Here's Professional Point's Summary of SAAS Pros and Cons

From the blog at Professionals Point,

Software as a Service (SaaS) is a type of Cloud Computing. SaaS is a software distribution model in which applications are hosted by a vendor or service provider and made available to customers over a network, typically the Internet. SaaS is also known as "on-demand software". In SaaS, software and associated data are centrally hosted on the cloud. SaaS is typically accessed by users using a thin client via a web browser.

Advantages of Software as a Service (SaaS)

1. SaaS (Software as a Service) is Cheap

Software as a Service allows organizations to access business functionality at a cost typically less than paying for licensed applications since SaaS pricing is based on a monthly fee. Unlike traditional software which is conventionally sold as a perpetual license with an up-front cost (and an optional ongoing support fee), SaaS providers generally price applications using a subscription fee, most commonly a monthly fee or an annual fee.

2. Less Hardware Required with SaaS (Software as a Service)

Software is hosted remotely, so business organizations don't need to invest in additional hardware. To support scalability, the application is installed on multiple machines (called horizontal scaling).

3. Little Maintenance Required with SaaS (Software as a Service)

Software as a Service removes the need for organizations to handle the installation, set-up and often daily upkeep and maintenance. Initial setup cost for SaaS is typically lower than the equivalent enterprise software. SaaS vendors typically price their applications based on some usage parameters, such as the number of users using the application. So SaaS provides easier administration. SaaS does automatic updates and patch management. No compatability issues will arise by using Saas as all users will have the same version of software. SaaS reduces IT support costs by outsourcing hardware and software maintenance and support to the SaaS provider.

Diadvantages of SaaS (Software as a Service)

1. Security Issue: As data is stored on cloud, security becomes a major issue.

2. Latency Issue: Again as data is stored in cloud far away from end user, it may take more transactional time as compared to traditional approach. So, SaaS model is not suitable for applications that demand response times in the milliseconds.

3. Total Dependency on Internet: Relying on an Internet connection means that data is transferred to and from a SaaS firm at Internet speeds, rather than the potentially higher speeds of a firm’s internal network.

4. Switching between SaaS vendors is difficult: Switching SaaS vendors may involve the slow and difficult task of transferring very large data files over the Internet.

Applications of SaaS (Software as a Service)

SaaS has become a common delivery model for many business applications, including accounting, collaboration, customer relationship management (CRM), management information systems (MIS), enterprise resource planning (ERP), invoicing, human resource management (HRM), content management (CM) and service desk management.

Future of SaaS (Software as a Service)

SaaS is becoming an increasingly prevalent delivery model as underlying technologies that support Web services and service-oriented architecture (SOA) mature and new developmental approaches, such as AJAX, become popular. Meanwhile, broadband service has become increasingly available to support user access from more areas around the world.