What Is Software as a Service?

Software as a Service (SaaS) is a software licensing and delivery model in which applications are hosted and managed by a third-party provider and made available to customers over the internet. Rather than installing software on individual computers or servers, users access the software and its features through a web browser. SaaS has become an increasingly popular model for delivering a wide variety of applications, ranging from business productivity tools and customer relationship management systems to data analytics and security solutions.

Thanks to this model, companies don't need to own and maintain their own expensive servers, which is costly and needs extra professionals on site. Providers of SaaS offer full support, and will fix problems effectively and quickly. This option is also more reliable when it comes to safety.

Key Characteristics of SaaS

Cloud-based delivery

One of the defining features of SaaS is its cloud-based delivery model. Instead of installing and running software on local computers or servers, SaaS applications are hosted and managed by a third-party provider on their infrastructure. Users access the software and its features through a web browser, enabling them to work from any device with an internet connection.

Subscription model

SaaS applications typically operate on a subscription-based pricing model, where users pay a recurring fee to access the software and its features. This pricing model offers greater flexibility compared to traditional software licensing, as it allows businesses to only pay for the software they need and adjust their subscription as requirements change.

Automatic updates and maintenance

SaaS providers handle software updates and maintenance, ensuring that users always have access to the latest features and security patches. This reduces the burden on businesses to manage software updates and frees up IT resources to focus on other tasks.

Multi-tenancy

Most SaaS applications operate on a multi-tenant architecture, meaning that multiple users or organizations share the same underlying infrastructure and software instance. This approach enables SaaS providers to efficiently deliver their services to a large number of customers while reducing costs and streamlining maintenance and updates.

Accessibility from any device

One of the main benefits of SaaS is its accessibility from any device with an internet connection. Users can access SaaS applications through web browsers on desktops, laptops, tablets, and smartphones, making it possible for employees to work and collaborate from virtually anywhere.

Benefits of SaaS

Enhanced collaboration and remote work

SaaS applications are accessible from any device with an internet connection, enabling employees to work and collaborate from virtually anywhere. This has been particularly beneficial in the context of remote work and distributed teams, as it allows employees to access essential tools and data regardless of their location. You can access all information through multiple devices without any transfers or updates. Flexibility is a big plus of cloud-based software, as employees can access data worldwide and at any moment.

Saving costs

Maintaining your own server tends to be expensive and unpredictable. Not only do you need a lot of hardware, but also extra employees who understand and maintain it. With SaaS, you don't need to hire additional employees - the provider offers full support and maintains the software. Costs of your server can rapidly change and bring many obstacles. With Software-as-a-Service, you only need to pay a subscription, which is predetermined, so you cannot get surprised by any extra fees. If there's trouble with the software, it's up to the provider to take care of it.

Scalability

If you need to expand, you only need to change your subscription or contact your provider. This, of course, works in the opposite direction, too. Changing the subscription tier is simple; you can add or subtract users in just a few clicks.

Safe data storage

Data is safely stored and encrypted in a data center in your region and backed up in a second physical location. In addition, the provider offers disaster recovery when needed. In other words, it is almost impossible to lose your data.

Analytics

The software helps you track results, generate reports, and monitor usage. You can always see if people are using the software and in what amount.

Security

Providers invest heavily in security. Data centers encrypt all data, so you can rest assured it's in good hands. The GDPR and HIPAA assure keeping your data protected is a priority of every provider.

Focus on what's important

Instead of wasting time and money on maintaining your servers or setting up your software, you have everything ready to go and can focus on your priorities. Employees receive guides from the provider, so you don't have to teach them to use your custom software.

Disadvantages of SaaS

Utilizing Software-as-a-Service has many benefits, but depending on your preferences and conditions, there may be some disadvantages. It’s important to find a reliable provider, or data breaches could be a concern.

Potential for hidden costs

While the subscription-based pricing model of SaaS can be cost-effective, businesses should be aware of the potential for hidden costs. These may include additional fees for data storage, API usage, or premium support services. It's essential for companies to thoroughly review and understand the pricing structure of their chosen SaaS provider to avoid unexpected expenses and ensure that the solution remains cost-effective.

You need internet connection

You will need a good internet connection if you want your data to be stored in the cloud. However, proper software should have an offline function, too. Your changes will be stored in your device and shared to the cloud immediately once an internet connection is acquired.

Less customizations

Even though most providers offer a wide variety of customizations in their software, you might still lack some specific functions. Software manufacturers typically run one version of the software for all customers.

Dependance on the provider

The provider should work to your advantage and take care of security and updates for you. But some customers might see this as a disadvantage. For example, you must move to the newest version if there's an update. You must trust your provider to ensure good security and proper data storage and that fixes will be done effectively. Choose a provider you can trust, and who fits your requirements.

Questions

Should I choose SaaS?

Software-as-a-Service is a new growing trend. More companies decide to utilize it as time goes by. The advantages are strong – you save money and have access to already functioning and reliable software.

What if I need to change provider?

With a reliable provider, you can change software at any time and won't lose your data. You can download all the information and should be able to transfer it to your chosen software. Or you can use multiple Software-as-a-Service at once and eventually migrate to one of them after you decide which is the best for your company.

Are there any OS limitations?

Every good Software-as-a-Service should work with all browsers and support all the commonly used OS versions. With modern software, you should rest assured that it will work on your personal mobile phone of any model. The only limitation might be an internet connection, but most Software-as-a-Service offers an offline function.

Conclusion

As technology continues to evolve and businesses increasingly embrace digital transformation, the role of SaaS in the digital landscape is expected to grow even more prominent. It plays such a significant role, that according to a Gartner report, sales of SaaS solutions will continue to grow at over 23 percent per year. Advancements in artificial intelligence, machine learning, and data analytics will likely drive the development of more sophisticated and powerful SaaS applications, enabling businesses to automate tasks, gain insights, and make data-driven decisions more efficiently. Furthermore, the ongoing shift towards remote and hybrid work models will reinforce the importance of SaaS in enabling seamless collaboration and access to essential tools and data from anywhere.

The SaaS industry has experienced remarkable growth over the past two decades and especially during the pandemic, and this trend is anticipated to continue as more businesses recognize the benefits of cloud-based software delivery. New SaaS providers will continue to emerge, offering innovative solutions that cater to a wide range of industries and use cases. Existing providers will also need to stay agile and innovative to maintain their competitive edge, as they strive to enhance the features, functionality, and user experience of their applications.