4 SaaS risks you should know about


It is true that the software-as-a-service (SaaS) model has provided companies with new possibilities of lowering costs, facilitating software integration, and speeding up business processes. Also known as ‘web-based software’ or ‘on-demand software’, SaaS offer companies programs and applications on a subscription basis instead of a proprietary license model which makes performing business processes far more convenient and flexible.

Despite the advantages, SaaS comes with many risks which, if neglected, can cause a host of problems for the organization. Here are 4 common SaaS risks every CIO or IT Manager should know about.

1)   Risk of usage

This refers to the risk of using a particular application that is both for a highly critical activity and that which contains sensitive data. If the application used does not fall into either of the two categories, then it can be classified as a low risk application. Highly critical activities that involve sensitive data are classified as risky due to its importance of the organization. Any interruption of such an activity or loss of data can be disastrous for an organization.

2)   Risk of data security

There is also a risk of data security as the programs and applications you use for your business are not owned by you but rather by the service provider or vendor. This means that any type of data security and performance falls not under your responsibility but under the vendor’s. It is thus important to know if the vendor is providing proper encryption of the applications or programs, for instance. Furthermore, an organization should also ask if the vendor provides a reliable user authentication system that is secured with efficient user and password control mechanism.

3)   Operational risk of SaaS provider

When using SaaS, there also tends to be a provider operational risk, that is, the risk of how the vendor executes their day-to-day applications. For this, organizations need to specify a particular service level agreement (SLA) and if the provider offers 24/7 support service. CIOs or IT managers should also inquire about a vendor’s disaster recovery strategy as it serves as an important risk management priority.

This is because, despite all the features an organization can avail, there will always be a risk of disruptions caused due to power outages, political and economic conditions, and damage done due to natural disasters. In such an event, an organization must ensure that a proper disaster recovery strategy and process is ready in advance to restore any sensitive data.

4)   Risk of neglecting legislation

The benefits of accessing and sharing data endlessly have become a modern feature of organizations.  Organizations, however, need to be cautious regarding what kind of data should be shared across different channels and whether it will revoke any legal boundaries in other countries. Organizations should ensure the extent of the damage caused by such instances and how liable it will be for breaking international or local government laws.

End note

Due to the aforementioned risks, organizations should always ensure that any agreement or terms of contract signed with the SaaS vendor should cover all aspects in order for SaaS to be used effectively and without any problems.


Article Name
4 SaaS risks you should know about
SaaS model has provide companies with new possibilities of lowering costs, facilitating software integration, speeding up business processes, performing business processes far more convenient and flexible.