SAP Logo LeanIX is now part of SAP

SaaS Vs Managed Services: What's Best For You?

Posted by Neil Sheppard on August 8, 2023

SaaS Vs Managed Services

Software-as-a-Service (SaaS) is an iteration of the traditional managed services provider (MSP) model. Let's consider the pros and cons of each so you can make the best choice for your organization.

Software-as-a-Service (SaaS) can be seen as a cloud innovation of the traditional managed services provider (MSP) model. In fact, SaaS can be viewed as a way to reduce costs while providing heightened levels of flexibility when it comes to buying software.

At the same time, SaaS also has some disadvantages. For example, the flexibility SaaS offers has a downside: Empowering your team to source and configure the applications that work best for them can quickly leave you without practical oversight of your application portfolio. This opens you up to unexpected costs and security risk.

To make SaaS viable and give you the choice between cloud and managed services, you need a way to enable your teams to source their own SaaS applications without sacrificing oversight.

Meanwhile, let's look at SaaS vs managed services to understand the advantages and disadvantages of each, so you can determine which is best for your organization.

What Are 'Managed Services'?

The 'managed services' model calls for a business to hire a third-party agency to manage and maintain software tools for a set business capability. The agency will find the right software for you to use and arrange for its implementation and upkeep.

This could be a single application, your entire application portfolio, or anything in between. The managed services provider (MSP) will then essentially become an out-sourced IT department for your organization, at least for the applications they provide.

For example, a startup may have an MSP provide them with an email platform, chat system, document collaboration tool, etc. The MSP will then implement that toolset, co-ordinate the applications to work together, and maintain their function.

Issues and downtime will be managed by the MSP and their customer service team will be your employee's point of contact. It's a quick and cost-effective solution for organizations that are scaling up quickly.


Cost savings:

CompTIA research found 46% of managed services adopters saved at least 25% of their IT budget by out-sourcing their application management to an MSP.


MSPs are familiar with their preferred tools and maintain knowledge-sharing among their organization, meaning you're buying best-practice use as well as a toolset.


MSPs have services familiar to them ready to roll out to your organization at any time, often much faster than you can do in-house.


Loss of control:

Your choices with MSPs are often take it or leave it, meaning the toolset they provide is their definition of best-of-breed and your say in it will be limited.


Likewise, if the MSP folds or changes structure, you could be left in the lurch without the essential tools you need.


On the other hand, if you are unhappy with the services an MSP provides, or decide to change the way you do things, you may still have a 12-month contract to complete before you can.

What is SaaS Management?

Software-as-a-Service (SaaS) management is the online version of a managed services provider (MSP). Rather than hiring an agency to provide software tools for you, you pick your own cloud-hosted tools from the internet through self-service.

The focus of a SaaS company is to provide an essential tool to an organization quickly and easily. Because SaaS applications are cloud hosted, they don't need to be implemented in your IT estate, and because they're user-friendly, the only management they require is the co-ordination of their use within your organization.

SaaS applications are also infinitely scalable. Anyone in your organization can make use of a SaaS application as they wish, or use an alternative platform if they prefer.


Even more cost savings:

Since SaaS applications don't need management, they're often the most-affordable option for organizations.

Ease of use:

SaaS applications are designed to be self-service and require little configuration or setup.


SaaS applications can be used as needed in many cases and offer short, flexible contracts.



SaaS applications are hosted off-site in the cloud, and security – including security around of your data stored in the application – is maintained by the SaaS vendor.


Given how simple SaaS applications are to implement, it's far too easy to end up with different teams in your organization using different tools (sometimes to do the same thing), which makes collaboration more difficult.

Lack of oversight:

While allowing your employees to choose and implement their own SaaS applications frees you from having to do it for them, it can make it almost impossible to see or understand what your true SaaS spend is.

SaaS Vs Managed Services

Software-as-a-Service (SaaS) is a modern, digital alternative to managed services, but there are pros and cons to each option. While using a managed services provider (MSP) means giving over control of your application toolset to a third party, still you have one entity responsible for oversight of your IT landscape.

With the SaaS model, each application is maintained by a separate vendor, and within your organization, it can mean applications are maintained by a host of different departments.

At the same time, the SaaS option is:

  • more cost-effective
  • more modern
  • more popular with employees
  • less resource-intensive

Choosing SaaS can mean that oversight of your application portfolio rapidly gets out of control. Nevertheless, SaaS applications are preferable to services managed through an MSP, except for the loss of oversight you face.

Without a full overview of your SaaS portfolio, you face escalating costs from overlapping and expired contracts, as well as SaaS security risks. Overcoming these challenges is key to avoiding unexpected costs and threats from hidden application use.

Subscribe to the LeanIX Blog and never miss a post again!

Related Posts