This study is written to provide guidance for evaluation SaaS solutions and comparing it with on premise solutions by developing an integrated framework which includes qualitative and quantitative aspects. The cloud computing is a fairly new technology that has many facets that remain mysterious to the average person. This study will seek to help familiarize SMEs and analysts with the SaaS concept and why it makes sense to subscribe IT applications online instead of owning them on premise. The variety of options and potential benefits of SaaS make it a consideration worth making. This study is written for SMEs particularly who want to use their IT budget and resources better than their competitors in the future. Although written with SMEs in mind, large organizations may also benefit from it due to hybrid deployment models. There are a several options when it comes to SaaS. SMEs must understand the nuances inherent in the different models they evaluate, along with understanding the difference between SaaS, hybrid, hosted, and in-house. If we make analogy such as most companies do not build their own electrical generating plants or their own water treatment facilities. They purchase only the utilities they really need without wasting any resources deliberately. Why not do that with computing in terms of fitness for purpose and fitness for use. This study covers the in depth analysis of SaaS service model and public deployment model of cloud computing. SaaS is never one-size-fits-all, however. IT departments should have a clear framework for evaluating and operating any new model, and a detailed supply chain IT impact assessment should be performed to determine if the SaaS model is a good match for the operation. Benefits such as rapid deployment, lower cost, and scalability must be balanced by other key decision criteria particular to an organization such as fit for use, fit for purpose, total cost of ownership (TCO), return on investment (ROI) and risk. Evaluations should consider both long-term ROI and short-term total cost of ownership.

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