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Home » What is SaaS (Software as a Service)? Here is What you Want to Know!

What is SaaS (Software as a Service)? Here is What you Want to Know!

If you’ve just begun to explore Saas, then this is the best place to start finding out what it can do for you. This article helps you learn SaaS meaning, how it differs from traditional Software, its advantages and disadvantages, what type of business is suitable for SaaS, and more. But first, let’s begin with what SaaS means.

What is SaaS?

SaaS, short for Software as a Service, is a software distribution where cloud providers host software applications and deliver the services to end-users across the internet. It bypasses the need for the end-user to install and maintain the Software as well.

Thus, users who want to use the Software will simply access it through the internet, which frees them from dealing with complex hardware and software management issues.

Users do not have to buy or even update their Software, and all they need is an internet connection. This setup makes it possible for Independent Software Vendors (ISVs) to contract third-party cloud providers to host their applications. However, in more prominent companies (i.e. Microsoft), cloud providers are also software vendors.

How does Software as a Service work?

As mentioned before, Software as a Service works via a cloud delivery model. There are two ways to go about it. Software providers host their applications using their resources, i.e., databases, servers, computing, and also networking resources. Or, ISVs could contract cloud providers to host their applications in their data centers.

SaaS is made available to users through devices that can access the internet. The applications are often accessed through web browsers. Companies and individuals who want to use the applications only subscribe to gain access to the Software, eliminating the need for installations and even constant updates.

In SaaS models, providers give customers access (network-based) to a single copy of the SaaS application that the provider developed solely for SaaS distribution. Since each user has access to the same application, they all receive new features and functionalities when they are made available.

The user’s data can be stored in the cloud, locally, or both depending on the SLA (short for Service Level Agreement). Organizations can integrate other Software with SaaS software applications using APIs (short for Application Programming Interfaces). For instance, businesses can write their software tools and use SaaS provider APIs to merge them with SaaS offerings.

SaaS architecture

SaaS services and applications usually employ a multi-tenant approach whereby a single instance of the application runs on the host server and serves each subscribed cloud tenant, i.e., the customer. The customers access a single configuration and version of the application, but their data is segregated.

This setup makes it easier for cloud service providers to handle updates, maintenance, and bug fixes easier, faster, and quite more efficiently. Instead of implementing these changes in multiple instances, the software engineers make the required changes through a single shared instance.

Advantages and disadvantages of SaaS

Advantages of SaaS

SaaS eliminates the need for individuals and entities to install, update, and run applications using personal computers and data centers. This makes it unnecessary for users to acquire optimal hardware, buy, install, maintain, license Software, and get software support. Other benefits of using SaaS are as follows;

Reduced time to benefit

SaaS is different from traditional models since the programs provided are installed and configured for the users. Users simply provision the server for a single instance in the cloud, and (in a few hours) you have the program ready for use, i.e., reduced time to benefit. They reduce the time taken for installation, configuration, and taking care of the issues that affect the development of the software.

Flexible payment

Instead of purchasing Software and additional hardware for more support, users can subscribe to a Software as a Service offering. Transitioning the costs to a recurrent operating expense enables many businesses to have improved and predictable budgeting. Note: Users can also terminate the offerings whenever they want to stop the recurrent costs.

Automatic updates

Rather than buying new Software, entities and individuals that use SaaS can rely on the provider to do patch management and perform automatic updates. This reduces the amount of work done by in-house IT staff, leaving them free to perform other more important duties.

Scalable usage

SaaS and other cloud services provide vertical s calability. This refers to the option provided to customers where they choose fewer or more features or even services depending on the demand. This is infinitely better when compared to the traditional setup where users have to perform a software update to get new features.

Accessibility and customization

SaaS vendors deliver their applications over the internet. The applications are easily accessible by users from any location through any device that can connect to the internet. The applications are also often customizable, making it easier for users to integrate them with other applications, especially those caused by a standard software provider.

Easy to use

SaaS offerings are pretty simple to use since they come with tested and proven samples and best practices as well. Users can test the Software’s functionality, do a proof-of-concept, and test new features set to be released in advance.

Disadvantages of SaaS

Security and data concerns

Accessing users’ data and keeping sensitive information private is one of the biggest challenges that concern SaaS users. The best option (if you share this concern) is to do thorough research to get efficient and secure SaaS providers.

Lack of control

Downloadable software provides businesses and users with more control over how they use the software. In hosted solutions, control of use often lies with a third party. For instance, every user has to use a single version with specific features regardless of their preference.


The SaaS model uses web delivery to provide its users with services. Users have to be constantly connected to the internet to receive said services. Losing your internet connection locks you out of most (if not all) services or features.


SaaS services often run slower than installed programs, especially if you have low internet speeds. Thus, it is a good idea to consider other options before committing yourself or your business to SaaS.

What kind of business is suitable for SaaS?

SaaS has lots of applications. These are as follows:

CRM or Customer Relationship Management

Businesses can use SaaS to assess their customer relationship and improve their products or services. The model allows businesses (especially B2C companies) to collect and store data that can be used for customer segmentation, enhancing customer relations, and more.

Accounting and billing

Users and business entities can use SaaS to track the company’s cash flow, budgets, and transactions. Doing this helps save users time to reconcile accounts, data entry, financial errors, customer transactions, taxes, and payroll.


Users can also use SaaS for communication services. Web-based communication from companies like Zoom and Slack has witnessed increased activities with people using their services for in-person meetings, voice, video calls, etc. Integration with other saas providers like google drive makes communication and sharing data extremely efficient.

E-commerce and content management

CMS refers to a low code tool kit that helps people create websites and apps without technical know-how, i.e., WordPress. Another example is E-Commerce platforms that allow customers to add their products and services advertised and sold to the customers.

Project management

Most businesses typically juggle various projects simultaneously. Following up on such projects personally is tedious and less efficient, so using SaaS project management software is infinitely better. It makes it easier for project managers to allocate, track, plan, collaborate, communicate, and schedule projects from one place.

Differences between SaaS and traditional software

  • Traditional software is often costly since it has self-maintenance and initial implementation costs, among others, while users only need to subscribe when using SaaS.
  • Traditional software is more challenging to maintain than SaaS. While such programs are often maintained and fixed by individuals or a company’s IT department, SaaS applications are resolved quickly and more efficiently by the vendor.
  • SaaS applications are easier to maintain than on-premise applications, which need collaboration between vendors and their IT departments. This results in an overall simplicity during the set up.

Successful SaaS companies

  • Adobe: Adobe is the best SaaS company. Adobe Creative Cloud comprises all software tools engineers may need. It was started in 2012. The company has launched several exciting programs that have earned the company a 13 billion dollar revenue, of which 11.6 billion dollars is courtesy of Adobe Creative Cloud.
  • Atlassian: This company provides collaboration tools for both remote plus distributed teams. The products help in product management, security, IT services, team collaboration, plus core product dev. The company has a $411.6 million total revenue from its wide variety of products.
  • Freshworks: This company is an end-to-end solutions provider for small to mid-sized businesses. They provide tools for employee and customer engagement, IT management, CRM, chatbots, etc. The company earns close to $104 million in revenue.