How Software as a Service Offsets Cost of Ownership
There is no doubt that starting a business in the sports facility market takes significant initial investment. Start-up costs can range from $50,000 to over $1,000,000, depending upon your business structure and how much equipment is needed. Let’s not forget that in business these days you have to have IT to survive. You need a website, email, a network, support, data backup, virus protection, a retail portal; the list goes on – it’s all critical, and it all costs money. In fact, typically the cost of set up and management of an IT infrastructure can equal at least $10,000 the first year alone. The good news is that Software as a Service (SaaS) can address every one of these needs for a fraction of the cost.
SaaS allows users to access software and its functionality remotely as a Web-based service. Instead of purchasing the software, SaaS users simply pay a monthly fee. Because the software is hosted remotely, users do not need to invest in additional hardware, or handle the installation, set-up, and maintenance of an infrastructure. There are many benefits to using SaaS, such as streamlining management, cutting operational costs, and making your business run smoother. However, probably the most crucial benefit of SaaS is how it affects the cost of ownership.
Take a look at the typical costs associated with building and supporting the IT side of a business:
- Server: $2500 (considers a 3-year depreciation)
- Network company: $125 an hour
- Operating system and software package: $4000 (doesn’t include ongoing upgrades)
- Software Support Agreement: $150 per month
- Data Backup Service: $300 per year
- Website SSL Certificate (256 bit): $80 per year
- PCI Compliance for retail portal: minimum $800 per year
Now take a look at how SaaS can reduce those costs:
- Eliminates need to purchase servers or other software to support use
- Eliminates need for an IT support person/team to manage the infrastructure
- Reduces up front capital cost; using predictable (pay-as-you-go) monthly fees instead
- Eliminates need to upgrade infrastructure as business demands grow
- Lowers costs associated with application implementation, support, and user training
It makes sense to keep in mind that your building and equipment are revenue generating assets; while an IT infrastructure is strictly an expense. SaaS eliminates the expense of an infrastructure, and it can also be of tremendous value to your daily operations and costs. If you decide that Software as a Service is right for your business, take time to research the options. There are a variety of SaaS’s out there, so be sure to look for software that is affordable, easy to use, and customizable to your business.
If you would like to consult with Mike Meszaros about how to maximize profit in your sports facility, please call (513) 791-4940.
Click here for an informative article about SaaS from Industry Week.
