What is Software as a Service (SaaS)?

Updated June 24, 2022

Software as a Service is an important fixture in enterprise cloud technology, and it's not going anywhere. SaaS, as it is sometimes called, offers many benefits to businesses, including much-sought-after agility and scalability for digital businesses. It also appeals to business leaders who want to stay ahead of the competition.

In this article, we'll teach you about SaaS, what it is and why businesses tend to use it for many of their corporate application needs.

What is SaaS?

SaaS stands for Software as a Service. It's a term that refers to enterprise and individual software that operates in the cloud and can be accessed on demands, and to the needs and specifications of the business. SaaS is a form of cloud computing.

While cloud computing is used in a number of enterprise and non-enterprise scenarios, businesses benefit greatly from cloud computing, because of its traits that are uniquely designed to help businesses grow. A cloud computing service model has several important traits:

An on-demand self-service model
Resource sharing
Easy to maintain
Access and availability
Cost- and resource-efficient
Measured service
Security
Scalability

SaaS is one of several cloud computing service models, and possibly the most popular and well-known of all of them, due to its ability to appeal to individual consumers and businesses alike.

Benefits of implementing SaaS

As more businesses complete digital transformation, they are seeing the benefits of SaaS. These are as follows:

Measured service is cost-effective

Measured service means businesses only pay for what they use. Sometimes in the business world, this is referred to as "pay-for-play". An important trait of SaaS is that it is pay-for-play. Service is monitored and a company or individual receives a bill at the end of the billing cycle that reflects actual usage.

In the enterprise world, this is a huge perk. Imagine the development process for internal applications before SaaS was around. Companies had entire rooms dedicated to the hardware required to run company software. Software needed to be developed, which is costly, or purchased in quantities of licenses that don't necessarily take usage into account. This made for a lot of wasted money on unused resources for businesses.

Today, using SaaS, companies have eliminated some of the waste and save money by paying for only the share of services that they use each month.

Elasticity makes it scalable

One trait of cloud computing, and SaaS, by design, is that it's a product that is elastic, meaning that it can grow and shrink with the needs of the business. This is great for digital businesses who want to pay for what they need now but ensure the ability to access more services as their business grows.

Even ground floor businesses can start with SaaS products and use those products throughout the lifecycle of a business, even after experiencing tremendous growth. This is due to on-demand provisioning and user accessibility of software-as-a-service.

SaaS is easy to access and use

SaaS is very accessible and easy to use. Typically, a new user can be activated by logging into the account and paying a user fee with a credit card or applicable linked digital bank account. That means almost anyone with internet access and a bank or credit account can access and pay for SaaS services.

What's more, usability is one of the hallmarks of SaaS products. These products don't typically require much in terms of management resources, which makes them less complicated than software products that have to be custom developed, custom-configured or custom installed, or products that require internal maintenance, monitoring and maintaining.

Less management makes it resource-efficient

One of the benefits of SaaS is that it's resource-efficient. One reason is that it doesn't require a lot of management, so it challenges the notion that IT departments need to have staff dedicated to monitoring and maintaining certain essential software items.

Many businesses still hire systems administrators, but they spend their time in more valuable ways that benefit the company. It also cuts down the time employees spend learning the software and making mistakes in over-complicated programs. Overall, companies that use SaaS benefit from more efficiency.

Greater business agility

All of these benefits equal one huge benefit, and that's greater business agility. Business agility is a company's ability to grow and scale, with available resources and cash flow to make important business decisions. Agile businesses run on technology that provides them with insights, allowing them to make fast decisions that could change the direction of the company.

Due to the low cost of resources assigned to SaaS, businesses are more agile when they use software products in the cloud.

See your instant resume report on Indeed

Get recommendations for your resume in minutes

Disadvantages of SaaS

While SaaS has a number of benefits, there are still some security concerns. These are:

Security concerns

It's typically the responsibility of the cloud service provider to secure resources on the cloud. In a SaaS environment, many businesses share resources via a process called resource pooling. It's to the benefit of the SaaS company to ensure these platforms are safe to avoid a costly disaster, and generally, cloud service providers have the skills, desire and knowledge to do so.

That said, the possibility of a cyber threat is always something enterprise businesses have to think about. When it comes to a cloud service provider's platform, hackers look for vulnerabilities at the client edge or the spaces between where two or more clients share resources on a cloud platform. For this reason, many cloud servicers provide additional security configurations that allow enterprise businesses to secure data in the cloud, such as encryption, for instance.

Less management and control

The lack of internal management ability with SaaS products is both a pro and a con. For many businesses, the fact that it's less complicated and less resource-intensive to manage is a huge advantage. However, for companies that have skilled systems administrators dedicated to monitoring software, it could be a detriment to give up control and customization in order to get simplicity.

If a company is already spending resources on management, they may expect more from a cloud service than a provider can offer. In these cases, it's likely better for companies to partner with an infrastructure-as-a-service provider that lets them build custom applications and features in the cloud.