Software program as a Service (SaaS): Definition and Examples

Software program as a Service (SaaS): Definition and Examples

What Is Software program as a Service (SaaS)?

SaaS is a licensing mannequin by which entry to software program is offered on a subscription foundation, the place the software program is situated on exterior servers slightly than on servers situated in-house.

Software program as a Service is often accessed by way of an online browser, with customers logging into the system utilizing a username and password. As an alternative of every consumer having to put in the software program on their laptop, the consumer can entry this system by way of the web.

Key Takeaways

  • Software program as a Service (SaaS) is a software program licensing mannequin, which permits entry to software program on a subscription foundation utilizing exterior servers.
  • SaaS permits every consumer to entry applications by way of the Web, as an alternative of getting to put in the software program on the consumer’s laptop.
  • SaaS has many enterprise functions, together with file sharing, electronic mail, calendars, buyer retention administration, and human sources.
  • SaaS is simple to implement, simple to replace and debug, and might be inexpensive than buying a number of software program licenses for a number of computer systems.
  • Drawbacks to the adoption of SaaS embody knowledge safety, velocity of supply, and lack of management.

Understanding Software program as a Service (SaaS)

The rise of SaaS coincided with the rise of cloud-based computing. Cloud computing presents know-how providers by way of the web, which regularly contains entry to knowledge storage, networking, and servers.

Earlier than SaaS, firms trying to replace the software program on their computer systems needed to buy compact disks containing the updates and obtain them onto their methods. For big organizations, updating software program was a time-consuming endeavor.

With SaaS, customers can log in by way of the web or internet browser and hook up with the service supplier’s community to entry the actual service. Expertise firms, monetary providers firms, leisure, and utilities have led the enterprise world in adopting SaaS know-how.

SaaS Historical past and Traits

SaaS can hint its origins to an idea known as time-sharing, which was developed within the late Nineteen Fifties and early Sixties to make cheaper use of pricy processor time.

As {hardware} and computing turned less expensive, organizations made the shift to particular person possession of non-public computer systems utilizing on-premise software program however had been impeded by ongoing software program and {hardware} upkeep of the person computer systems.

Within the mid-90s, the expansion of the Web noticed the inception of the “on-line cloud,” which allowed organizations to entry software program from wherever. By 1999, Salesforce turned the forerunner within the SaaS house and each startups and trade giants together with Microsoft, Oracle, and SAP had been keen to maneuver towards it.

The SaaS supplier hosts the client’s software program and delivers it to authorized finish customers over the web, giving clients network-based entry to a single copy of an utility that the supplier created particularly for SaaS distribution. When new options or updates are launched, they’re then rolled out to all clients.

In the present day, SaaS is ubiquitous. With pure-play firms like Adobe, Salesforce, Shopify, and Intuit main the way in which, the SaaS market is predicted to succeed in $145 billion in 2022.

Benefits and Disadvantages of SaaS


SaaS presents a wide range of benefits over conventional software program licensing fashions. As a result of the software program doesn’t dwell on the licensing firm’s servers, there may be much less demand for the corporate to put money into new {hardware}. It’s simple to implement, simple to replace and debug, and might be inexpensive than buying a number of software program licenses for a number of computer systems.

SaaS has quite a few functions, together with electronic mail providers, auditing capabilities, automating sign-up for services, managing paperwork, and Buyer relationship administration (CRM) methods, a database of shopper and prospect data. SaaS-based CRMs can be utilized to carry firm contact data, enterprise exercise, product buy historical past, and gross sales leads.

The SaaS mannequin works properly for enterprise-level providers, corresponding to human sources. Most of these duties are sometimes collaborative, requiring workers from numerous departments to share, edit, and publish materials whereas not in the identical workplace.


Drawbacks to the adoption of SaaS focus on knowledge safety and velocity of supply. As a result of knowledge is saved on exterior servers, firms should guarantee it’s protected and can’t be accessed by unauthorized events.

Sluggish Web connections can scale back efficiency, particularly if the cloud servers are accessed from far distances. Inside networks are typically sooner than Web connections. Resulting from its distant nature, SaaS options additionally endure from a lack of management and a scarcity of customization.

SaaS Disadvantages

  • Elevated safety dangers

  • Slower velocity

  • Lack of management

  • Lack of customization

Examples of SaaS

• Google Docs

Launched in 2021, Google Docs is Google’s free on-line phrase processor the place people simply have to log in by way of an online browser for immediate entry. Google Docs permits you to write, edit, and even collaborate with others wherever you occur to be.

• Dropbox

Based in 2007, Dropbox is a cloud storage service that lets companies retailer, share, and collaborate on recordsdata and knowledge. For instance, customers can again up and sync pictures, movies, and different recordsdata to the cloud and entry them from any machine, irrespective of the situation.

SaaS expanded and as we speak helps dwelling workplaces and leisure each day as customers go browsing to Netflix, Zoom, DocuSign, Adobe, Shopify, and Slack.

SaaS Safety

As firms undertake cloud-based fashions for software program merchandise, issues come up concerning safety and privateness. The place administration was as soon as chargeable for the updates on in-house software program, companies now should depend on third-party administration of their encryption, identification and entry administration (IAM), knowledge privateness, and downtime or incident response. They need to additionally depend upon an enough stage of communication with technical help.

SaaS Pricing

A SaaS product is often cheaper for an organization than a conventional software program license, as setup and set up usually are not wanted. SaaS suppliers depend on subscription-based pricing fashions for patrons corresponding to tier-level pricing per individual or group or a flat charge annual price. Customers might also select an ad-based mannequin the place the SaaS earns income by way of promoting throughout the cloud house.

SaaS vs. IaaS vs. PaaS

“As a service” merchandise match into one in every of three major classes: SaaS, IaaS, and PaaS.

SaaS makes use of the Web to ship subscription software program providers, that are managed by a third-party vendor. Effectively-known SaaS examples embody Dropbox, Google Workspace, and Salesforce.

Infrastructure-as-a-service (IaaS) presents entry to sources corresponding to servers, storage, reminiscence, and different providers. It permits organizations to buy sources as wanted. Some widespread IaaS examples embody Amazon Internet Companies (AWS), Microsoft Azure, and Rackspace.

Platform-as-a-service (PaaS) offers a software program growth platform over the net. Particularly, it permits builders to focus on software program creation with out concern for storage and infrastructure.

What Is SaaS Advertising and marketing?

SaaS advertising and marketing makes use of customary advertising and marketing practices to advertise and purchase leads for cloud-based software program functions and data providers.

What Is B2B SaaS?

B2B SaaS merely refers to firms that promote software program providers to different companies. These merchandise assist organizations optimize all kinds of capabilities together with advertising and marketing, gross sales, and customer support.

How Is MRR Calculated for a SaaS Enterprise?

Month-to-month recurring income (MRR) is a crucial metric for SaaS companies that make the most of a month-to-month subscription pricing mannequin. The calculation of MRR is easy: multiply the typical income per buyer by the entire variety of accounts for that given month.

The Backside Line

SaaS or Software program as a Service makes use of cloud computing to supply customers with entry to a program by way of the Web. With out having to put in software program in-house, SaaS permits every consumer to entry applications usually by way of a subscription service. SaaS has many enterprise functions, together with file sharing, buyer retention administration, and human sources, and is utilized by functions corresponding to Netflix, Slack, Dropbox, and Google Workspace.

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