Saas (Software as a Service) is also referred to as "on-demand software". It is a way of delivering software.
SaaS is not new. It can be traced back to the 1960s, with IBM and other corporations using distributed software packages to connect users with mainframes which hosted applications and data. These services included offering computing power and database storage to banks and other large organizations from their worldwide data centres.
The expansion of the Internet during the 1990s brought about a new class of centralized computing, called Application Service Providers (ASP). ASPs hosted and managed specialised applications for businesses. The aim was to save costs through central administration and the provider's specialization in a particular business application.
As the Internet became faster and more accessible for all users, cloud computing (servers being hosted in remote locations or datacentres) took off and the software model of SaaS spread.
These days, businesses are shifting away from the installed programme model and are addressing their basic needs with SaaS. Popular examples are Microsoft’s Office 365, Google's G Suite, Adobe Creative Cloud, Salesforce, Shopify, Dropbox, Stripe, Slack, Mailchimp and Intercom. Just the tip of the iceberg!
Nearly every type of core business function is available via SaaS today, including:
Although SasS and the cloud are related, there is a difference between the two technologies. Essentially, the cloud refers to anything that is hosted remotely and delivered via the internet.
SaaS, however, refers specifically to business software applications that are delivered via the internet. With SaaS, the user no longer has to maintain either the physical servers or the cloud based software application. Instead, they pay a subscription to access an already developed software application.
Put simply, the cloud is a larger platform in which SaaS resides. There are other technologies that reside in the cloud alongside SaaS. These are Platform as a Service (PaaS) and Infrastructure as a Service (IaaS).
Unlike the traditional installed software which involves the purchase of a perpetual license, SaaS providers price their applications using a subscription fee. This monthly or annual payment includes the software licence, support and other fees. In the SaaS pricing model, the initial setup costs are low and a user is able to spread the costs out over time.
The costs to a SaaS provider of setting up a new customer are also low. This often means that providers can offer free applications with limited functionality or scope and only charge for enhanced applications. Other SaaS applications are completely free to users and funded through alternative sources such as advertising.
Most SaaS contracts state that the user owns their data and is able to export and back it up locally at any time. It is also common for contracts to provide that the service will help the user migrate the data, for a fee.
Most SaaS providers prepay their data centre hosting company to “keep the lights on”. This contingency payment ensures that users can access their data if something should happen to the provider.
SaaS relies on a good internet connection. Therefore, some SaaS vendors have developed “offline” functionality as a safeguard. This allows users to keep working if the internet goes down. Furthermore, all data is synced to the system once a stable connection is established again.
Most SaaS companies support multiple web browsers and operating systems.