Managed Services vs SaaS: Which is Best For Your Company?

Mid-sized companies are rejoicing today at the number of services available to them for IT and customer service related needs. These outsourced resources allow you to tackle difficult technical situations without the costly investment of server installation and upkeep, software engineering, or on-call staff.

Instead, outside companies provide these services to you, often based on a subscription.

SaaS

Software-as-a-Service (SaaS) is a service category that allows your company to subscribe and sign in users to an existing software program that operates remotely from your company. You and your employees are able to remotely log in and receive the benefits of the program to do tasks such as bookkeeping, payroll, or even research and present reports.

One of these companies, MissionInsite, allows you access to demographic information based on census data and data tracking of populations. Since this is information that is continually being updated, it is not stored on your computer. You log in through a web portal. There is an annual or monthly subscription required to access this information as well. As long as your account is up to date, you have access to the data. In rare cases, where the SaaS organization detects misuse of the software or attempts to break in and alter it, you could potentially be banned from using it.

The overall concept of SaaS is like renting a truck to move furniture that you cannot do yourself. You have no control over how the truck will look or respond. You just match your need with its ability. Once you are done with it, it goes back to the owner and may be used by others as well. You have no real ownership of it, nor do you have any ownership of the programs you use when you subscribe to SaaS.

Managed Services

If you are looking for custom options, managed services might be a better fit for you. Instead of subscribing to software use, managed services provide you with actual people to help you with your work. These employees are subcontracted to you through the managed services company as a firm or broker of their services.

The people who serve you through managed services are usually experts in their field rather than individuals looking for work through a temp agency. This makes a big difference in two significant ways for your business.

First of all, you can expect efficient work with good results without the need to give extensive training yourself. While they may know nothing about your company, they will have extensive knowledge about things like bookkeeping, customer service, or IT needs. Most of those categories cut across all companies today with minor alterations between them.

The second way their expertise applies to you is that they will serve multiple clients simultaneously, meaning they will work for your company as well as other companies at the same time, as their availability allows. You are not hiring them as a person, you are essentially paying for their work hours.

Costs

The cost of outsourcing this work is a significant factor in deciding whether you want managed services vs. SaaS, or whether to do the job on your own.

The first cost is not money, but a legal responsibility. Depending on the task you need to be accomplished, you may or may not be working with sensitive data. This could include private information from clients and customers. This information itself comes in a range of sensitivity. Some information, such as survey results have a low level of sensitivity about them. Other information, such as contact information and home addresses requires more protection.

If you happen to work with tax records, purchasing info, or medical records, you need to be extremely careful that this information does not get exposed. For these reasons, you should be sure you have legal representation look over your documents and procedures to ensure that you are not placing yourself under liability by sharing this information with a third party, such as managed services or SaaS.

Be sure you have the right to share pertinent information and permission from those you work with before working with these services. If you have any questions regarding security or liability, contact the managed services or SaaS provider for more details.

The second cost is money. Money is tied directly in with ownership of these services. With SaaS, you do not own anything and have very little control or ability to customize the software service to fit your needs. In fact, in most cases, you may need to customize your own business processes to suit the needs of the SaaS software. Dates and times for necessary information updates or payouts may be under control of the SaaS, requiring you to adjust your company's schedule accordingly.

SaaS compensates for this lack of control by offering less expensive subscription costs than are typically associated with managed services. With most, you can pay monthly or yearly, often with a discount for a longer subscription. There are often video tutorials that help you get acquainted with the new software and that you can use to help train your employees to use the SaaS. In most cases, there is an initial amount of transition as you begin to use the software, and later updates only require very minor business process transitions, if any at all. After all, it is the best interest of the SaaS company to avoid all but the most necessary of program changes to preserve business continuity for themselves.

Managed services come at a higher price, but you get your money’s worth in flexibility. With SaaS, you are literally paying a subscription cost for a software program. Managed services connect you with real people, giving you access to the people behind the computer and the ability to alter the software or platform you are using to fit your needs. You do not get complete control, and there is a limit to how far managed services can flex to suit your needs, but their adaptability is far greater than SaaS.

Key Questions and Differences:

What kind of service do you need?

Every company needs a variety of IT related services. If your primary needs center around straightforward functions like payroll or simple accounting, SaaS is probably a good fit for you. It is the less expensive option, and SaaS should be able to take care of those kinds of standard business needs for your company.

Artificial intelligence continues to grow by leaps and bounds, but there are still some services that need a more personal touch. When technical issues escalate beyond rebooting the computer or reinstalling software, it is helpful to have a real, living person on the other side of the screen rather than a list of Frequently Asked Questions. You will find the measure of the cost/benefit ratio between a help page on your website, and SaaS IT customer service is much closer than managed services.

You truly get your money’s worth when it comes to customer service efficiency, and it is not something you should cheap out on because, behind the performance of your own products and services, it is the next most crucial touchpoint between you and your customers.

Do you expect significant changes to your business processes in the next five years?

If your business is rapidly growing, you can expect some process changes to accommodate your company growth sooner rather than later. Why is this important to your decision to go with Managed Services vs. SaaS? Because each of these services comes with an expected timeframe around their services.

If you are looking to grow quickly, it probably would be worth the extra money to hire a flexible service like managed services to help you transition smoothly without losing business continuity. If you do not expect significant growth in the next five years, you may be able to get a discount with a good SaaS with a long-term subscription.

How big is your company and how much money can you afford to outsource this work?

Ultimately, the question of managed services vs. SaaS will come down to what you can afford. However, this does not mean you should automatically go with the least expensive option or even the option that is closest to your spending ability. You always have the third option of hiring the work out yourself. It may be a smart business move to seek out and hire temporary help at lower rates to help you manage and grow your business enough to the point you can subscribe to a SaaS or hire managed services to meet your growing needs.

Answering these questions above will guide you in making a wise business decision for your company regarding your work with Managed Services vs. SaaS. Both are incredibly helpful services offered to businesses today, but it is important you spend your money wisely and find the best service for your company. If you have any questions, be sure to contact your prospective SaaS or Managed Service providers to get the answers you need to make the best business decision.

Ready to find the right managed services provider for your business? Click here to read our full guide on how you can successfully unlock innovation and reduce costs by working with a third party to manage your IT needs.