Check out our FREE Resources page – Download complimentary business frameworks, PowerPoint templates, whitepapers, and more.







Flevy Management Insights Q&A
How does cloud-based SaaS differ from traditional software delivery models, and what are its advantages for businesses?


This article provides a detailed response to: How does cloud-based SaaS differ from traditional software delivery models, and what are its advantages for businesses? For a comprehensive understanding of Cloud, we also include relevant case studies for further reading and links to Cloud best practice resources.

TLDR Cloud-based SaaS shifts from traditional models by offering lower upfront costs, scalability, and remote accessibility, aligning with modern demands for agility and operational efficiency.

Reading time: 3 minutes


Cloud-based Software as a Service (SaaS) represents a significant shift from traditional software delivery models, fundamentally altering how organizations access, utilize, and benefit from software applications. This evolution is not merely technical but strategic, offering a myriad of advantages that align with the agility, scalability, and efficiency demands of modern organizations.

Differences Between Cloud-based SaaS and Traditional Software Models

The traditional software delivery model is characterized by on-premise installations, where the software is purchased through a license and installed on the user's hardware. This model demands significant upfront investment in both software and hardware, along with ongoing expenses for maintenance, updates, and support. Additionally, it requires a dedicated IT staff to ensure the smooth operation of the software, manage data security, and comply with regulatory requirements.

In contrast, Cloud-based SaaS is delivered over the internet as a service. Instead of purchasing a license, organizations subscribe to the software, typically on a monthly or annual basis. This model eliminates the need for on-premise hardware, drastically reducing upfront capital expenditure and shifting the responsibility for maintenance, updates, and security to the SaaS provider. SaaS applications are inherently scalable, allowing organizations to adjust their subscription levels based on current needs without the need for physical infrastructure changes.

Moreover, SaaS offers unparalleled flexibility and accessibility. Since the software is hosted in the cloud, it can be accessed from anywhere, at any time, using any device with an internet connection. This supports remote work environments and ensures that organizations can remain operational and resilient in the face of disruptions, such as natural disasters or global pandemics.

Learn more about Remote Work Disruption

Are you familiar with Flevy? We are you shortcut to immediate value.
Flevy provides business best practices—the same as those produced by top-tier consulting firms and used by Fortune 100 companies. Our best practice business frameworks, financial models, and templates are of the same caliber as those produced by top-tier management consulting firms, like McKinsey, BCG, Bain, Deloitte, and Accenture. Most were developed by seasoned executives and consultants with 20+ years of experience.

Trusted by over 10,000+ Client Organizations
Since 2012, we have provided best practices to over 10,000 businesses and organizations of all sizes, from startups and small businesses to the Fortune 100, in over 130 countries.
AT&T GE Cisco Intel IBM Coke Dell Toyota HP Nike Samsung Microsoft Astrazeneca JP Morgan KPMG Walgreens Walmart 3M Kaiser Oracle SAP Google E&Y Volvo Bosch Merck Fedex Shell Amgen Eli Lilly Roche AIG Abbott Amazon PwC T-Mobile Broadcom Bayer Pearson Titleist ConEd Pfizer NTT Data Schwab

Advantages of Cloud-based SaaS for Organizations

The advantages of cloud-based SaaS are manifold, impacting various aspects of organizational operations, from cost management to strategic agility. First and foremost, the subscription model associated with SaaS translates into lower upfront costs and predictable ongoing expenses. This financial flexibility is particularly beneficial for small to medium-sized organizations that may not have the capital to invest in expensive on-premise solutions.

From a strategic standpoint, the scalability of SaaS allows organizations to respond more swiftly to market changes. They can scale their operations up or down without the delays associated with traditional software procurement and deployment processes. This agility is a critical asset in today's fast-paced business environment, where the ability to quickly adapt to new opportunities or challenges can be a significant competitive advantage.

Furthermore, SaaS providers invest heavily in security, compliance, and performance enhancements. This continuous investment ensures that organizations benefit from the latest technological advancements and robust security measures without having to manage these aspects in-house. For example, updates and patches are applied automatically, ensuring that the software remains secure and compliant with the latest regulations without any effort on the part of the organization.

Learn more about Competitive Advantage Cost Management

Real-World Examples and Statistical Insights

Consider the case of Salesforce, a leading provider of cloud-based customer relationship management (CRM) software. Salesforce has revolutionized the way organizations manage their customer interactions, sales pipelines, and marketing campaigns. By leveraging a cloud-based SaaS model, Salesforce offers its clients a highly scalable, customizable, and intuitive platform that can be accessed from anywhere, eliminating the need for costly on-premise installations and ongoing maintenance.

According to a report by Gartner, the global market for public cloud services is expected to grow significantly, underscoring the increasing reliance of organizations on cloud-based solutions, including SaaS. This trend is driven by the need for digital transformation, operational efficiency, and competitive agility, all of which are facilitated by the adoption of SaaS.

In conclusion, cloud-based SaaS offers a compelling alternative to traditional software delivery models, providing organizations with financial flexibility, strategic agility, and operational efficiency. As the digital landscape continues to evolve, the importance of SaaS is only expected to grow, making it an essential component of modern organizational strategy. Organizations that embrace cloud-based SaaS will be better positioned to navigate the complexities of the digital age, leveraging the power of software to drive innovation, enhance customer experiences, and achieve sustainable growth.

Learn more about Digital Transformation Customer Experience Customer Relationship Management

Best Practices in Cloud

Here are best practices relevant to Cloud from the Flevy Marketplace. View all our Cloud materials here.

Did you know?
The average daily rate of a McKinsey consultant is $6,625 (not including expenses). The average price of a Flevy document is $65.

Explore all of our best practices in: Cloud

Cloud Case Studies

For a practical understanding of Cloud, take a look at these case studies.

Cloud Integration Framework for Oil & Gas Industry Leader

Scenario: The organization in question operates within the oil & gas sector, which is characterized by its high demand for computational power and data storage capabilities.

Read Full Case Study

Cloud Infrastructure Overhaul for Power & Utilities Firm

Scenario: A leading power and utilities firm is grappling with outdated and fragmented cloud infrastructure, which is leading to increased operational costs and decreased system reliability.

Read Full Case Study

Cloud Infrastructure Revamp for Aerospace Manufacturer

Scenario: The organization is a leading aerospace parts producer facing inefficiencies and scalability challenges in its current cloud infrastructure.

Read Full Case Study

Enterprise Cloud Strategy Development for a Global Financial Services Firm

Scenario: The organization, a leading financial services provider with a presence in multiple continents, has been relying heavily on traditional IT infrastructures.

Read Full Case Study

Cloud Transformation Initiative for Agritech Firm in Sustainable Farming

Scenario: The company is a leading agritech firm specializing in sustainable farming practices.

Read Full Case Study

Cloud Migration Strategy for Midsize Retail Firm in Competitive Landscape

Scenario: A midsize retail firm operating in a highly competitive landscape is facing challenges in scaling its operations effectively due to an outdated and inefficient cloud infrastructure.

Read Full Case Study

Explore all Flevy Management Case Studies

Related Questions

Here are our additional questions you may be interested in.

How can businesses leverage cloud computing for sustainable environmental practices?
Cloud computing enables businesses to enhance environmental sustainability by reducing carbon footprints through efficient energy use, optimizing resource use with analytics and AI, and fostering sustainable Innovation and Collaboration. [Read full explanation]
How does cloud computing influence the speed of innovation within organizations, and what examples illustrate this impact?
Cloud computing accelerates innovation by offering scalable IT infrastructure, enabling faster product development, improved collaboration, and Operational Excellence, illustrated by Airbnb, Spotify, and General Electric. [Read full explanation]
How is the adoption of serverless computing changing the landscape of cloud infrastructure management?
Serverless computing is transforming cloud infrastructure management by enabling cost savings, scalability, rapid deployment, while posing new security challenges, yet significantly driving Innovation and Agility. [Read full explanation]
What strategies can companies employ to ensure data privacy and security when adopting cloud technologies?
Organizations can improve Cloud Security by adopting a Cloud Security Framework, ensuring end-to-end Data Encryption, and implementing strong Access Control and Identity Management to protect data and comply with regulations. [Read full explanation]
What role does edge computing play in the evolution of cloud strategies, especially for IoT and real-time data processing applications?
Edge computing is crucial for IoT and real-time data processing by reducing latency, optimizing bandwidth, and improving security, necessitating its integration into cloud strategies for operational excellence and innovation. [Read full explanation]
In what ways can cloud computing enhance customer experience and service delivery?
Cloud computing enhances Customer Experience and Service Delivery through Personalization, Scalability, Reliability, and Innovation, enabling organizations to exceed customer expectations efficiently. [Read full explanation]

Source: Executive Q&A: Cloud Questions, Flevy Management Insights, 2024


Flevy is the world's largest knowledge base of best practices.


Leverage the Experience of Experts.

Find documents of the same caliber as those used by top-tier consulting firms, like McKinsey, BCG, Bain, Deloitte, Accenture.

Download Immediately and Use.

Our PowerPoint presentations, Excel workbooks, and Word documents are completely customizable, including rebrandable.

Save Time, Effort, and Money.

Save yourself and your employees countless hours. Use that time to work on more value-added and fulfilling activities.




Read Customer Testimonials



Download our FREE Strategy & Transformation Framework Templates

Download our free compilation of 50+ Strategy & Transformation slides and templates. Frameworks include McKinsey 7-S Strategy Model, Balanced Scorecard, Disruptive Innovation, BCG Experience Curve, and many more.