SaaS (Software as a Service)

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Software as a Service (SaaS) definition & meaning

SaaS stands for “Software as a Service”, which is a software deployment model that allows users to use applications via the internet instead of installing them in a cloud computing platform. These applications can also be called web-based, on-demand, or hosted software. In the SaaS delivery model, which is a cloud-based service, the vendor handles all the technical issues. As users and businesses adopt SaaS solutions, it has become more popular in recent years.

History of SaaS

The history of Saas dates back to the 1960s when IBM and other mainframe computer providers offered services that include computing power and database storage to large organizations. In the 1990s, as the internet was gaining popularity, a new class of centralized computing has emerged, named Application Service Providers. ASPs offered services that include managing specialized business applications to organizations.

While SaaS is considered a modern version of the ASP model, there are also some significant differences. Most ASPs were managing and hosting third-party software; SaaS vendors are generally developing and managing their own software. SaaS solutions became very popular among end-users and organizations of every size with cloud computing solutions.


How does SaaS work?

The vendor gives customers network access to applications in the SaaS software deployment model. The vendor is responsible for all the infrastructure, and the software it provides. In SaaS solutions, customer data can be stored either locally or in the cloud. SaaS can be integrated with software with an API. While using a SaaS application, the user doesn’t have to worry about the hardware or software updates.


What is a SaaS application?

A SaaS application is a fully built software solution that can be accessed with a web browser or an application. Online email clients or office suites are the most common types of SaaS applications. These applications are hosted in the cloud, thus users don’t need to install the software on their computer.

The vendor takes full responsibility for the SaaS application’s delivery and maintenance. Some of the most popular types of SaaS applications can be listed as; Customer Resource Management (CRM), Enterprise Resource Planning (ERP), accounting and invoicing, project management, web hosting, and eCommerce, human resources, and data management.


What are the SaaS Characteristics?

The SaaS deployment model has some defining characteristics. The most significant one is web access, which allows users to use the SaaS application via a web browser. The SaaS model uses a multitenant architecture, meaning that the users and applications share a single, common infrastructure and codebase.

These components are managed from a central location, which is another characteristic of SaaS. SaaS also provides customization options that allow users to customize the solution to meet their needs, unique to every vendor and application.


Key features and benefits of SaaS

SaaS offers various benefits for both end-users and organizations. One of the most important benefits of SaaS is accessibility. An internet user can use SaaS applications, regardless of their location, device, and operating system. In the SaaS model, updates and patches are handled by the vendor, thus users don’t need to worry about managing the application.

The vendor is also responsible for providing the appropriate hardware required for using the application. Another important benefit of SaaS applications is cloud storage, which allows users to access their data anywhere and anytime. Cloud storage also simplifies sharing data with colleagues. Since it is a centralized platform, it is also easy to gather data for analytics, which can be beneficial for organizations to optimize their operations.


Advantages and disadvantages of SaaS at a glance

Saas offers very important advantages for organizations and end-users. However, it doesn’t mean that it also has some disadvantages. Here are the things you should consider:

Pros Cons
✔ SaaS solutions allow users to access the service anytime, anywhere ✘ Since the vendor manages everything, users are completely dependent on the vendor’s capabilities
✔ The vendor handles hardware or software installation, updates, or upgrades ✘ Most SaaS solutions come with customization options, but it is not possible to customize the application beyond that limit
✔ It eliminates all upfront costs and comes with pay-as-you-go payment models, which makes it very affordable ✘ It is slower compared to on-premise solutions, especially if the user has a slow connection speed
✔ Users can easily scale a SaaS solution to suit their changing needs ✘ Although the vendor takes care of security, it doesn’t allow users to implement extra security measures
✔ All the data is stored in the cloud, which makes it easier to access and safer
✔ SaaS solutions can be used immediately after subscribing, eliminating long deployment times
✔ Most SaaS solutions can be integrated with third-party apps
✔ SaaS applications allow users to easily collect, store, and analyze data allowing them to improve their methods
✔ SaaS vendors also handle of security the data and their applications
Advantages and disadvantages of SaaS

What are the examples of SaaS?

Email, office, and messaging services are the most common types of SaaS solutions. But there is a wide range of SaaS applications that services different needs. Google Docs and Microsoft Office 365 are very good examples of Saas (Software as a Service). There are also applications like Dropbox that enable users to store their files and access them anytime and anywhere. Another good example of SaaS applications is Zoom, which unifies cloud video conferencing and other communication features.


What’s a SaaS company?

A SaaS company hosts and makes an application available to users via the internet. The software it provides sits on the company’s infrastructure and enables users to access it remotely. The organization is responsible for creating, developing, hosting, and updating the applications.


What are the top SaaS companies?

SaaS companies became widely popular especially during the pandemic that changed most organizations’ working habits. Some of the most popular SaaS companies are Twilio, Xero, Zoom, Atlassian, GitHub, Slack, Figma, Fiverr, Mailchimp, Dropbox, BambooHR, Heroku, Adobe, Salesforce, Shopify, and Zendesk. Netflix is also a Saas company that uses follows a subscription-based model and gained popularity worldwide recently. Collibra, a data governance software platform, is also a Saas application.


How big is the SaaS market?

With the pandemic, the SaaS market’s growth exceeded expectations in recent years. According to the latest researches, SaaS was an approximately $225 billion market in 2020. In 2021, with a compound annual growth rate of 20.8%, it was increased to approximately $272 billion. At a compound annual growth rate of 12.5%, it is expected to reach $437 billion in 2025.


Can I customize SaaS software?

Since you don’t own the software in SaaS solutions, you can customize the SaaS application within the vendor’s limits. It makes SaaS applications one of the least customizable solutions in the market. SaaS applications focus on providing the application in a standardized way with few complexities, users can’t change the core product or modify it by building customizations. However, vendors are constantly improving their products to provide more flexibility to attract potential customers.


Is my data safe in the SaaS?

In SaaS solutions, the vendor takes care of the application security and users’ data. Security is a top priority for most SaaS companies, thus they are using the best possible security measures to keep themselves and their customers safe. However, data breaches are always a risk and probably one of the worst situations a SaaS provider can face.

You can always check which security measures does the SaaS vendor takes before choosing the service provider. Since most SaaS applications lack to flexibility to implement extra security measures, they can still be considered safe to keep your data in. To be extra cautious, you can always store your ultra-sensitive data somewhere else.


Understanding the difference

IaaS PaaS SaaS
Applications Customer Manages Customer Manages Provider Manages
Data Customer Manages Customer Manages Provider Manages
Runtime Customer Manages Provider Manages Provider Manages
Middleware Customer Manages Provider Manages Provider Manages
OS Provider Manages Provider Manages Provider Manages
Virtualization Provider Manages Provider Manages Provider Manages
Servers Provider Manages Provider Manages Provider Manages
Storage Provider Manages Provider Manages Provider Manages
Networking Provider Manages Provider Manages Provider Manages
IaaS vs. PaaS vs. SaaS

What is the difference between SaaS and PaaS?

The biggest difference between SaaS and Paas is that a PaaS vendor only provides hardware and software tools, allowing the customer to develop applications over the internet. Unlike SaaS, PaaS solutions don’t include the application. PaaS is very popular among organizations that create their own applications.

PaaS eliminates the need to manage hardware and software tools allowing developers to create applications. PaaS solutions allow users to save time and money while they are developing their applications.

What is the difference between SaaS and IaaS?

The most significant difference between SaaS and IaaS is that IaaS vendors only offer hardware, storage, and networking services. Unlike SaaS, IaaS gives full control of the infrastructure to the customer, allowing them to install the operating system and the applications they prefer. IaaS can be considered as a cloud-based alternative to on-premise infrastructure but eliminates the difficulties of maintaining an on-premise IT infrastructure.

What is the difference between SaaS and on-premise?

The most important difference between SaaS and on-premise solutions is that on-premise requires buying and maintaining all the hardware and the software required. On-premise solutions come with a high upfront cost and require high technical knowledge to maintain. Unlike other cloud computing solutions, on-premise is prone to having technical issues, however, it provides full control of the network, hardware, and software to the user.

What is the difference between SaaS and BaaS?

Although SaaS and BaaS look very similar, there are several differences between SaaS and BaaS. While Baas targets developers with additional services, such as storage, analytics, push notifications, dashboards, and social integration, SaaS targets end-users. Mobile application developers mostly prefer BaaS. It provides a fast and stable backend to run the applications on. BaaS providers also offer API and tools for different computer languages integrated with their solutions.

What is the difference between hosted and SaaS?

The main difference between SaaS and hosted is that users pay for the software and install the software at a hosting center. On the other hand, in SaaS, the vendor handles these steps for the customer. In hosted solutions, the customer is also responsible for software maintenance but has more control in hosted solutions over the software.

What is the difference between SaaS and managed services?

The difference between SaaS and managed services is that customers own the license to the software in managed services, and the subscription also covers support, upgrades, and training. Managed services can be implemented quickly like SaaS solutions, but they can also be configured to meet the customers’ specific needs. In general, managed services are more comprehensive solutions, but they are also more expensive than SaaS.

What is the difference between ASP and SaaS?

There are several differences between ASP (Application Service Provider) and SaaS, such as while ASP follows a single-tenant approach, SaaS follows a multi-tenant approach. This means in ASP the provider offers the infrastructure and a dedicated software installation. However, ASP lacks the scalability that SaaS can offer, while allowing more customization options. In most cases, SaaS is a more affordable option, especially for small and medium-sized businesses.


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