Managed Services vs. SaaS: What’s the Difference?

When considering managed services vs. SaaS, you may find that the two share similar aspects. However, the words shouldn’t be used interchangeably. In a general sense, managed services is a much more broad term, while SaaS applies specifically to software services. Many businesses actually use both to save time and money on IT.

Understanding Managed Services

Managed services usually encompass a variety of IT services. By definition, these services include remote IT support based around a subscription model. The type of support varies based on your business and the provider. Common support includes:

  • Hardware troubleshooting
  • Remote monitoring
  • Disaster recovery
  • Data storage
  • Security services
  • Software deployment and troubleshooting

When talking about managed services vs. SaaS, managed services work on the same type of monthly plan as SaaS. This is part of what makes managed services so appealing, especially for small businesses with a limited IT budget.

Another benefit is most managed service providers offer proactive support, meaning less downtime for businesses. There are typically service hours included in the monthly fee for support if something goes down or breaks, such as a server wearing out

For the most part, small and medium-sized businesses use managed services more than large enterprises. Larger businesses often have an in-house IT department. Smaller businesses may not have the budget for full-time IT staff. They might also lack enough hardware to warrant an in-house IT team.

These smaller businesses benefit by having IT expertise that manages their hardware and software behind the scenes. The monthly fee is more manageable and prevents fluctuating IT costs.

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Understanding SaaS

Some confusion comes in when talking about managed services vs. SaaS because SaaS is a form of managed service. The key difference is SaaS refers to a third party software provider that hosts and manages a business’s applications. SaaS providers don’t offer a full range of IT support services.

Most SaaS providers only support their own software. Businesses often utilize SaaS applications to save money and time on installations, updates, and initial fees. With an SaaS model, businesses pay a monthly fee to remotely access the software. The provider handles software updates, configurations, and application security.

SaaS is more widely used among businesses due to convenience. Even large businesses may use one or two SaaS solutions, such as CRM, marketing, and business intelligence.

Managed Services vs. SaaS

Businesses shouldn’t look at managed services vs. SaaS as an either or. Instead, businesses should consider both as viable options. Most businesses have computers, servers, and other hardware to maintain and secure. This makes managed services a must have if you don’t have an IT team or the expertise to manage things yourself.

If software licensing and upfront costs are too much, SaaS solutions are ideal for getting the software you need without having to manage installations and updates yourself. In fact, managed services and SaaS can work hand-in-hand to completely outsource IT in a business.

While most businesses haven’t outsourced all their IT needs yet, small and medium-sized businesses often benefit from a reduced IT budget and predictable monthly costs that are easy to scale as the business grows. As they grow into larger businesses, they may switch to in-house IT support, but still keep their SaaS solutions.

The key is to determine the cost effectiveness of both managed services and SaaS to see if they fit your business needs or not. However, it’s important to note that one doesn’t replace the other. They’re both different and address different aspects of IT.

For instance, managed services may or may not cover software support. You may still be at the mercy of your software provider for software issues. With SaaS, you get full software support, but only for that provider’s software. However, you’ll still need hardware support for the devices accessing your SaaS applications.

Some businesses use managed services to host their own applications, creating their own remote software service. These include apps and services, such as CRM, business intelligence, analytics, and data storage. For businesses that want to host their own applications, managed services make more sense than SaaS.

In the end, it all depends on your business goals and needs at this moment. The great thing about both options is they’re subscription based. This means you’re free to change your IT strategy at any time.

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Managed Services Growth

The managed services industry has been slow to grow. Many businesses don’t like the idea of outsourcing their IT needs. They also fear it may cost more. However, budget constraints are forcing businesses to take another look at managed services. Once they see the benefits, they’re making the decision to outsource.

In 2014 alone, managed services spending reached $107 billion. It’s expected that manged services will account for nearly 20% of IT service spending worldwide.

The slow start was just a bump in the road for managed services. Today, the trend is towards using managed services, at least to some extent.

SaaS Growth

SaaS is an easier concept for businesses to understand, since managed services often vary from provider to provider. As businesses become more comfortable with the idea of remote and cloud-based software, they’re helping the SaaS industry grow quickly.

The SaaS market is expected to reach $112.8 billion by 2019 and increase to $164.29 billion by 2022. Currently, the main reason small businesses are using SaaS solutions is for file storage and sharing. They also use SaaS for backups, payroll, and CRM.

Being able to jump in more slowly with SaaS is part of the reason businesses are more likely to embrace this industry over managed services. However, as businesses see the benefits of SaaS, they’re also more likely to look closer at managed services.

For small and medium-sized businesses, a combination solution usually works best. There isn’t a managed services vs. SaaS choice to make. Both benefit your business and can help you save time and money over traditional IT support and software. Both scale with your business and allow you to customize your plans to get the right support and features you need to build a thriving business.

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