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The Truth about Saving Money with “The Cloud” – Part 2: Build vs. Buy?

Welcome to the second installment of our series on saving money with the cloud. If you missed lesson one in which we showed how your business could save over 50% by using a virtual server—a server hosted in the cloud—instead of a traditional server, check it out here!

Lesson 2: Build vs. Buy: Are You Asking the Right Questions?

“DIY”, short for “Do it Yourself” is great if you’re handy with a paint brush and your living room needs an updated look, but when it comes to delivering a SaaS (Software as a Service) application, you would be wise to proceed with caution.


DIY is great for home improvements, but not necessarily for SaaS application delivery.

If I lost you at SaaS, fear not! You’re actually familiar with SaaS applications, you just might not realize it. Software as a Service is referred to as on-demand software because it is a delivery method for common business applications such as CRM (Customer Relationship Management) solutions like, and also payroll processing software, management software, enterprise resource planning (ERP), human resource management (HRM), office and messaging software and many more. Companies use SaaS because by outsourcing their hardware and software maintenance to a SaaS provider, they greatly reduce their IT support costs.

For these SaaS providers, the question of using an internally built solution versus a fully managed solution from a managed hosting provider comes down to more than just the hardware costs, which is the only component many CTOs focus on mistakenly. While hardware is a critical component of the cost model, it is only one of many items that need to be identified to properly make a comparison.

Ask yourself these overall questions before you start thinking about using a service provider:

  • Is building and maintaining infrastructure a core competency of yours?
  • Who will do the work in-house?
  • What do your end users expect from your service?
  • What are the costs to start and how do you scale as you grow?

Remember that there are different challenges with delivering a Web (or SaaS) application than most companies have experience in supporting. Keep these new challenges with delivering SaaS in mind:

  • 24x7 infrastructure management and end-to-end application management
  • Scaling resources and infrastructure to meet customer demand
  • Direct end-user support
  • Development of procedures to address Change Management, Escalation, Troubleshooting, etc.
  • Addressing single points of failure – Infrastructure and People
  • Service Recoverability – Disaster Recovery, Backups

Next, consider how capable your company is to support the delivery of SaaS operations. Here are some common SaaS Operation Requirements to ask yourself:

  • Do you have a monitoring solution that provides checks to help detect application level issues?
  • Do you have a 24x7 support organization that will respond to those alerts?
  • Do you have a ticketing system to capture actions and issues to help your support team?
  • Does your support team have the skill set to meet SLA uptime requirements?
  • How will you ensure you will deal with compliance-driven legislation such as SSAE-16, PCI or HIPPA if required?

Experienced personnel with the understanding for 24x7 Operations can be difficult to find and aren't cheap. Also, don’t forget that the processes and procedures documentation is critical to a well-oiled support team!  There is cost to creating this documentation but it delivers huge value especially with compliancy requirements in mind.  Ensuring the proper tools are in place to alert and capture information will help with efficient response to issues and decreasing downtime.

Finally, here are some key environmental, software, and hardware requirements to consider:

  • Do you have a datacenter provider already chosen that provides the security and reliability that is required for your SaaS application?
  • Does your provider meet the physical security (CCTV, Two Factor Entry) and environmental resiliency (HVAC, Power, Fire Suppression) to support your service?
  • Do you have Just in Time (JIT) parts on hand for immediate turn around on components for commonly used parts?
  • Do you know the cost for the software licenses required to power your application?
  • Can you leverage virtualization?
  • What do you have implemented to protect yourself from DOS and DDOS attacks?

The answers to these questions all carry some type of cost implications that are not always taken into account in making build vs. buy decisions. There are one-time costs that need to be accounted for such as implementing solutions, finding technical talent, and documenting that don't always get included. It is important to capture all costs so you can properly compare a managed service provider as part of the buy model. It’s not always just about the dollars.

After weighing your options, let’s say you decide it’s smarter and more cost-effective to use a managed hosting provider. Your next step is choosing the best one for your needs; but how should you compare potential providers? Here is a checklist you can use when vetting vendors for the hosting of your company’s SaaS application.

SaaS applications - finding the best managed hosting provider v
Use this checklist when vetting managed hosting providers

Understanding your needs, requirements, and time investment—to compare your options both outsourced and internal—will help you choose the best SaaS delivery solution.

So, will you build yourself or will you buy?

Before you decide, make sure you know what your needs are so you can ask all the right questions. Be open to new ideas and more efficient ways to accomplish things as managed service providers can truly add value to you and your team.

About Emily Swartz

As the Social Community Manager at Broadview Networks, I enjoy sharing valuable content across all our social platforms. I particularly love writing for our blog because it gives me the opportunity to share tangible advice on how businesses can leverage technology to gain competitive advantages, control costs, provide superior service, and ultimately improve their bottom line. Find me on Google+

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