Software as a Service (SaaS) refers to software that is licensed on a subscription basis and delivered through the cloud (internet). As opposed to the traditional model of physical "on-premise" software that must be installed and maintained on an on-site computer, SaaS POS is a restaurant POS software that is leased to customers and downloaded as an application over the internet.
SaaS technology was first introduced back in the 1960s and has expanded to account for an estimated $1 of every $6 spent on software by 2017. Despite its massive adoption, SaaS technology is still a fairly new concept in the foodservice industry. Traditional point of sale systems that are installed and maintained on a physical, back-office computer system continue to dominate the POS marketplace as they have for over a decade. However, cloud POS systems that are tailored to foodservice businesses have come a long way in the past few years. As a study of 2015 POS trends shows, restaurant executives are now prioritizing cloud-based solutions and POS software that is licensed on a SaaS model. As cloud-based systems become more common in the restaurant industry, restaurateurs are starting to realize that cloud-based solutions provide a more cost-efficient and, typically, better overall experience than their outdated legacy predecessors.
Traditional POS vendors require restaurant owners to invest tens of thousands of dollars to acquire the computer hardware and software. Once these systems have been purchased, restaurant owners have to employ an IT professional to come in and set up the computer, implement the back office server, and install the software. In addition, restaurants have to pay to maintain and upgrade the system as it gets outdated or require new features.
Restaurants that use SaaS point of sale systems pay a monthly or yearly subscription fee for the rights to use the software application. While restaurant owners still have to purchase the necessary hardware to run the software, cloud POS systems are typically designed for consumer-grade iPad or Android tablets. Although iPad hardware is slightly more expensive than Android, both are far more cost-effective than the computer systems that traditional POS customers purchase or lease from their providers. Instead of investing thousands in a POS computer and software upfront, restaurant owners using cloud POS systems only have to pay for the cost of the tablet hardware ($1k - $3k) and the first month’s subscription fee (typically $50-$150/month) to acquire the system.
Legacy POS providers are often quick to offer customers discounts on upfront costs for hardware and software because they know that they will make that money back tenfold in upgrades, support, and other miscellaneous charges over the lifetime of the customer. The further away it gets from the initial acquisition costs, the more time and money restaurant owners expend maintaining and updating their systems. Although they often come to despise their outdated POS and provider, after a while they simply "can’t see the forest for the trees;" they become too involved and invested in their existing system to search for an alternative solution.
Restaurant owners who pay a monthly subscription through a aren't trapped in a long-term contract or commitment. If they are ever unhappy with the software or provider, they can cancel their subscription at anytime without worrying about losing thousands of dollars. Because the vendor is constantly working to keep the business, the SaaS model tends to lead to better, more attentive customer service. The POS vendor literally has to earn their customers’ business month after month, so they cannot simply disappear once they acquire a new customer. Instead, they have to live up to the service aspect of SaaS by troubleshooting and releasing updates with new features on a regular basis, and by making themselves easily available to their customers. This tends to lead to a better and more successful POS experience for customers.
Although most SaaS POS vendors are involved in the on-site installation process to ensure that new customers get off to a strong start with their system, the installation process is far less intensive than it is with traditional POS systems. While there is still some wiring and general networking required to set up the system (particularly in a full service environment), the restaurant POS software does not need to be installed by an IT person. Instead, once the network is configured correctly and all of the terminals, printers, and additional equipment are connected properly, the restaurateur can simply download the software to all of his connected devices via the internet. Each vendor has its own installation process and it likely varies based on the complexity of the individual restaurant setup.
Since SaaS POS software is distributed and maintained through the cloud and accessible online, customers are not tied to an on-site computer. Rather than having to be in the restaurant with physical access to the computer system, restaurateurs who use cloud POS solutions can access all of the data and information stored in their POS system remotely. They can log in to their accounts from anywhere, using any device with internet access, and view all of the data stored in their system in real-time. This provides a level of flexibility that is simply unparalleled by traditional POS solutions and is a huge help to owners and operators who practically live in their restaurants.
Prior to the SaaS model, POS systems could only be supported on-site. Traditional models require restaurant owners to pay an IT professional to come in and maintain and troubleshoot their systems. Not only is it very expensive, but it also means that they have to wait for an IT person to arrive and address the issue before they can continue using the system. A restaurant’s POS is a mission critical system. If it's not working properly or cannot be accessed during business hours, it can be catastrophic to the restaurant’s operations and to the guest experience. SaaS POS systems can be accessed and supported remotely, which eliminates the need for on-premise support and allows for more timely assistance. Depending on their level of support, restaurant managers or employees can call a critical support line and fix the system immediately over the phone.
As the name implies, SaaS POS providers are not simply selling a product; they are selling a service. Instead of having to wait for and purchase yearly software upgrades, cloud-based POS vendors are constantly troubleshooting their software and releasing updates with bug fixes and new features. Rather than waiting for the IT person to arrive and install the newest software upgrade, the system updates can be downloaded to all connected tablets and terminals over the internet, in real-time. Not only are restaurateurs able to update their software without disrupting their ability to serve guests, but these updates are also included in the monthly subscriptions that they pay for the restaurant POS software. They don't pay extra to have the latest version of the software.
Traditional POS systems store all of the data that they collect in an on-premise computer. Some store full, unencrypted credit card information and customer data for months at a time, making them incredibly susceptible to data breaches (as in the cases of the Target and Home Depot breaches). In addition, the back-office server can only store so much data at any given time, so many traditional POS customers are only able to save customer data for a few months at a time before it has to be removed from the hard drive completely.
SaaS systems rely on cloud-based servers to store data. Many cloud-based POS providers have implemented strict encryption processes so that the full credit card data is never saved in the system. Since these systems are hosted on the web, there is also an unlimited amount of storage space. If a customer questions a charge from six months ago, a restaurant can log in to their account and pull up the check in seconds to provide proof of the transaction. Restaurants that use cloud-based solutions are also not at risk of losing any data or information when their system crashes since no data is stored on the physical hardware.
While foodservice has historically been slow to adopt new technologies, every other aspect of the industry is incredibly fast-paced. Foodservice businesses need a POS system that can keep up. Once software is installed on an on-premise computer, it is very difficult to make changes to the system. Even something like adding a new lunch special to the menu can require the entire system to be rebooted. Cloud POS systems are more adept to changing circumstances. Making changes to the dining room table layout or adding new items to the menu can be done in seconds. Changes instantly sync to all connected terminals and tablets. If a traditional POS computer goes down, it can take days or weeks for an IT professional to arrive and setup a new system. Restaurants who use a cloud-based solution can just add a new tablet and download the software application in seconds in the event one of their tablets breaks or they want to add an additional tablet as the business grows.
Despite all the cost and time savings, and the assortment of other benefits SaaS POS systems offer, many restaurant owners are still struggling to abandon the traditional models that they have poured their time and hard-earned money into for years. However, as these modern SaaS POS systems continue to become more commonplace in restaurants, operators will continue to realize at an increasing rate that switching to a SaaS POS is not simply another POS-related investment, but a smarter alternative - a solution to many of the pain points they have endured for years with their traditional restaurant POS software.