When it comes to business software, there are two main types of solutions: on-premises software and software as a service (SaaS). On-premises software is what most people are familiar with. It’s installed on your own computers and servers in your office.
With SaaS, you access the software over the Internet, instead of installing it on your own computers. This type of solution is sometimes called “cloud-based” or “software as a service.”
In recent years, SaaS solutions have been among the most dynamic sectors in IT. Software as a service (SaaS) models is gaining popularity among many businesses for a variety of reasons, including flexibility and cost efficiency, working on a subscription basis, and being centrally positioned on a remote cloud network.
Gartner predicts that end-user spending on public cloud services will reach $396 billion in 2021, and rise 21.7% to $482 billion by 2022.
What is Software as a Service (SaaS)?
Software as a service (SaaS) is a technology for delivering apps over the Internet—as a service. Instead of installing and maintaining software, you simply access it via the Internet, saving time and money.
SaaS has many advantages over on-premises software. First, it’s always up to date because the service provider updates the software automatically. You don’t have to worry about installing new releases or patches. Second, it’s easy to get started. There’s no need to install anything or configure servers. Third, SaaS is more affordable than on-premises software because you pay only for what you use. And finally, SaaS is scalable, so you can add more users or features as your business grows.
There are many different types of SaaS applications, including email and messaging apps, calendaring apps, document collaboration tools, and online databases. Common examples include Microsoft Office 365 and Salesforce.com.
If you’re thinking about using SaaS for your business, here are some things to keep in mind:
- Make sure the app meets your needs. Not all apps are created equal. Be sure to research what’s available and choose an app that fits your specific requirements.
- Check out the provider’s security and privacy policies. This is especially important if you’ll be storing sensitive data in the cloud. The provider should have strong security measures in place to protect your data from unauthorized access or theft.
- Consider how the app will integrate with your existing systems. Many SaaS apps can be integrated with other applications used by your organization, such as email, CRM, and ERP systems.
Be sure you understand the terms of service. The provider’s terms of service should spell out what you’re allowed to do with the app and what, if any, restrictions there are on usage.
How Does It Work?
With SaaS, you purchase a subscription to use a particular application or suite of applications. The provider hosts and manages all of the necessary infrastructures, including servers, networking gear, storage, and applications.
You simply connect to the software through a web browser on your computer or mobile device.
Some of SaaS characteristic includes:
- Multitenant Architecture: In a multitenant architecture, all users and apps use the same shared infrastructure and codebase, which is centrally maintained by the SaaS vendor. Vendors can innovate more quickly because their clients are all on the same infrastructure and codebase.
- Rapid Deployment: You can get up and running in a matter of minutes, if not seconds. The ability for each user to effortlessly modify applications to match their company procedures without impacting the underlying infrastructure. Because SaaS is structured, these customizations are unique to each business or consumer and are automatically kept during updates due on
- No upfront investment: Because you pay as you go, there is no need to make a large capital expenditure on hardware or software.
- Scalability: You can add or remove users easily, and the service provider will scale the infrastructure to meet your needs.
- Flexibility: The service can be tailored to fit your specific needs.
- Location independence: Users can access SaaS apps from any device that has an Internet connection.
Example of SaaS
Today, there are many SaaS solutions available. Here are a few examples:
- Salesforce is a CRM system that helps sales teams manage their customer relationships.
- Google Workspace is a suite of apps from Google, including Gmail, Google Calendar, and Google Drive.
- Office 365 is Microsoft’s SaaS offering that includes the Office productivity suite (Word, Excel, PowerPoint) and other services such as Exchange Online for email and Skype for Business for video conferencing.
- Asana is a web-based project management tool that helps teams track their work.
- Zendesk is a customer service platform with features like ticketing, self-service, and chat.
- QuickBooks Online is accounting software that helps small businesses manage their finances.
- Notion is an online productivity tool that helps teams organize their work.
- Airtable is a spreadsheet-like app with features for building custom databases.
Pros and Cons of SaaS
Like every other technology, SaaS has its pros and cons:
Pros of SaaS:
- Reduced upfront costs: You can pay as you go, so there are no large up-front costs like with traditional software licenses.
- Increased flexibility and scalability: The service can be tailored to fit your specific needs, and it’s easy to add more users or capacity when your business grows.
- Low maintenance costs: The provider manages the hardware
Cons of SaaS:
- Potentially higher long-term costs: If your usage increases over time, you may end up paying more than if you had bought a traditional software license.
- Limited customization: The service is what it is—you can’t change or add features like you can with traditional software.
- Potentially slower response times: Since the app and data are located in the cloud, your users may experience longer response times than if the apps were installed on their local devices.
- Security concerns: With sensitive company data moving to the cloud, security is a top concern for many businesses. You need to be sure that your provider has effective security measures in place.
Why is SaaS So Popular?
Despite budget constraints, especially for small and startup businesses, customers are increasingly adopting the subscription-based pricing model to meet rising IT demands.
Established businesses aren’t ignoring software-as-a-service. Instead, they’re adopting the as-a-service business model to meet a broad range of demands with agile, modern solutions.
In the long run, software as a service solution is here to stay. Small and large businesses alike are using SaaS in some manner, and as these options grow in scope, this proportion will rise.
Whether you love it or hate it, the Software-as-a-Service revolution is in full swing. More businesses are moving to subscription pricing models and benefiting from increased agility, scalability, and innovation. If you’re not on board yet, it’s time to reconsider what SaaS can do for your business.