What is SaaS? A Data-Driven Guide to Software-as-a-Service

These products help organizations optimize a wide variety of functions including marketing, sales, and customer service. SaaS offers a variety of advantages over traditional software licensing models. Because the software does not live on the licensing company’s servers, there is less demand for the company to invest in new hardware. It is easy to implement, easy to update and debug, and can be less expensive than purchasing multiple software licenses for multiple computers. Consider factors like support services, data security and hype before signing a contract with a software-as-a-service provider. SaaS has the potential to increase earnings and significantly boost productivity but when things go wrong, it becomes annoying, costly and even unsafe.

Because innovation is so critical in the digital age, businesses want to take advantage of the latest capabilities. SaaS engineered for the cloud speeds innovation cycles and gives you faster access to the latest innovations and applications. By contrast, the on-premises in-the-cloud SaaS model requires you to wait for innovations because of the longer development cycles typical of on-premises solutions and applications. Software vendors spent the last several years bombarding IT professionals and business executives with messages about the advantages of cloud computing in its various forms. Some of these messages targeted the accountants and number crunchers by discussing the advantages of operating expenses (OpEx) compared with capital expenditures (CapEx).

Marketing Cloud

Today SaaS is the most common public cloud computing service, and the dominant software delivery model. Compared to traditional software installed on premises, SaaS offers businesses of all sizes—from startups to giant global organizations—the benefits of rapid time-to-value, low-to-no management overhead, and predictable costs. In fact, web-based applications delivered by application service providers (ASPs) actually pre-date the “cloud computing” concept as we know it today. Early applications https://www.globalcloudteam.com/ delivered using the SaaS model often focused on sales force automation (SFA), customer relationship management (CRM) and web content management. The public cloud provider manages all the hardware and traditional software, including middleware, application software, and security. So SaaS customers can dramatically lower costs; deploy, scale, and upgrade business solutions more quickly than maintaining on-premises systems and software; and predict total cost of ownership with greater accuracy.
However, when you take into account the sums you need to spend on buying the necessary hardware, as well as hiring and managing people to maintain it all, it often turns out that the SaaS approach actually is a lower cost option after all. This is one of the reasons why SaaS is usually favored by midsize companies who are careful about how they invest their budgets into new systems – even if it’s considered business critical. So, it is no surprise to find that the global public cloud service market is projected to grow to more than $200 billion in 2021, up from $175.8 billion in 2020, according to Gartner. Yet here we are, more than fifty years later building start-ups and unicorns (companies with a market value of above $1 billion) based on a shared resource of computing power.

SaaS providers typically use one of many subscription-based pricing models for customers. IaaS is used by companies that want to outsource their data center and computer resources to a cloud provider. IaaS providers host infrastructure components such as servers, storage, networking hardware and virtualization resources. Customer organizations using IaaS services must still manage their data use, applications and operating systems (OSes). SaaS is closely related to the application service provider (ASP) and on-demand computing software delivery models where the provider hosts the customer’s software and delivers it to approved end users over the internet.

What’s the Difference Between SaaS and Cloud Computing?

Others targeted the IT community with messages about scalability, on-demand capacity and the cloud’s ability to take over the mundane tasks of infrastructure management and allow IT talent to focus on business problems. Some industry historians trace the origins of SaaS to the 1950s, when applications running on mainframes were delivered to remote terminals. But SaaS as we know it today began in 1999, when Salesforce launched its customer relationship management (CRM) system built from the ground up as cloud-hosted software delivered to web browsers. SaaS application users do not have to download software, manage any existing IT infrastructures or deal with any aspect of the software management. Vendors handle maintenance, upgrades, support, security and all other aspects of managing the software. While SaaS providers benefit from the consistent recurring revenue, customers enjoy reductions in deployment, management, and operations time and expense.

To learn more about what a SASE solution entails, get a copy of our “10 Tenets of an Effective SASE Solution” e-book. In the 1960s, mainframe computers were connected to dumb terminals that shared the mainframe’s software—a software delivery system known as time-sharing. As the cost of computers began to fall in the 1980s, many businesses created their own local version of time-sharing, which was called a local-area network (LAN). However, the business (not the technology provider) was responsible for supplying and managing the hardware and network. Many SaaS vendors also provide an application programming interface (API) their customers can use to integrate the SaaS application with other SaaS or traditional software applications. Traditional software generally demands large, upfront investments in exchange for limited installations.

SaaS vendors and examples

SaaS marketing utilizes standard marketing practices to promote and acquire leads for cloud-based software applications and information services. By running an integrated system, the company enjoys a single customer view. From sales to marketing to customer service, everyone who uses the SaaS CRM platform can access the same information. In turn, the business can serve its customers with increased speed, accuracy, and quality. That frees users from licensing and hardware limitations, as well as maintenance responsibilities. Maintenance of the software is transparent to the customer, as the cloud provider is responsible for maintaining and updating the application and managing the IT environment needed to support it.

• Whether you choose cloud or on-premise platforms, the idea is to pick the best program that meets your company’s requirements.
• The first SaaS solutions emerged in the late 1990s, when the term SaaS was originally coined.
• Today, the Salesforce customer relationship management (CRM) platform offers companies of all sizes a centralized place to store data as their business grows.
• Well-known SaaS examples include Dropbox, Google Workspace, and Salesforce.
• Apply a Zero Trust framework to your data center network security architecture to protect data and applications.

They also host the application data and provide the IT infrastructure and services needed to support the SaaS application and data, all for a predictable recurring fee. Juniper offers open, intelligent, and customizable cloud-native networking software applications as cloud services. Enterprises and network service providers can utilize our SaaS solutions to monitor, maintain, and control their network environments and related cloud computing services. “The challenge with SaaS, especially in the ERP market, is the market hype around SaaS,” he said. “The SaaS business model requires many moving pieces that need to be considered, like the technology used to build the SaaS application, the pricing model and the software delivery model.

For example, each customer required their own version of the software, which meant they had to install some software on users’ computers. And, finally, ASP solutions typically didn’t offer a way to collect and aggregate data efficiently. Software-as-a-Service (SaaS) refers to cloud-based applications purchased on a subscription basis from cloud service providers.

Companies will continue to need qualified IT pros who can analyze, evaluate and design cloud computing solutions that fit their current and future needs. Other SaaS solutions improve the capabilities to store, organize and maintain data. SaaS marketing automation tools and customer relationship management (CRM) solutions are great examples of how software on demand is helping businesses reach their goals. The most common challenge is integrating data across multiple cloud applications, especially apps that come from different providers. Sharing data across SaaS apps typically requires custom solutions that use the apps’ APIs (application programming interfaces). Organizations without developers who can create custom workflows from the APIs are likely to face integration challenges.

If you need the software to do something very specific that may not appeal to anyone else, you could ask a company to modify an off-the-shelf product to suit you. Many customers ask for this capability, and more SaaS providers are ready to respond as a result. SaaS, or software as a service, is a term that describes cloud-based programs companies can buy as an alternative to applications installed on hardware. They typically gather requirements across the customer base and will likely trade off solving one customer’s problem by solving many customers’ problems at once.
Vendors building this way allow for many advantages, such as scalability and lower maintenance to benefit customers. Customers then pay for the software over time (usually as a subscription) with the understanding that their feedback will create improvements down the line. The customer doesn’t own the software, and in exchange, they don’t have to worry about maintaining it. Although SaaS sounds new, it launched as an application service provider (ASP) in the 1990s.
A multi-tenancy model is a codebase that every user shares when they log into a cloud program. This model permits vendors to maintain it and update it regularly so you never work on an outdated interface. Hewlett-Packard, SAP and Qwest created the ASP industry consortium in 1999 because software was booming at a rate that computer hardware couldn’t maintain. Companies had problems hosting thousands of computer programs without taking up space on hard drives. Instead of relying on LAN and in-house storage, they turned to storing data off-site and obtaining it through the internet.
Laurie McCabe brings more than 25 years of experience in the IT industry to her current role as co-founder and partner of SMB Group. But the fact is that out-of-the-box and ready-made tools will always have a place in business. Overall, SaaS offers a wide range of benefits that work in the interests of both suppliers and users.