What Is SaaS? Meaning and Examples
April 4, 2023 Max 11min read
Definition of SaaS
Software as a Service (SaaS) is a cloud-native approach to delivering software to users. Instead of buying and installing software, SaaS users subscribe to applications accessible from any compatible device over the internet. These servers may get located far away from the user’s physical location.
Are you tired of having to update and maintain your software applications on your own constantly? Do you wish for a more effective method to gain access to and utilize the most recent technology without the hassle of ongoing maintenance?
Well, you’re in luck because Software as a Service (SaaS) is here to solve those problems for you!
But what is SaaS?
Users can access software applications via the internet thanks to SaaS, a cloud-based technology. This means they don’t have to worry about the technicalities of infrastructure, maintenance, or updates.
Unlike traditional software, where users pay a one-time fee for a perpetual license and additional costs for maintenance and updates, SaaS operates on a subscription basis. In SaaS, users pay a recurring fee for access to the software solution.
This means that businesses don’t have to worry about purchasing expensive hardware or maintaining the software, as the provider takes care of all of that.
But that’s not all – SaaS has several advantages over traditional software. Since the provider manages the software, it’s always up-to-date, ensuring users can access the latest features and security updates.
Seems fascinating right?
This article will explore the nuances of SaaS and other cloud-based technologies. Let’s dive deeper into the world of SaaS and see what it has to offer!
Understanding SaaS Technology
The ascent of cloud-based computing coincided with the emergence of SaaS. Cloud computing provides specialized services via the internet, typically involving access to servers, networking, and data storage.
Before the advent of SaaS, businesses seeking to update their computer software had to procure CDs containing the updates and install them onto their systems, which could be tedious for larger organizations.
However, SaaS enables users to log in via the internet or web browser and connect to the service provider’s network to gain access to the desired service.
Companies in various sectors, such as technology, finance, entertainment, and utilities, have been at the forefront of adopting SaaS technology.
We hope you have understood SaaS meaning. Let us look at the types.
Types of SaaS technology
SaaS solutions come in various types, each designed to serve specific business needs. Let’s take a closer look at some of the most popular ones!
- CRM Software: Managing customer data, tracking customer interactions, compiling business information, and automating sales processes are all made easy with CRM software. This software helps you stay on top of your customer relationships, ensuring your business runs smoothly.
- ERP Software: If you want to integrate various business functions into a complete system, ERP software is your go-to solution. It improves efficiency and enables information sharing across the organization, helping you streamline operations.
- Accounting Software: Organizing finances and ensuring proper tracking is crucial for business growth and compliance. Accounting software can help you keep things in order so that you can focus on other aspects of your business.
- Project Management Software: From planning and scheduling to resource allocation and deadline communication, project management software has got you covered. It’s an excellent method to guarantee that your projects are finished on schedule.
- Email Marketing Software: Engaging with customers via email is a powerful way to improve customer engagement and sales. Email marketing software optimizes message delivery and automates marketing emails so that you can focus on other aspects of your business.
Other types of SaaS applications include billing and invoicing, collaboration, web hosting, and human resources software. With so many SaaS products available in the market, you can select and combine different solutions that best meet your needs.
Let’s examine how developers build SaaS solutions.
The basic idea behind SaaS architecture is to have a single version of the application that all customers can use. This version is installed on multiple machines to ensure that it can handle high traffic and usage, also known as horizontal scaling.
Sometimes, a second version of the application provides select customers access to pre-release versions for testing purposes. Each version of the application usually depends on a unique code.
Now, here’s an interesting fact: not all SaaS solutions use multitenancy to manage a large number of customers cost-effectively.
Multitenancy means multiple customers can use the same application instance, keeping their data separate. Whether or not multitenancy is necessary for a SaaS solution is controversial.
Moving on to the types of SaaS solutions, there are two main varieties: vertical and horizontal.
Vertical SaaS aims to meet the specific needs of a particular industry, such as healthcare, agriculture, real estate, or finance.
On the other hand, horizontal SaaS focuses on a specific software category, such as marketing, sales, developer tools, or HR. It is applicable across various industries.
SaaS Delivery Models
Let’s discuss the different deployment models for software as a service (SaaS).
Public cloud SaaS Delivery
Public cloud SaaS is like renting a house – you don’t own it, but you have access to everything you need while you’re there.
In this model, the software and data reside in a cloud environment accessible to anyone with an internet connection. It’s highly scalable and flexible, but it comes with some security risks and less control over data.
Private Cloud SaaS Delivery
Private cloud SaaS is more like owning a house – it’s yours, and you have complete control over who has access to it.
With private cloud delivery, the software and data get hosted in a dedicated environment that’s only accessible to a specific organization or user. This model offers greater control and security, but it can require more resources and be less flexible than public cloud SaaS.
Hybrid Cloud SaaS Delivery
If you want the best of both worlds, then hybrid cloud SaaS delivery might be the way to go. It enables businesses to profit from the advantages of both public and private cloud settings.
Sensitive data and applications can get stored in a private cloud or on-premises environment. At the same time, you can use public cloud resources for other applications to take advantage of their scalability and flexibility.
With a hybrid cloud, data and apps can move between the two environments, which is excellent for businesses with fluctuating resource needs.
Many organizations choose a hybrid cloud approach to meet regulatory and data sovereignty requirements or simply for greater flexibility and cost savings.
SaaS vs. PaaS vs. IaaS
Here is a table comparing SaaS, PaaS, and IaaS:
|Definition||Software delivered over the internet by a third-party vendor.||Platform delivered over the web to enable developers to build and deploy applications.||Virtualized computing resources, such as servers and storage, rented on a pay-per-use basis from a third-party provider.|
|Managed by||Third-party vendor||Enterprise or third-party provider.||Third-party provider|
|Resources||Applications||Framework for software creation and deployment||Virtualized computing resources, such as servers and storage.|
|IT Staff||No need for IT staff to install or manage software.||Developer staff needs to manage applications.||No need for IT staff to manage physical hardware.|
|Security||Concerns regarding data security.||Businesses need to ensure data security.||Businesses need to ensure data security.|
|Examples||Google Workspace, Dropbox, Salesforce, SAP Concur.||Google App Engine, AWS Elastic Beanstalk, Heroku.||AWS, Microsoft Azure, Google Compute Engine.|
Examples of Popular SaaS Applications
Let’s talk about some famous SaaS examples.
Google is a household name that we all know and love. Their G Suite, now known as Google Workspace, is a prime example of a SaaS.
With apps like Gmail, Contacts, Calendar, Meet, Chat for communication, and Drive for storage, it’s no wonder why Google is one of the leading tech companies in the world.
Microsoft 365 is another popular software suite available in various subscription plans. It’s aimed at serving different market needs and segments with home, business, and enterprise apps. The apps include Word, Excel, PowerPoint, Microsoft Teams, Outlook, OneDrive, and more.
Like Google Workspace, these apps are available online and can be accessed anywhere.
Another one of the great SaaS examples is Salesforce. It is an American cloud-based software company specializing in customer relationship management (CRM) services and software. It’s been around since 1999 and is considered one of the leading examples of SaaS.
Its flagship CRM software provides customers with a wide range of software categories: Commerce, Sale, Service, Data, Marketing Cloud, and more.
If you need cloud storage and file synchronization, Dropbox is your go-to SaaS.
It creates a central folder on your computer, which then gets synchronized to Dropbox’s servers and other devices where you’ve installed the software. You can sign up for a free account and upgrade for more storage and features because it operates on a freemium business strategy.
Last but not least, we have Zoom. During the pandemic, Zoom became a household name as it offered a platform for remote video conferencing and communication. It’s a collaborative platform that allows users to set up virtual video/audio conferencing, screen-sharing, live chats, webinars and more.
You can easily set up Zoom meetings and access them online, making it a popular choice for remote work and education.
Advantages of SaaS
Let’s dive into the benefits of SaaS that your business can take advantage of:
- SaaS eliminates upfront costs and ongoing costs like maintenance and upgrades.
- SaaS apps are easily downloadable and virtually maintenance-free from the user’s end.
- Pay-as-you-go SaaS pricing model allows businesses to reduce costs by paying only for the software they use.
- Subscription-based nature of SaaS platforms eliminates financial risk.
Better Time Management
- SaaS applications require merely an internet connection and the acquisition of a log-in.
- Maintenance responsibilities are shifted to the vendor, thus eliminating downtime or extra work hours required to upgrade standard software.
Efficiency and Convenience
- SaaS offers fantastic flexibility as the SaaS application development company externally hosts the software.
- Businesses can change their usage plan without worrying about giving advance notice.
- Given their web-based use, you can access SaaS solutions from anywhere in the world.
- With SaaS technology, users log in to the latest upgraded version of their SaaS solution.
- It is the SaaS vendor’s responsibility to manage updates and upgrades, removing the need to install patches.
- SaaS guarantees that the customer will always have access to the most recent edition of the application.
Reliable Service Levels, Backup Procedures, and Data Recovery Assurance
- SaaS gives the user a guarantee of how well it will work.
- SaaS supports automated backups without user intervention, ensuring data integrity.
- SaaS solutions can keep an organization’s business information safer than traditional software.
- Multiple geographically separated data centers deliver SaaS applications, ensuring continuity of services.
Excellent Adoption Statistics
- SaaS solutions are delivered over the web, resulting in rapid adoption by the workforce.
Test Before You Invest
- SaaS providers offer free trials of the products and that too of the full version.
- Businesses can take advantage of ‘prep time’ to gauge the solution’s viability before investing in the systems.
Disadvantages of SaaS
Here are some potential drawbacks of using Software as a Service (SaaS) solutions, which you might want to consider before making a decision:
One potential disadvantage of using a hosted solution is that you may have less control over your applications. When you use an in-house software application, you have complete control.
With a SaaS solution, you will be relying on a third-party provider to manage critical business applications. If you’re uncomfortable with that, there may be better choices than SaaS.
While SaaS is gaining popularity, not all software applications offer a hosted platform. You may still need to host particular applications on-site, mainly if your company relies on multiple software solutions.
Since SaaS software is web-hosted, you need an internet connection to use these applications. Suppose your internet service goes down or your workers are in an area with poor connectivity. In that case, you may need access to your software or data.
Functionalities and Features
Hosted applications may offer different functions or features than you would find in a client/server counterpart. You should evaluate each application on a case-by-case basis to ensure your SaaS solution offers the features you need to do business.
Lower Performance Rates
SaaS applications may run slightly slower than client/server applications. Although the speed is still good, you should be ready for a less-than-instant computing environment.
Trends and Future of SaaS
AI-powered SaaS Solutions
You won’t be shocked to learn that AI has wholly transformed the digital world, and the SaaS sector is no exception.
AI will disrupt the SaaS model by providing hyper-personalization that meets customer needs in any market.
You can use AI for high-quality support services, more accessible code review and maintenance, and security breach identification. AI also enables advanced user guidance and SaaS onboarding.
Machine Learning in SaaS
People often use machine learning and AI interchangeably, but they are different concepts.
Machine learning focuses on learning capabilities and processing data. ML can learn about customer preferences, process large amounts of data, and optimize internal collaboration and operations. ML also ensures superior data security via advanced pattern recognition.
Salesforce is an excellent example of a SaaS product that uses ML.
In the early days of SaaS, products, and services couldn’t be merged, and customers had to use third-party solutions. But now, more SaaS vendors offer integration capabilities, which entices businesses that prefer a hybrid system.
Integrations also eliminate human error through partial automation of processes. Zapier is an excellent example of seamless automation.
Rise of Micro SaaS
With more players entering the SaaS market, we see companies adapting to the competitive environment by creating smaller, more flexible products run by very small teams or even a single person.
Micro SaaS products are often extensions or add-ons to larger products that optimize the experience for particular industries. These lower-risk products are relatively inexpensive to run and serve narrower customer groups and niches.
Mobile-first SaaS Solutions
As the world moves into a more mobile-first era, we’ll start seeing more SaaS products heading in the same direction. It comes with many challenges, such as accommodating neurodiverse and senior users, people with sight and hearing impairments, and creating interfaces for mobile users.
Areas that gained the most attention in 2023 were improved accessibility features, enhanced mobile personalization, AR and VR-based immersive mobile experiences, and enhanced responsivity, gesture design, and ML-based intuitive filtering abilities.
Low-code Development Platforms in SaaS
No-code and low-code development platforms have been on everyone’s radar for the last few years, and the SaaS industry is no exception. Low-code platforms allow less “techy” startups and individuals to enter the scene, diversifying the market.
Low-code platforms reduce costs, enabling developers, designers, and product executives to spend more time and money on innovation.
Vertical SaaS for Tailored Solutions
Horizontal and vertical SaaS have different focuses. Horizontal SaaS offers products and services that can be used across multiple industries, while vertical SaaS focuses on specific industries.
Vertical SaaS offers more tailored solutions and in-depth industry expertise. For example, dental practices might use Curve Dental, a vertical SaaS product, rather than a horizontal SaaS product like Salesforce.
The future of SaaS is full of endless possibilities and exciting innovations. The SaaS industry is on the verge of a revolution. Now that you have completely grasped an understanding of what is SaaS, time to make the best use of it.
Don’t miss out on the incredible potential that SaaS has to offer.
SaaS and regular software applications differ in their architecture. SaaS uses a multi-tenant approach where users share the same database and application while their data is kept private. Regular software applications use a single-tenant architecture where each user gets their servers, OS, hardware, and database management system, which is less efficient.
SaaS usage involves risks such as cloud misconfigurations, third-party risks, supply chain attacks, zero-day vulnerabilities, insufficient due diligence, non-compliance, and unclear responsibilities. Users must be aware of these risks and take appropriate measures to mitigate them.
In 1999, Salesforce’s CRM platform became the first SaaS solution built from scratch and paved the way for the start of the SaaS industry. The platform achieved exceptional growth and established the foundation for adopting cloud-based software solutions in the following years.
Typically, developing a minimum viable product (MVP) will cost between $50,000 to $150,000. However, several factors will impact the final cost. These factors include the complexity of the platform, the number of development stages required, the type of solution, the type of team involved, and the location of the development team.