The Software as a Service (SaaS) delivery model can be an affordable and scalable way for companies to get software, especially human resources software for small and mid-sized businesses. But to avoid security and availability problems, here are some things to keep in mind when you pick a vendor.

Be sure to ask yourself, and the vendor, these questions before making any decisions:

1. Is it really “pay as you go”? One of the advantages of SaaS software is that you pay a regular fee (usually every month) instead of shelling out a big lump sum to get your own copy. But many vendors ask customers to pay licenses fees up front for as much as a year in advance. That’s fine if you’re ready to make that kind of commitment. But if not, keep shopping.
2. Will your data always be available? You’ll need to know what kind of contingency plan the vendor has when there’s a problem with the primary data center. Also, many vendors offer service agreements that include harsh penalties (against the vendor) if any information is lost. That might be a good indication.
3. How about your own infrastructure? One selling point for an SaaS application is that it’s not on your network, so for the most part, it’s not using your company’s computing resources. But companies still need to look at their own networks before they commit to on-demand software. For example, if all this work is getting done over the Internet, a reliable connection is a must.
4. Can you try a demo? The answer should be yes, considering all the vendor has to is give you access to the application temporarily. But if they don’t offer a demonstration, that’s probably a bad sign.

And finally, remember not to buy too much into the hype. SaaS is making a lot of waves right now, but a lot of companies are still offering the traditional buy-and-install applications that might give your company exactly what it needs. (For interesting takes on the problems with the SaaS model, go here and here.)