Updated December 30, 2023
What is Software as a Service (SaaS)
If you are new to the concept of SaaS, then this article is meant for you. You will know what SaaS is, what it can do for you, how it differs, and more about Software as a Service application. It is a software delivery method that enables access to Software and its functions from any device with an internet connection and a web browser. Both individuals and organizations can use cloud-hosted applications to perform various tasks. In short, Software as a Service means a provider hosts an application centrally and provides access to multiple users across various locations through the Internet for a fee.
Web-based Software or hosted Software are alternative terms for SaaS applications. SaaS runs on a SaaS provider’s servers. Utilizing Software as a Service (SaaS) is similar to renting Software rather than buying it. Previously you would purchase Software and install it on your computer. Through Software as a Service, you subscribe to Software on a term basis, usually monthly. Software as a Service has become a widespread software delivery model as web services have become more popular with their improved technologies and developmental approaches. Due to the increasingly available broadband services, we can easily access different areas of the world.
Google. Facebook and Twitter are typical examples of Software as a service that lets you access the service through any internet-enabled device.
Understanding Software as a Service (SaaS)
Software as a Service is often compared with Application Service Providers (ASP) and on-demand computing software models. Earlier, these applications had a lot of things in joined with traditional on-premise applications. But now, Software as a Service application has developed a lot in its architecture and licensing.
Today, multi-tenant architecture centralizes Software as a Service application to provide a better experience compared to on-premise applications.
The provider or an aggregator usually sells access to the Software through a subscription model in the case of SaaS. At the same time, On-premise Software generally uses a one-time licensing model.
The cost of SaaS varies from application to application. Some SaaS providers charge a fixed price for access to all the application’s features, while others charge a varied price based on the usage of the application.
You can customize the SaaS applications like the data schema, workflow, and other aspects per your business need.
Such providers also provide a high-security mechanism to protect the customers’ data during transmission and storage.
An excellent example of the Software as a Service model is a bank. It protects the customer’s privacy while providing more reliable service. All bank customers use the same technology without fearing anyone accessing their personal information without proper authentication.
Objective of SaaS
- Reduce the investment in server hardware by sharing end-user licenses
- Reduce hiring costs of Software
Models of SaaS
There are two models of SaaS.
- Hosted Application Management Model
- Software On-demand Model
In the hosted application management model, the provider hosts the readily available Software for the customers and delivers it through the net.
In the software, on-demand model, the provider gives web-based access to its customers only to a specific section of the application created explicitly for SaaS distribution.
Benefits of the SaaS model
There are several reasons why SaaS is more beneficial for individuals and businesses of all sizes and types. Here’s what is driving customers to use SaaS.
- No initial setup costs – The applications, once subscribed by you, are ready to use
- Time management – SaaS applications need less time spent on installation and configuration.
- Reduces the work of the IT department – the hoster handles SaaS applications. Thus it helps the IT department to concentrate more on the activities that help attain the business’s goals.
- Lower costs – SaaS is operated in a shared environment where the hardware and software license costs are low compared to other software models.
- Low maintenance costs – If you want to improve the storage capacity, it can be done without installing any new hardware or Software.
- Scalability – SaaS resides in a scalable cloud environment.
- Seamless Integration – SaaS can be integrated with many devices, such as tablets, laptops, desktops, and other internet-enabled phones. SaaS can be customized to meet the needs of a particular customer.
- New Upgrades – If the SaaS providers upgrade the Software, then it is available online to you free of cost. Even if it is available for the cost, it will be lower than the traditional model up-gradation cost.
- Easy accessibility – SaaS applications can be accessed from anywhere and from any device that uses the Internet
It has several characteristics that make it unique from other services. A few of the essential characteristics are listed below.
SaaS offers various configuration options like Social site extensions, blog interface, network content access, and custom tool modules. The user can use these options at any time per their site needs.
In SaaS, all the users share a common infrastructure and code, which the provider centrally maintains. This way, users can save their server space, cost, and maintenance. Updates are automatically notified to the users and made at no cost or sometimes at less cost. This will also save a lot of time for you.
You can easily customize SaaS applications to meet your business needs without impacting your common infrastructure. Software as a Service is designed to make the customizations unique to each company or individual. We can make updates with less cost and less risk.
Software as a Service has a multi-tier structure that implements a load balancer. You can adjust your system’s capacity by adding servers to meet your demand without modifying your Software’s entire structure.
You can easily access the data from any device that uses the Internet. This will help you manage your data and ensure everyone sees the same information simultaneously.
SaaS and On-premise Application
Software as a Service and On-premise applications can be distinguished by three significant dimensions: Licensing, Location, and Management.
On-premise applications are licensed with a single cost for each user or site.
SaaS applications are licensed based on usage-based transaction and time-based subscription models. The usage-based model charges the user based on the number of service transactions utilized. In the second model, the user pays for a particular period for which he has subscribed.
On-premise applications are hosted in the user’s IT environment. The application provider also provides a hardware or software part called a ‘black box, which will be installed in the user’s location.
The provider hosts SaaS applications on their server, and users do not need to install hardware or software.
In On-premise applications, the entire responsibility lies with the company’s IT department. The IT people should be familiar with the network, server, and application functions. They should also be able to troubleshoot problems and ensure the application’s reliability and security. This represented a significant undertaking, and some companies even outsourced this work to a third party specializing in IT.
The Software as a Service provider or vendor handles the entire application management in the case of Software as a Service. The vendor must provide support and services to the user by the Service Level Agreements.
Considerations for Embracing Software as a Service
Before using a SaaS application in an organization, several factors should be taken into consideration. Here are four significant factors that affect Software as a Service.
Some critical people in the organization will feel that certain functionality of the business should remain under the IT department’s support and control. In such situations, Software as a Service and other applications may be deemed unimportant. The deployment of a test application by the provider within the organization may increase the likelihood of approval by managers.
Software as a Service provides a customization option to its users, but it has a few limitations. Suppose a particular technical knowledge is required to operate a Software as a Service application, and the Software cannot afford it as a Service provider. In that case, it becomes difficult for the user to run the Software as a Service application.
The amount and type of data transmitted to and from the application are also critical factors. The transmission of data between servers should be fast. So companies always prefer a Software as a Service solution that takes network latency into account.
In such situations, people may consider SaaS and other applications as unimportant. But the long-term cost of SaaS applications is not sure. The Software as a Service application’s prices include the number of licensed users, the customization needed for your business, and your data centers’ economy of scale.
Some industries are subject to the law in different parts of the world. They need to maintain various reports and records. Saas application will not be able to satisfy all such needs of the customer. To prevent legal issues, Software as a Service suppliers should also adhere to your data security and privacy requirements.
SaaS applications should meet the rules and regulations of the organization’s jurisdiction.
Is SaaS suitable for your organization?
SaaS is not suitable for all organizations, nor can all the applications lend themselves to the SaaS delivery model. Several criteria should be considered when deciding on a SaaS application for your business. The essential factors are listed below.
- The type of process for which you are going to use the Software as a Service application
- The number of customizations required.
- The integration of SaaS applications with other systems in your company which includes both internal and external
- The term of the application
Simple and standard processes that are not heavily reliant on other functions and systems of your business are typically the most suitable for Software as a Service applications.
SaaS is particularly effective for functions that are being automated for the first time, as minimal alterations will be needed.
A function related to the core of your business, like ERP and others, does not lend itself to Software as a Service, so for such functions, you need to go with other onsite solutions. This will help you to manage the application as it runs.
If you need to customize a SaaS product, implementing it will take more time. Customization will shoot up the SaaS vendor’s cost and involves a lot of complexity. As a result, many vendors refuse to do customizations, and even if they do, they do it for a high cost.
So if you customize your Software as a Service product, be aware of its charge and whether it is affordable.
The more integration, the longer the SaaS implementation. So SaaS providers pay attention to things that ease the integration process.
SaaS can work best if you purchase a new application from a vendor who frequently updates the application for its enhancement.
SaaS has a lot of advantages, and thus Software as a Service remains a fascinating option for many enterprises. Businesses can do well by adding SaaS to their portfolio of IT services. An internet connection is all that you need for SaaS. Incorporating SaaS application in your organization considers only two critical factors – integration and composition.
When selecting a SaaS application, determine what your company wants from it and proceed.
When you select a Software as a Service vendor, know about the company, its reputation, reliability, market position, price, and security of its product.
I hope this article has helped you to know what Software as a Service is.
This has been a guide to Software as a Service. Here we have discussed the basic concept, models, objectives, characteristics, and a few criteria to consider while deciding on a SaaS application for your business. You may also have a look at the following articles to learn more –