What is SaaS (Software as a Service)?

SaaS stands for Software as a Service. It is the most modern innovation in software solutions, and it’s quickly overtaking its predecessor as the most viable and progressive software solution on the market.

For example, instead of buying software at a high cost and installing it manually, you can now search the internet for the software you need and sign up for it in minutes.

There are many advantages to SaaS. Firstly, you can start using the software on the same day, saving you time and effort on set up.

There is also software management to consider. Traditional software requires manual updates and can be time-consuming to operate. On the other hand, SaaS is entirely managed by the provider, meaning it can save you time and costs.

If you’re unfamiliar with SaaS, read on. This article gives you all you need to know to make an informed choice about your next software solution.

Not only will you find out what SaaS is and why it’s the best option for progressive businesses, but you will also discover the various pricing options that SaaS solutions use and how to invest in the best one for your business.

How does SaaS work?

SaaS is a cloud-based software system that can be accessed with a web browser. Unlike other software options, SaaS doesn’t need to be installed or downloaded; SaaS software is hosted on servers owned by a software provider.

Alternatively, the SaaS service can be delivered by an independent software vendor (ISV) that contracts with a cloud provider to deliver the service.

Traditional software requires some effort on the part of the end-user; it normally has to be downloaded or manually installed.

However, SaaS software does not require any setup or maintenance; it is run entirely by the ISV or by the SaaS service provider. Users must pay a subscription service fee before they can gain access to the software via a web browser.

When a subscription fee is paid, the SaaS service provider allows access to the software application.

In addition, subscription holders get the same access to the software source code across the board, meaning that updates to the software are uniform. There are some exceptions to software updates; however, these will depend on the service level agreement (SLA).

Using SaaS is not only cheaper and more convenient for businesses and individuals, but it is also more flexible and innovative. Companies operating SaaS software might need to extend the capabilities of the platform.

Unlike traditional software options, SaaS allows companies to develop their own tools and use the existing Application Program Interface to operate them.

The architecture of SaaS

Software as a service is an example of multitenancy architecture. This is different from single tenancy architecture, in which software instances are directed towards a single end-user or a group of end-users.

Multitenancy software can serve multiple end-users or groups of end-users. Cloud computing also refers to shared hosting, where server resources are divided up.

The multitenancy architecture means that SaaS applications can be operated using a single host but can serve a wide range of end-users.

This is not only more streamlined and convenient for software providers and customers, but it lowers maintenance costs and distributes resources more efficiently. Of course, it does require some extra maintenance, the provider covers that.

With a single-tenant architecture model, engineers must implement changes across various networks and users. This can be costly and time-consuming.

SaaS makes the software service more efficient by using a multitenant architecture model. It not only makes maintenance more reliable, but updates and bug fixes can be rolled out simultaneously for all users and networks.

These days, speed and security are priorities when it comes to deciding on software solutions. Both businesses and individuals expect a high level of service that’s safe from data theft and cybercrime.

The multitenant architecture model is the best way to share resources without compromising the software’s security, speed, functionality, or privacy – it is used by SaaS.

Advantages of SaaS

Not every business is on board with SaaS; some still use conventional software that needs to be bought and manually installed. However, there is a clear trend away from this type of software. For a start, it requires installation, hardware solutions, higher costs, and more maintenance.

The alternative is a SaaS solution that doesn’t require any installation. A SaaS solution can be accessed immediately by signing up for the service online. Once you have access, you can begin using the software immediately. There’s no need to worry about keycodes or faults.


Conventional software is expensive. That’s because it is usually bought as a one-off product and installed on a hardware device. As a result, there is no recurring payment, but additionally, there is no possibility for ongoing maintenance, and updates need to be paid for independently.

SaaS is different! With SaaS, you pay a nominal monthly fee for full access to the platform and no maintenance or update issues to worry about. This monthly fee can be reduced by opting for a lower tier or canceled anytime, depending on requirements. SaaS has fully flexible pricing.


Conventional software solutions have their limitations. This style of software is usually released periodically, meaning you have to invest in the updated version to keep your company relevant and competitive. This puts the monthly fees of SaaS into perspective. But SaaS is also scalable.

Unlike conventional software, SaaS has excellent vertical scalability. Vertical scalability is the practice of adding more resources to your database as your company grows or your requirements change. SaaS lets you opt for more features or fewer with affecting performance.


Conventional software often needs to be updated manually. Additionally, some of the updates for this software need to be purchased separately, meaning the functionality of the product declines. So, updating the software in your office can be costly as well as time-consuming.

That is not the case with SaaS! The software updates for SaaS are included in the monthly cost of the software. Not only that, there is very little you need to do to keep your software updated. Now and then, you respond to a prompt, that’s all. It also eliminates the need for an IT team.


Nowadays, mobility is a key consideration in business operations. Not only do employees need access to their workstations from any device at any time of day, but they need access to the software from different locations. Only SaaS can deliver this kind of flexibility and functionality.

Conventional software is localized; once it’s installed on a piece of hardware, there is no way to use it on another device unless it is independently installed. SaaS uses vendors that deliver applications online; this means workers get the functionality they need to operate the business.


It’s fair to say that conventional software has its limitations. Not only must it be installed on independent hardware and replaced every few years at a high cost, but it might not always integrate with new and existing systems. Unfortunately, that is not the case with web-based SaaS solutions.

SaaS solutions are highly customizable. If you have business applications that are central to the operation of the business, you can integrate them with your SaaS solution. It’s even simpler to integrate your SaaS software if your product and apps have a common software provider.

The downside of SaaS

With all the advantages of SaaS, it’s hard to imagine there’s any downside at all. That said, there are a few challenges and risks associated with using SaaS. Since SaaS is run and operated by outside vendors, businesses have less control over its running and upkeep.

Most of the issues with SaaS come down to the fact that it’s outwith the immediate control of businesses and IT teams. Therefore, a degree of trust is required when you partner with a SaaS solution. The good news is that SaaS operations are usually reliable and have contact teams.

Customer Control

Customers need a level of control over their software solution to optimize it for their business and deal with any inefficiencies. Unfortunately, much of this is out of the hands of customers because software providers have their own dedicated operation management teams on hand.

The SaaS provider might issue an update that compromised the efficiency of a business operation, but without direct access to the software, no changes can be made – at least not right away. Similarly, a security breach might be easier to handle with purpose-built software.

New versions

If you run conventional software, it will have to be updated at regular intervals. This is because new software products are released regularly that you can choose to run or not run. If you choose not to update the software, it will still function optimally for many years to come.

With SaaS, this is not the case. When the SaaS software is updated, it is updated across the board. Any customer with a subscription will receive the update whether they want it or not, and if this update interferes with your business operations, the issues can take some time to resolve.

Vendor Issues

If you’re a business and operate SaaS solutions, it’s a good idea to choose your provider carefully. SaaS is very convenient and efficient, but only when you stick with the same provider. If you want to move to a different provider, be prepared to shift large amounts of company data.

There is a further drawback to switching your SaaS provider as many of them use particular technologies and data types. So as well as transitioning your data to the new provider you; also have to adapt to a new way of working. This can be avoided by selecting a provider carefully.


Remote workforces have become increasingly common in recent years, this is highly advantageous, but it also comes with a new set of challenges. The increase in remote working environments has triggered new levels of cybercrime that must be guarded against.

Security is a big concern for companies using SaaS, not least because they are entrusting sensitive data to third-party services. The good news is that SaaS solutions make security a high priority and always seek to enhance and integrate improved security measures.

SaaS Security

Conventional software is different from SaaS when it comes to security. With conventional software, it’s the responsibility of the software developer to eliminate code-based errors that can create vulnerabilities. Users are then responsible for running the software on a secure network.

SaaS is slightly different because it is operated entirely online there are more weaknesses and vulnerabilities. So it’s no wonder that SaaS providers pay so much attention to ongoing security enhancements. These include encryption, identity and access management, and data privacy.

Cloud service models

SaaS is a cloud service model, but it isn’t the only one. Other cloud service models include IaaS and PaaS, these stand for Infrastructure as a Service and Platform as a Service. Although all three models are cloud-based services, they differ in some important and significant ways.

Companies use IaaS to outsource their hardware to a cloud-based services solution. IaaS service is used primarily for infrastructure outsourcing. PaaS is different again; it’s used for companies that want to outsource hardware but also develop in-house software tools and apps.

Popular SaaS vendors

SaaS vendors are almost as varied as the software itself. SaaS products can be issued by industry players such as Microsoft or Google; at the same time, smaller vendors exist and can provide products that are more niche and practical. There is no one-size-fits-all solution.

SaaS services exist for IT solutions and analytic services, but you can also find SaaS products for financial management, customer relationship management, human resources, and everything in-between. Popular SaaS vendors include Hubspot, Trello, Adobe, and Shopify.

SaaS pricing models

There are many reasons why the majority of businesses are moving over to SaaS solutions. SaaS is simple, effective, cheaper, and more functional than conventional software options. That said, there is a significant shift in the way companies pay for software services.

Conventional software operates on a supply and demand basis. Businesses identify the software they need and then invest in it. Once it is installed, it must be updated every few years. SaaS eliminates these inefficiencies by offering a simple monthly or annual subscription fee.

Free or ad-based

A popular pricing model for SaaS products is the free or ad-based subscription service. This model allows you to use the platform for free; the catch is that your software provides ad space that generates revenue for the software provider. If this is inconvenient, there are some options.

The advantage of free or ad-based SaaS is that you get to use the software freely and decide if it suits your business and its goals. If you decide that the software is suitable, there are options to upgrade to a higher tier that will give you the same functionality without the intrusive ads.

Flat rate

The flat-rate model is also extremely popular, although it is more common with providers with a strong reputation for what they offer. For instance, Microsoft, Google, and Adobe are happy to offer a flat rate because customers already understand the service.

A flat-rate service is usually offered on a monthly or annual basis. Customers are charged a fixed fee for twelve months – this fee is sometimes charged upfront. The advantage of a flat-rate service is that you get full access to the platform and benefit from the ongoing services.


Some companies require a SaaS option with multiple users. In this case, the SaaS solution can be offered on a per-user basis. A per-user basis is a subscription model that charges a fee based on how many individuals will be using the service. Therefore, it can be beneficial to businesses.

A per-user pricing option lets you increase the size of your operating team without moving into another pricing tier with your SaaS option. For example, if your team increases from 15 to 17, you might move into an expensive SaaS tier instead of a moderate per user increase one.

Feature-based tiers

Unlike the free ad-based SaaS pricing option, feature-based tiers categorize the software functionality based on how many features the tier provides. As a result, you will find very limited demo-like functionality at a low cost. Conversely, the upper-scale has more features.

The more you pay for your subscription, the more features you have available. This allows you to cherry-pick the software options you need for your business and scale the features as your project grows. These are the most popular SaaS pricing models for subscription services.


How do I choose a SaaS option?

Choosing SaaS software is an important part of your business planning. It isn’t easy to transfer your data services once you’ve signed up to a solution, so do your research before investing. Ask yourself detailed questions about the complexity of your business before searching SaaS.

To get the SaaS solution that suits your business best consider truing some free versions or ad-based pricing options first to figure out the exact software requirements of the business. Alternatively, you can start at the lower tier and stay reserved with your data commitments.

Can I customize SaaS software?

The short answer is yes! Today, SaaS solutions are designed to be fully flexible so that companies can modify them to specific requirements. For example, most SaaS solutions allow businesses to modify the interface, change data fields, and optimize specific areas of programs.

As the market for SaaS solutions continues to grow, there is a greater need for more enhancements and more customization. Nowadays, you can find SaaS solutions that allow you to tailor the software so that it’s on-brand and more user-friendly for your business model.

Who owns SaaS data?

When you partner with a SaaS service, you entrust that third party with a lot of sensitive company and customer data, but do you still have ownership of it? The answer is yes, in most cases. Always check your service level agreement (SLA) to confirm the terms of service.

Furthermore, while most SaaS operators provide contracts that allow you to access your data even if the company goes out of business, some do not. Therefore, it’s worth checking the SLA carefully and asking your SaaS provider about this personally before you make an investment.

Is my data safe in the cloud?

These days, data security is a huge area of interest and concern! So naturally, companies are anxious about the level of security a SaaS company can offer. Although SaaS is slightly less secure than traditional software, SaaS companies are rising to a data security challenge.

While SaaS companies are rising to meet data security challenges, it must be said that data security for traditional software is also risky. For example, it’s arguably riskier to have large quantities of sensitive data stored on hardware and servers with local access in the company.

Final thoughts

SaaS stands for Software as a Service. Although SaaS is not new, it has grown significantly in recent years as more and more businesses see the benefits of choosing cloud-based software solutions.

Of course, traditional software is still available, and they are still popular to an extent, but there are many drawbacks to these and many advantages to using online SaaS solutions.

Conventional software must be purchased independently and then installed. This takes time and effort. Furthermore, conventional software needs to be updated manually, and the updates are often charged at a premium.

All of this can be eliminated with a SaaS solution that offers the same service without the investment of time and energy. A provider also manages SaaS.

While there are some reasons to continue to use traditional software, there is a significant trained away from this technology. SaaS solutions are streamlined, integrated, and cheaper in many cases despite a monthly or annual subscription fee.

If you decide to invest in SaaS services, make sure you choose your provider carefully, as switching providers can be difficult.

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