This kind of IT support provides and ensures a superior level of productivity for the availing organization, regardless of the time and date.
On the other hand, the SaaS model can be available and accessed on all locations with Internet connection. This is unlike licensed software that provides limited access because it is dedicated only to specific number of devices and can’t be accessed using foreign computers. Location is not only the advantage of SaaS when it comes to accessibility. SaaS model is compatible across multiple devices and this advantage increases mobility and independence.
Weighing the Solutions
Managed Services vs SaaS? The solution an organization chooses depends primarily on its business needs. Some organizations need aid in monitoring and administering their IT infrastructure. In that case, managed IT services are ideal solutions. Other organizations need essential software delivered through the cloud to attain the needs that they want, in which case, SaaS solution is better.
Moreover, after breaking down the differences and similarities of managed services vs SaaS, any organization will understand that these services are both leaning towards efficiency of operations of any IT system and network. When an organization’s IT infrastructure grows more complicated because of the technological advancements, there are high chances that the organization might consider integrating managed IT services or the SaaS solution. Whatever the choice may be, any organization needs to ensure that these services help them in the long run, not just in the midst of complexity in the present time.