6 Disadvantages of SaaS


Before contracting with a software-as-a-service provider, consider issues such as support services, data security, and hype. Under the right circumstances, SaaS can greatly enhance profits and improve efficiency. But under the wrong circumstances, it becomes inconvenient, insecure, and unnecessarily expensive. Knowing the risks and disadvantages of SaaS will help in determining whether a solution is the best choice for your business.

Read more: Four Advantages of SaaS

6 Disadvantages of SaaS

Loss of Control

Because organizations must rely on third-party vendors to deliver services, it quickly becomes apparent these services are not completely in the end user’s control. In the worst case scenario, a cloud provider may simply shut down and go out of business without warning. For example, this happened with Nirvanix, which went bankrupt in 2019, and their customers were given one month’s notice to pull their data.

Because of the multi-tenant nature of the cloud, the “noisy neighbor” effect may have an impact. This effect is basically the result of a shared infrastructure. The use of a virtual machine in a neighboring core, operating within the same cloud, can lead to performance degradation.

In the worst case scenario, a cloud provider may simply shut down and go out of business without warning.

Vendor lock-in is also a concern. Vendor lock-in describes a situation where a cloud vendor has manipulated the system, with the goal of making it difficult or expensive to transfer data to another cloud. The customer becomes “locked in” to a service that may be inferior to those offered by other clouds.

And depending on the vendor, there may be times the customer cannot access the services they need. When an organization’s staff does not have complete access to the cloud’s services, they can’t use resources that are being paid for. In essence, money is being wasted.

Software Integration Problems

Some software cannot be integrated with certain clouds. Integration problems can range from architectural problems to network latency issues.

If a mix of on-premises software and SaaS is used, it can be difficult to organize the right balance between use of the cloud and the on-premises system. Even businesses wanting to transfer completely to the cloud can discover they must leave some of their legacy systems in on-premises computers.

Paying for unnecessary, redundant services in the cloud, while also having them available in-house, is an obvious waste of money.

Read more: Key Considerations for Evaluating Cloud vs. On-Premise Software

Wasted Spending

SaaS has the potential to run rampant unless usage is closely monitored by management. Staff members who take long breaks while using SaaS, or people who are easily distracted, should probably not be given access to this service. People need to be trained in using SaaS efficiently.

As a general rule, businesses should limit themselves to no more than three cloud vendors at any given time.

The unnecessary use of software-as-a-service can be hidden by the confusion caused with overlapping subscriptions. The business ends up paying for features that are not being used and time that is being wasted.

While there are certainly exceptions, as a general rule, businesses should limit themselves to no more than three cloud vendors at any given time. Additionally, SaaS contracts and licenses need to be reviewed regularly to avoid overlaps and waste.


One of the biggest concerns for many businesses is SaaS security. With on-premises software, data is stored in-house. With SaaS on the other hand, data is often stored offsite by the service provider, who must secure and backup the data.

While this ensures backup data is available when needed, this creates yet another location where security can be breached, and your data can be accessed by a cybercriminal. Before becoming involved with a SaaS provider and storing your sensitive information with them, it would be wise to fully research their data security to ensure it meets the company’s standards and requirements.

According to an Archive360 and Pulse survey, 58% of the world’s technology leaders say many SaaS vendors do not meet all their security requirements.

With on-premises storage and an isolated computer, data can only be accessed from inside of the company’s walls. This type of security is not completely unreasonable. It simply involves storing data in a computer that cannot be accessed by the internet.

58% of the world’s technology leaders say many SaaS vendors do not meet all their security requirements.

Data that is meant to be secure must be transferred to it on a regular basis, and this data should not be copied and stored on other computers. It’s a clumsy system, but remarkably secure. A cybercriminal would have to physically break into the office before hacking into the computer.

With software-as-a-service, data can become vulnerable because your staff may be accessing software services using insecure outside connections.

Unfortunately, sometimes it’s not until a security breach takes place that IT managers realize there is a need to deliberately increase security. Security policies that are thrown together in an ad hoc fashion, or that are completely nonexistent, can leave organizations open to theft and having their data held for ransom.

Read more: TechnologyAdvice Buyer’s Guide to Security Software

Ineffective or Redundant Apps and Tools

Sometimes, research and development teams will find themselves using and paying for multiple or redundant apps that have overlapping functions. In other cases, teams will be using, or could be using, free open-source apps in-house, while paying for apps in the cloud to accomplish the same goal.

For example, a human resources manager may pay for on-premises video conferencing, while the sales reps, as a group, have already discovered free video conferencing applications that are easier to use.

SaaS products may not be necessary if free ones are available, which allows spending to be reallocated for other purposes. That said, free and open-source software comes with its own set of security concerns that must also be weighed.


The SLA (service-level agreement) must be viewed as a potential trap for unsuspecting victims.

These documents are typically written in a style that is so tedious, the average reader will fall asleep before finishing the second paragraph. Not knowing what is in the SLA can lead to confusion, unmet expectations, and paying for services that are never used.

Not knowing what is in the SLA can lead to confusion, unmet expectations, and paying for services that are never used.

If the decision is made to sign the agreement, it must be read thoroughly, regardless of how tedious it is. This document defines who is responsible for what, what your expectations of the SaaS vendor should be, and a description of how to proceed when something goes wrong.

Read more on Enterprise Networking Planet: The Fundamentals of Good Service Level Agreements

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