There are all kinds of technologies and services that can help small businesses punch above their weight – and SaaS is a prime example.

Software as a service (SaaS) is a software distribution model in which a provider makes applications available to subscribed customers over the internet. It’s one of the three main categories of cloud computing, alongside platform as a service (PaaS) and infrastructure as a service (IaaS).

There are SaaS applications available to meet most traditional enterprise technology needs, including email, financial management, customer relationship management (CRM), collaboration and human resource management – all of which are designed to replace conventionally installed software packages.

SaaS has become a popular alternative to traditional software options, which are typically installed on-site, and there are several reasons why.

1. Cost savings

Francis West, CEO of IT services provider Westtek, says cost savings are a big part of the appeal for his SME customers. “As SaaS works on a shared environment, the licensing costs are lower than those associated with the traditional set-up,” he says. “This means smaller businesses can access enterprise-level technology for a fraction of the price they would normally have to pay.”

2. Manageable monthly payments

The subscription models used by SaaS providers can also be financially beneficial. “Instead of having to make a significant upfront investment, businesses can pay for SaaS inexpensively with small and fixed monthly payments,” says Michael Fontana, director of Leeds-based telecoms company Optionbox. “And as you require more services, you can select from a large portfolio of crucial software without having to dip too far into your budget.

“What’s more, SaaS is constantly upgraded at no extra cost to customers. You pay for these upgrades through your subscription fee, so you can avoid the costs of upgrading every few years as you would with more traditional software options.”

3. Scalability and flexibility

West lists these as other major selling points. “Users pay only for the apps they want and these can be adjusted as and when requirements change,” he says.

This flexibility applies to user numbers, too. “As the company expands, it can simply add a user at a fixed cost, so there are no sudden leaps in expense when new servers are required or extra licences.”

Despite its various plus points, SaaS isn’t a one-size-fits-all shortcut to business success, and it’s important to tread carefully when choosing applications.

Steven Tucker, MD of cloud-based payroll services provider The Payroll Site, suggests carrying out some in-depth research. “The main pitfalls of SaaS are the same as those of conventional software, so make sure you evaluate carefully that it meets your needs and is easy to use,” he says.

“You’ll also want to make sure that the system is reliable and has good technical support,” he adds. “And if it’s going to hold any information about living people, it needs to comply with data protection laws, so you should think about where the data is actually being stored, and whether you need to obtain consent or update your privacy policy.”

Martin Sandhu, founder of creative tech agency nuom, echoes Tucker’s view. “I’d urge everyone to research the software market and not just settle for what they see first. I recently subscribed to an amazing piece of software we never knew existed but will save us days’ worth of time on projects. All it took was a 10-minute internet search.

“Before making an investment, always take advantage of free trials, demos and walk-throughs,” adds Sandhu. “Don’t be afraid to challenge sales teams to make a compelling use case for how the software will benefit your business and remember to unsubscribe from any services you don’t want to avoid an unexpected bill.”

Keep track of your subscriptions

Some businesses get caught out by signing up for too much, so it’s important to keep track of what you’re paying for.

“The best way to manage subscriptions is to record them all as you sign up to them,” Fontana says. “To do this, you could use a project management tool or simply place all subscription information into a dedicated folder on your computer. As a rule, you should review your subscriptions on a six-month basis to ensure you’re still using all the SaaS that you are paying for.”

And even when cancelling subscriptions, you’ll need to be careful. “Some companies will delete your data from their systems when you end your subscription,” says Tucker. “If you need to maintain access to your records, you’ll need to download the data before you cancel.”

Five top cloud tips from the experts

1. Do your research before committing to anything.
2. Make use of free trials.
3. Ask questions of SaaS providers – especially around data protection and service level agreements (SLAs).
4. Keep track of your subscriptions and review them regularly
5. Save your data if you’re going to cancel.