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3 facts to consider when evaluating SaaS model for payments processing

Availability, cost-efficiency, and expertise – how to guarantee these when choosing your IT delivery model?

Jarkko Turunen / November 04, 2021

Software-as-a-Service delivery model grows in popularity as more companies re-evaluate their investments in privately held IT systems versus time and energy that could be spent on achieving primary business goals. Companies must weigh assumed cost reduction from operating their own data centers and software solutions against potential limitations that such approach creates for business growth.

 

We listed some of the limitations that businesses should take into account when choosing between SaaS model and own IT systems.

 

1. Availability of IT professionals

It has been an increasing struggle within the IT industry to attract and source expert talent and to maintain employee retention. Availability does vary depending on geographical region, but overall, it is safe to state that globally, the demand for IT workforce will only increase.

As a result of shortage of IT professionals, companies find themselves building two business plans: one for their primary product and another for themselves, promoting their employer reputation and creating strategies to cope with the constant need for new IT employees.

 

2. Stringent requirements towards system availability

Software systems face ever-increasing availability requirements, as instant payment processing becomes a commodity. The demand for 100 percent uptime brings a new level of complexity into entire software solution stack.

Every single component of the system (both software and infrastructure) must be redundant, hot-swappable, and multi-node. This puts extra pressure on IT department during design, implementation, and operational/maintenance phases, and does require higher qualification of IT employees.

 

3. Visibility into and control over IT costs

Business owners often find themselves struggling to control the exponentially growing IT costs. This is a direct result from lack of transparency that is caused by the ever-increasing complexity of IT systems. It is impossible to predict the size of upcoming investments, as the IT industry brings new and increasingly expensive solutions into the market daily.

One might think that SaaS brings a much higher cost compared to on-prem solution. But that is not true when taking into account hardware, software, labour, administrative, and utility costs, combined with procedural and compliancy requirements. This is especially so when software deployment, processed data volumes, and teams maintaining, operating, and developing the IT solution begins to grow. One cannot expect to be as cost-competitive as companies that specialize in SaaS service provision.

The aim of a business owner is to focus on its product, rather than spending time on back-end IT systems. This is reflected by preferred format of cost reporting that is intended to show overall cost per business metric (e.g. cost per card, authorization, payment), rather than diving into individual cost items on a technical level. But that is not feasible from the moment one starts to look for cost optimization, even though it would be way more convenient to isolate oneself from the technical complexity and operate exclusively within business realm.

Assuming that SaaS model would solve the abovementioned issues, requirement to have control over the solution is still actual – even if hosting, operations, and maintenance of the solution are outsourced. However, when chosen based on evaluation of customer-orientation, solid growth, and strategy, the SaaS provider can become a long-term partner, walking the business growth path together with you.

 

Benefits of SaaS in a nutshell:

  • SaaS removes all the technical complexity
  • Costs are transparent and typically measured using metrics directly linked with the company’s primary business
  • The company can concentrate on building their core business and focus on the product without the complex details of the technical solution
  • SaaS relieves the impact of IT workforce sourcing ability as one of the product success factors.

 

For further benefits of moving payments processing to SaaS model, see our next blog post: “What sets SaaS apart from on-prem and processing centre solutions in the payments space?

Jarkko Turunen
Head of Business Development and Product Management, Payment Solutions, TietoEVRY

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Jarkko Turunen

Head of Business Development and Product Management, Payment Solutions, TietoEVRY

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