What is SaaS?

Software as a Service (SaaS) is a cloud-based software delivery model that allows users to access applications through an internet-connected device rather than requiring an upfront purchase and installation of physical software.

In the SaaS model, a third-party vendor manages all aspects of the software application, including coding, hosting, monitoring, updating and security, as well as the purchase and maintenance of the associated hardware, such as servers and databases.

Since SaaS solutions are delivered over the internet, customers generally do not need to download or install the software to use the service. This means that users can access the application or their data from virtually anywhere with an internet connection, assuming all other system requirements and security protocols are met.

SaaS Examples

Most internet users regularly access SaaS applications even if they are not familiar with the term itself. In a business setting, users often leverage SaaS applications to conduct routine business activities such as conducting online meetings and conference calls, accessing customer data portals or databases, logging help desk or support tickets, and creating or editing documents.

Some prominent SaaS vendors and SaaS solutions include:

• Adobe as a tool to optimize and edit content and applications
• Amazon Web Services (AWS) as an on-demand cloud computing platform
• Atlassian as a set of products aimed at improving software development
• Box as a content management platform
• Dropbox as a tool for file sharing and storage
• GSuite as a suite for collaborative productivity apps created by Google
• Microsoft Office 365 as a suite for collaborative productivity apps created by Microsoft
• Netflix as a video content streaming service
• Salesforce as a customer relationship management tool
• SAP as a business operations management tool (i.e. managing workforce travel accommodations)
• Slack as a popular chat tool for businesses
• Quickbooks as an accounting software package
• Workday as a financial and human capital management platform
• Zapier as a workflow automation platform
• Zendesk as a customer experience support platform
• Zoom as a remote video conferencing tool

SaaS vs IaaS and PaaS

Organizations are incrementally investing in “as service” integration platforms to increase cost savings and operational efficiency. Before exploring how SaaS works, it is important  to understand the other two main “as-a-service” cloud computing options:

• Infrastructure as a Service (IaaS): A cloud computing model in which a third-party cloud service provider (CSP) offers virtualized compute resources such as servers, data storage and network equipment on-demand over the internet to clients.
• Platform as a Service (PaaS): A platform delivery model that can be purchased and used to develop, run and manage applications. In the cloud platform model, the PaaS solution provider manages both the hardware and software used by application developers.

How Does SaaS Work?

While there are multiple deployment options, most SaaS applications are deployed via the public cloud or multi-tenant architecture, and used as a shared resource by multiple customers or tenants. Each tenant maintains control of their account and data, but the platform and infrastructure on which the application is built and run is common to all customers.

The public cloud model tends to be the most affordable model in that the cost of the platform itself is shared among a group of users. However, it is also associated with greater risk since each tenant is responsible for maintaining the security of its data and users. A breach in one account can jeopardize security across all SaaS users.

Other deployment options include single-tenant or private cloud deployments, and hybrid cloud deployments.

SaaS Advantages

SaaS applications have exploded in popularity over the past three decades because they offer valuable workforce efficiencies and cost savings for both large and small enterprises. Some key advantages include:

• Access: Because SaaS applications are cloud-based, they can be accessed by any user at any time in any place with virtually any internet-connected device, such as a computer, smartphone or tablet. This means that employees can leverage applications on demand, as opposed to from a physical office or dedicated device. This enhanced access is a necessity for any organization that needs to manage a global workforce or enable remote work capabilities.
• Cost savings: In a SaaS model, organizations are not required to invest in any of the hardware or equipment needed to run the application, such as servers or databases; nor are they responsible for building, deploying, managing, updating or maintaining the application itself. Further, most SaaS applications offer flexible usage tiers that can expand or contract based on the variable needs of the organization. This significantly reduces the costs associated with software usage, as compared to a traditional enterprise software model.
• Usability: Most SaaS applications feature an intuitive and friendly user-interface that cater to users with varying degrees of technical literacy.
• Maintenance: As noted above, the maintenance of the SaaS solution, including updating, patching and managing security controls, is the responsibility of the SaaS vendor. In addition, the SaaS company has the ability to centrally push a software update, which does not require customers to configure and test endpoint security or compatibility.
• Scalability: Most SaaS solutions are highly scalable and allow organizations to quickly spin up or down workloads based on demand.
• Data and analytics: Most SaaS applications provide users with regular data reporting and intelligence tools. This provides businesses with valuable insights into organizational performance and business outcomes.
• Security: All users benefit from the highest level of security set for those in most need.

Disadvantages of SaaS

The SaaS delivery model is not without challenges. Customers should consider the following issues when leveraging SaaS applications:

• Security and privacy: The vast majority of SaaS solutions are delivered via a multi-tenant or public cloud model. This opens the organization to a certain amount of risk, based on the actions — or inactions — of other tenants. Companies should work with their cybersecurity partner to ensure they have adopted and implemented a comprehensive security strategy that protects and defends cloud-based assets, in particular.
• Compliance: Many organizations are required to comply with government or industry regulations related to data security and privacy. It is the responsibility of the customer to ensure that each SaaS product and its deployment method fully comply with any relevant regulations. Organizations should ask clear and specific questions about SaaS vendor compliance and review all contracts with a legal expert.
• Customization: While SaaS application customization and configuration has advanced significantly in recent years, doing so can be complex and time-consuming. Customers must research the flexibility of the application and ensure that any customizations do not affect the performance of the application or other aspects of the IT environment.