1.) The budget for SaaS comes from Opex, not Capex, so is deductible from taxes. 2.) Instead of paying in advance all at once to equip say, 100 desks, you pay month by month, which improved the cashflow. 3.) If you downsize, the expense of the extra desktops goes as soon as the employee goes. If you do mass layoffs with buy once SW, you already paid, and the software will sit in a shelf, unused, acruring depreciation. 4.) Spekaing of depreciation, is easier to keep track and administering all the SW, not only in terms of techies installing, configuring, patching and supporting it, but also in terms of license compliance, accounting and inventory tracking. 5.) May seem redundant, but if you outsource via SaaS your sw, your IT/Support team will be smaller. Which is important if the core of your business is NOT Information Technology related (say, a plywood factory). Of course, you will need smart high level/skill people to choose and manage the contracts, but you need less entry level types. 6.) If you are smart about contracts and SaaS offerings, and disciplined with your data retention and data format policies (which you should be anyway, even if you use buy once SW), you can migrate away from one provider to another. Yes, it will be hard, since your current provider has incentives to make it difficult to keep you there, but just remember that the new vendor has incentives to make it easier for you: i.e. your new vendor will offer a migration path and tools to make it happen.
And this is only scratching the surface of why some companies (and individuals too) may preffer a SaaS. YMMV.
No matter what your prefference is, please be aware that is just that, your prefference, and other people may see things differently, and derive benefits from a SaaS offering. One size DOES NOT fit all
Mmmmmm, creative earnings management. The question is when will accounting standards realize this style of intangible lease and force a change to an operating/financing lease decision like for property.
1.) The budget for SaaS comes from Opex, not Capex, so is deductible from taxes.
They're both deductible for taxes, it's just a question of how much and over what term. Now since you don't pay the full amount in year one for SaaS, it all works out pretty close to the same. Large corporations' accounting structures favor SaaS, but that's more of a bug than a feature.
Those who do not understand Unix are condemned to reinvent it, poorly.
- Henry Spencer, University of Toronto Unix hack
For us individual users, one time purchases... (Score:2)
But for companies, SaaS has advantages.
1.) The budget for SaaS comes from Opex, not Capex, so is deductible from taxes.
2.) Instead of paying in advance all at once to equip say, 100 desks, you pay month by month, which improved the cashflow.
3.) If you downsize, the expense of the extra desktops goes as soon as the employee goes. If you do mass layoffs with buy once SW, you already paid, and the software will sit in a shelf, unused, acruring depreciation.
4.) Spekaing of depreciation, is easier to keep track and administering all the SW, not only in terms of techies installing, configuring, patching and supporting it, but also in terms of license compliance, accounting and inventory tracking.
5.) May seem redundant, but if you outsource via SaaS your sw, your IT/Support team will be smaller. Which is important if the core of your business is NOT Information Technology related (say, a plywood factory). Of course, you will need smart high level/skill people to choose and manage the contracts, but you need less entry level types.
6.) If you are smart about contracts and SaaS offerings, and disciplined with your data retention and data format policies (which you should be anyway, even if you use buy once SW), you can migrate away from one provider to another. Yes, it will be hard, since your current provider has incentives to make it difficult to keep you there, but just remember that the new vendor has incentives to make it easier for you: i.e. your new vendor will offer a migration path and tools to make it happen.
And this is only scratching the surface of why some companies (and individuals too) may preffer a SaaS. YMMV.
No matter what your prefference is, please be aware that is just that, your prefference, and other people may see things differently, and derive benefits from a SaaS offering. One size DOES NOT fit all
JM2C
Re: (Score:1)
Mmmmmm, creative earnings management.
The question is when will accounting standards realize this style of intangible lease and force a change to an operating/financing lease decision like for property.
Re: (Score:2)
1.) The budget for SaaS comes from Opex, not Capex, so is deductible from taxes.
They're both deductible for taxes, it's just a question of how much and over what term. Now since you don't pay the full amount in year one for SaaS, it all works out pretty close to the same. Large corporations' accounting structures favor SaaS, but that's more of a bug than a feature.