by Fred Ode

Learn what Software as a Service (SaaS) is and how it can help your construction business.

When was the last time you used a dictionary to look up the meaning of a word?  What about checking movie times in a newspaper?  It has probably been a while. And chances are you no longer use the set of encyclopedias gathering dust in your basement when you help your children write a research paper. This is because everything is on the Internet these days-including software.

A trend that appears to be taking a strong foothold in our industry is "Software as a Service" (SaaS). Once reserved for areas such as sales force automation and client relations, SaaS is effectively crossing over into other business areas including construction accounting and payroll.

What Is SaaS?

To put it simply, SaaS is a subscription-based (pay-as-you-go) method for companies to securely use software via the Internet from a single or multiple locations.

How Does It Work?

The application itself is hosted and operated by the software vendor or a third-party data center, which means that all hardware and software are located in one place and maintained by the vendor.  In other words, almost everything happens behind the scenes, as opposed to the traditional method of installing and maintaining your own hardware and software.  Imagine SaaS as the back office of a contracting business; there is a lot of activity happening that is essential to the business, but you do not always get to see how it works.  The software vendor maintains responsibility for software installation, updates, and system backups, significantly reducing your staff's workload.

Vendors create and maintain the system for running the application as well as installing software and performing maintenance, so, in theory, the environment is there and the system is ready to go.  Keep in mind that while the environment and software are ready to go, adequate employee training on features and functionality is still required.

The Pay Process

Because SaaS is offered on a subscription-based method, contractors pay a monthly fee.  Depending on the contract made with the software provider, users may subscribe on a monthly basis or may need to sign on for a year or more.  With that said, it is important to understand that there is no one certain model for the payment process of SaaS.  Pay models may be determined based on the number of users, the amount of data transferred, or simply an agreed upon monthly fee.

What Are the Benefits?

Like a traditional software purchase, research is key.  In order to understand what SaaS does, first learn what it offers and the benefits it can provide to your business.  Here are some of the advantages:

Lower Initial Cost

SaaS can make industry-specific software, like accounting or customer relationship management CRM, a more affordable option for the contractor who is not ready to completely commit to a new system.  Software can cost hundreds to thousands of dollars in initial cost and start-up.  With SaaS, that initial fee is avoided, which allows relatively small contractors to use feature-rich applications that are traditionally used by the larger organizations in a much more affordable setting.  The initial acquisition cost and the level of IT support to run a program sufficiently have hindered small construction businesses in the past, but with the pay-as-you-go method of SaaS, these hindrances disappear.  SaaS brings down these barriers and allows many more construction companies to use the tools that will help advance their business.

No Investment in Equipment

Because the software vendor or service center hosts the application, investing in expensive equipment is not required. Maintenance and upkeep costs for the equipment are already factored into the monthly fee.  SaaS also allows companies to avoid the cost of employing and training IT staff or outsourcing these responsibilities.

Backup and Security

Any contractor or business owner understands that it is essential to back up data daily.  Data loss can completely debilitate a business.  Using SaaS eliminates the contractor's responsibility of backing up data.  Saas vendors consistently back up your data, so you can rest easy.  Information security has also improved with SaaS.  Service providers offer up-to-date security and intrusion detection to ensure an excellent product and peace of mind.

Easier Upgrades

As with backup and security, SaaS vendors manage all upgrade processes. You can be sure that you are using the latest, most up-to-date version of the software to operate at optimum performance.  New releases and feature enhancements are updated by the vendor, so you do not have to deal with waiting for CDs, confusing downloads and cumbersome installations that require lengthy support calls, testing or other common issues that delay the process.


Because SaaS operates behind the scenes through the software vendor or a data center, all you need is the Internet.  You can access and use the application through any browser from any computer.  Once you have had the proper training and all your employees are on board with how to use the software, all you have to do is log in and enter the information.  The vendor takes care of the rest.

SaaS and Your Contracting Business

SaaS offers a lot of advantages, particularly to contracting businesses looking to avoid a high upfront cost.  With improved IT infrastructures, improved application deployment in geographically dispersed locations and significant cost savings, SaaS is something to consider as the construction industry keeps the door open to current and upcoming technology.  Working with SaaS frees you from multiple burdens so you can focus on your projects and growing your business.


Construction Business Owner, January 2011