SaaS Solution and Hosted Solution... is there a difference? (Enterprise)
When it comes to enterprise software, would you say there is a difference between a hosted solution and an SaaS solution? Or are they the same thing?
If there are differences and you offered a "hosted" solution would you still use a "subscription" based pricing model?
4 Answers
Hosted and SaaS are different:
- Hosted means the software you access is not on your own infrastructure, it is "hosted" by someone else. That means that you could have bought a bunch of software and have them hosted. This is not SaaS.
- SaaS is software that you pay as you go (as a service) and there lies the difference.
Now let's bring a bit of confusion: A SaaS application is usually hosted.. But a Hosted solution is not necessarily a SaaS solution.
To answer you question about subscription, SaaS is "pay as you go", so it is subscription based (otherwise the provider wouldn't be able to stop the "service" if you stop paying). But a hosted solution will have a subscription on the hosting part, not necessarily on the software you access (and that is hosted).
Let me know if you need more clarity.
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What we'd like to do is use a pricing model where we charge an annual fee. We host everything. I guess we fall into SaaS on an annual basis as opposed to the usual monthly? – Big Tuna 14 years ago
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I don't see how pricing model / payment frequency would have any bearing on whether you define yourself as a "host" or a "SaaS" provider. Can you elaborate? – Jim Galley 14 years ago
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My two issues are: 1) If we call define it as a "hosted" solution, does the customer own the software? If so, what happens when they want to end the arrangement? 2) If we call it SaaS, I was concerned about the customer leaving early, after the expensive customer acquisition for enterprise. I think our solution is define it as SaaS with a monthly fee, but with the condition that for enterprise customers they have to sign a one year contract. Am I on the right track? – Big Tuna 14 years ago
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Hey Jimg, as Big Tuna pointed out, it's not so much the pricing model that defines what you are. You can be a SaaS provider and charge annually. At the end of the year, if your customer stops paying, they cannot access the Software anymore. There is often time some costs of adding a new customer, so yes, having them leaving after a month can be a pain.. You can always incentivize by giving a discount for an annual subscription versus a monthly payment. – Antony P. 14 years ago
These are both slippery terms, and there's definitely overlap.
SaaS generally implies that the provider has a system somewhere in the cloud, and that as a customer I pay for software features and utilisation rather than for the platform hosting as such.
Hosted solutions are often software that you could install for yourself, and as an option you can access the service through the cloud. It's commmon - but not universal - to find that payment for hosted services mirrors the underlying software's pricing structures plus structures common in 'raw' hosting.
But the difference is really more a matter of convention than anything. I've certainly seen companies who seem totally SaaS to me position their services as 'hosted' in order to connect better with enterprises who like 'cloud,' know what 'hosting' is but are not decided about SaaS. And I've seen common software packaged up with hosting and called SaaS to differentiate from commodity hosts.
Definitions vary all over the place, so your results may vary. This works for me.
Hosting - running and maintaining a computer system on someone's behalf.So, whether its SaaS, IaaS, Paas - its all "hosted" - that is, running somewhere other than on your hardware, and you pay for it (of course, there are hybrid solutions that incorporate your hardware + their hardware, but let's keep it simple for now.)
SaaS - Software-as-a-Service is a model of software deployment whereby a
provider licenses an application to
customers for use as a service on
demand. One example of SaaS is the
Salesforce.com CRM application.
IaaS - Infrastructure-as-a-Service is the delivery of computer
infrastructure (typically a platform
virtualization environment) as a
service. Rather than purchasing
servers, software, data center space
or network equipment, clients instead
buy those resources as a fully
outsourced service. One such example
of this is the Amazon web services.
PaaS - Platform-as a-Service is the delivery of a computing platform
and solution stack as a service. It
facilitates the deployment of
applications without the cost and
complexity of buying and managing the
underlying hardware and software
layers. PaaS provides the facilities
required to support the complete
lifecycle of building and delivering
web applications and services. An
example of this would the GoogleApps
or Heroku.
How you pay - per use, monthly, quarterly, annually - is a condition defined by the provider and not a deciding factor on what type of provider it is.
Most software vendors that offer hosted solutions will install their software on a server and network that they manage for you. In the enterprise, a company may want to start with a hosted solution and then bring it in-house as their company and infrastructure grows (We're hiring a network admin and buying servers for other purposes, might as well bring the app in-house and save money and get a better connection.). Some companies may prefer this option instead of purely SAAS with no chance bringing the data in-house.
You can buy an annual contract for the software and then pay monthly for the additional hosting. Number of users is generally tied into the cost.
