What Is SaaS? A Complete Guide to Software as a Service

SaaS stands for “software as a service.” SaaS is a cloud-based software delivery model in which a service provider licenses software applications to end users who access the software over the Internet rather than downloading it to their personal computers. Common SaaS business applications include email, calendaring software, customer relationship management (CRM), human resource management (HRM), payroll processing, invoicing, employee communication, enterprise resource planning (ERP), content collaboration, database management, and document management.

Depending on the service level agreement (SLA), SaaS companies typically charge an annual or monthly subscription fee for their service. This subscription fee generally includes both the software license and continued support based on the end user's business needs.

SaaS, IaaS, and PaaS are the three primary cloud computing models, each revolving around cloud service providers that grant customers access to their own cloud-hosted data centers.

1. 1. SaaS (software as a service): SaaS vendors offer cloud service and handle all aspects of managing the software and hardware. In the SaaS model, customers do not have to oversee security upgrades, support, and maintenance. SaaS is useful for new businesses looking to get off the ground fast with low upfront costs.
2. 2. IaaS (infrastructure as a service): IaaS providers host physical data centers, manage servers, storage, virtualization machines, firewalls, and security. Unlike SaaS, IaaS end users must control and run their own hosted applications, development management tools, and database management tools. Businesses might use IaaS for data storage and backup, web hosting, and high-performance computing needs.
3. 3. PaaS (platform as a service): PaaS providers give their clients a platform to develop, use, and control business applications without the complex IT infrastructure needed for those activities. In short, PaaS providers manage everything for their clients except the applications and services developed by the user. Businesses might use PaaS when they need a development framework or data analytics to make more informed business decisions.

SaaS models offer numerous benefits that allow smaller businesses to compete with companies with greater resources.

1. 1. Accommodating pricing: With traditional software, customers pay a considerable upfront cost for a perpetual license with the option to pay for an additional support fee. In the SaaS model, customers pay a smaller subscription fee that includes ongoing support. Without a costly initial investment, businesses have the freedom to cut ties with the SaaS provider at any time for any reason. Additionally, a company doesn't have to spend money to upgrade hardware and IT infrastructure to use the software.
2. 2. Accessibility: Since SaaS applications run from Internet browsers, users can access them from any Internet-equipped device. On-premise software installed on office computers, on the other hand, is limited. Users can also access the SaaS software from any operating system, which eliminates compatibility issues.
3. 3. Scalability: With SaaS, Businesses can easily adjust to fluctuations in users. For example, a company will not need to purchase more hardware or waste purchased hardware if their user base grows or shrinks. Instead, they can simply adjust their service level agreement with the SaaS provider.
4. 4. Data protection: SaaS cloud applications protect data from power outages and other hardware failures that can cause a business to lose data or disrupt their work activity.
5. 5. Efficient updates: On-premise software updates can create costly downtime and leave users vulnerable to security flaws. SaaS vendors can test and update their software centrally before automatically granting users access to updates, patches, and new features.

There are potential negatives to the SaaS model that a business must weigh against the positives before using a SaaS application.

1. 1. SaaS requires an internet connection. While some SaaS vendors offer an offline mode with limited functionality, SaaS applications primarily require an Internet connection.
2. 2. Changing vendors can be inconvenient. Depending on the cloud service provider, switching to a new vendor can be a complex and laborious process due to the sizable amount of customer data that must be transferred and the fact that a SaaS vendor may use an exclusive data format not interchangeable with other vendors.
3. 3. SaaS offers less control. The hands-off benefits of a SaaS application also come with some drawbacks since many problems can be entirely out of the user's control. For instance, security breaches to the SaaS provider's servers, service disruptions, and unwanted updates are potential risks.

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