What is SaaS? - Software as a Service (2024)

The History of SaaS
SaaS Characteristics
SaaS Features
SaaS VS On Premise Software
SaaS Benefits
Salesforce SaaS Products
The Future of SaaS
SaaS FAQ's

What is SaaS?

Software as a service (or SaaS) is a way of delivering applications over the Internet—as a service. Instead of installing and maintaining software, you simply access it via the Internet, freeing yourself from complex software and hardware management.

SaaS applications are sometimes called Web-based software, on-demand software, or hosted software. Whatever the name, SaaS applications run on a SaaS provider’s servers. The provider manages access to the application, including security, availability, and performance.

Examples of popular SaaS products:

  • Google Workspace
  • Salesforce
  • Trello
  • Zoom
  • DocuSign
  • Slack
  • Adobe Creative Cloud
  • Mailchimp
  • Netflix
  • Spotify

A brief History of SaaS

Software-as-a-Service or SaaS is a relatively new concept in the world of software delivery, although its origins date back to the mainframe era of computing in the 1960s and 1970s, when computer terminals were used to access a mainframe that hosted software applications.

However, the modern-day SaaS model as we know it today didn't emerge until the late 1990s and early 2000s when the internet became more widely accessible and reliable, this technology shift made it possible to deliver software applications over the web, which gave rise to the SaaS delivery model.

The first known SaaS applications were simple web-based tools such as email, customer relationship management (CRM), and project management software. These applications were designed to be accessed through a web browser, eliminating the need for users to install and maintain software on their own computers.

One of the very earliest examples of a SaaS application was Salesforce, launched in 1999, Salesforce offered a web-based CRM solution that allowed businesses to manage their customer relationships more efficiently and with greater scalability. Other early SaaS applications included NetSuite (launched in 1998), which provided accounting and ERP software, as well as WebEx (launched in 1995), which provided an early example of web conferencing software.

Early SaaS applications faced several challenges, including slow internet speeds and limited bandwidth. However, these challenges were gradually overcome as internet infrastructure improved and more businesses adopted the SaaS model.

The popularity of the SaaS operating model has continued to grow since the early 2000s, driven in part by the rise of cloud computing. Advances in cloud computing made it possible to deliver software applications over the internet using remote servers, which drastically reduced the cost and complexity of deploying and managing SaaS applications.

The continued rise of the SaaS operating model has been driven by several factors, below we highlight some of the key developments in the SaaS space over the last decade:

  1. Increased Adoption: SaaS has become the dominant model for delivering software applications. Many organisations have shifted from traditional on-premises software to cloud-based SaaS solutions. This shift has been driven by the benefits of scalability, flexibility, and the cost-effectiveness of the SaaS operating model.

  2. Cloud Infrastructure: Cloud infrastructure has become more robust, with the major cloud providers (AWS, Microsoft Azure, Google Cloud) investing heavily in expanding their cloud services.

  3. Mobile-First Approach: With the increased importance of mobile devices, SaaS providers continue to adopt a mobile-first approach, with a focus on developing applications that are optimised for mobile devices and accessible anywhere.

  4. Artificial Intelligence (AI): SaaS providers are leveraging AI to provide advanced functionality such as predictive analytics, natural language processing (NLP), and machine learning (ML) functionality.

  5. Platformisation: SaaS providers have moved beyond providing standalone applications to creating platforms that enable third-party developers to build and deploy their own applications on top of the SaaS infrastructure. This has opened up new opportunities for innovation, customisation and cross platform integration.

  6. Integration: SaaS providers are increasingly providing integrations with other applications and services, making it easier for users to connect and share data across different systems and platforms.

  7. Data Security: Security has become a top priority for SaaS providers, with a focus on providing leading edge security features such as encryption, authentication, and access controls.

SaaS has evolved significantly over the past 10 years, and it will continue to be a key driver of digital transformation and innovation in the years to come.

SaaS Characteristics and Features

An excellent way to understand the SaaS model is to think of it like a bank. A bank protects each customer's privacy while providing reliable, secure, and efficient service. SaaS does the same.

The Saas model helps your business use its resources more efficiently. By harnessing the power of SaaS features, your business will improve customisation, lower costs and become better connected to those who matter. The application achieves this through four customisable SaaS characteristics.

SaaS Characteristics

SaaS Multi-Tenant Architecture

Multi-tenancy is an architecture where all SaaS vendor clients and applications share a single, common infrastructure and code base that is centrally maintained. This architecture allows vendors to innovate more quickly, saving development time previously spent on maintaining outdated code.

Easy Customisation with SaaS

Users can easily customise applications to fit their business processes without affecting the shared infrastructure. A SaaS model supports each user and company's unique customisations changes and preserves them through regular upgrades. This means SaaS providers can make upgrades more often, with less customer risk and lower adoption costs.

Better Access From Network Devices

A SaaS model allows your business to remotely access data from any networked device, making it easy to manage privileges, monitor data use, and ensure many users can see the same information simultaneously.

SaaS Harnesses the Consumer Web

Anyone familiar with Amazon.com or My Yahoo! will be familiar with the Web interface of typical SaaS applications. With the SaaS model, you can customise with point-and-click ease, making the weeks or months it takes to update traditional business software seem hopelessly old-fashioned.

SaaS Features

If reducing costs and growing your business is a priority, utilising SaaS features will allow sales and business teams to engage more effectively with stakeholders as well as existing and prospective clients. Here are the top 5 ways SaaS features can improve your business.

  1. Boost lead management through better identification and monitoring during the sales cycle.
  2. Improve sales and marketing collaboration by capturing and sharing prospect and customer insights better.
  3. Improves marketing automation by streamlining your digital marketing campaigns.
  4. Improves data management.
  5. Improves contact management through better storing, organising and tracking of information about your customers, prospects and sales leads.

SaaS v On-Premises Software

In the past, businesses bought and relied on packaged software; however, this “on-premises” software had several drawbacks.

The Drawbacks of On-Premises Packaged software:

  • Requires in-house systems that need to be regularly upgraded by an internal IT department.
  • Requires frequent maintenance that can lead to IT word pressure and bottlenecks for projects.
  • Architecture and coding differences can make it difficult when integrating multiple systems.
  • Increased upfront software, licensing and server costs.
  • The CRM software and hardware costs could make it unaffordable for small businesses or challenging to scale up quickly in response to growth or change.

Learn more about Sales Cloud and how a cloud-based CRM can support business growth.

SaaS Benefits

Due to the increased efficiency and cost-effectiveness of software as service applications, many businesses turn to cloud-based SaaS for solutions. Why?

With Software as a Service, you get:

  1. Low Set Up and Infrastructure costs:
    You only pay for what you need, so it is a very cost-effective solution for all-sized businesses.

  2. Scalability:
    You can adapt your requirements to the number of people who need to use the system, the volume of data and the functionality required as your business grows.

  3. Accessible from Anywhere:
    Just connect to the internet, and you can work from wherever you need to be via desktop, laptop, tablet or mobile or other networked devices.

  4. Automatic, frequent updates:
    Providers offer timely improvements thanks to their scale and because they receive feedback about what their customers need. This frees up your IT department for other, more business-critical tasks.

  5. Security at the highest level required by any customer:
    Because of the shared nature of the service, all users benefit from the security level set up for those with the highest need.

Salesforce SaaS Products

Sales Cloud:
Raise efficiency and lower costs with scaled automation and intelligent analytics using real-time data with Sales Cloud.

Discover Sales Cloud

Service Cloud:
Power your sales teams to do more with less with automated processes and data that drives connected customer experiences with the Service Cloud.

Discover Service Cloud

Marketing Cloud:
Make every engagement count whilst building lifelong loyal relationships with the Marketing Cloud.

Discover Marketing Cloud

Commerce Cloud:
Adapt quickly to boost sales, profitability and reduce inventory risk with Commerce Cloud.

Discover Commerce Cloud

Request A Demo

The Future of SaaS

Cloud computing and SaaS have come a long way in helping companies develop end-to-end integrated solutions. With increasing awareness and uptake, organisations are developing SaaS integration platforms (or SIPs) for building additional SaaS applications.

SaaS is one of several cloud computing solutions for business IT issues. Other ‘as-a-Service’ options include:

  • Infrastructure as a Service (IaaS) – the provider hosts hardware, software, storage and other infrastructure components
  • Platform as a Service (PaaS)
  • Everything as a service (XaaS) – which is essentially all the "aaS" tools neatly packaged together.

The payment model for these kinds of services is typically a per-seat, per-month charge based on usage – so a business only has to pay for what they need, reducing upfront costs.

With companies adopting various "aaS" services, long-term relationships with service providers will grow, leading to innovation as customers' evolving needs are understood and provided for. SaaS may one day help address critical business challenges, such as predicting which customers will churn or which cross-selling practices work best.

With the need for high-volume data, software performance and backup increasing daily, it’s easy to see why so many businesses are choosing to outsource to cloud-based providers. If you’re considering moving to a SaaS platform, find out what Salesforce has to offer for businesses of all sizes.


What is SaaS? - Software as a Service (2024)


What is the software as a service SaaS? ›

Software as a service (SaaS) allows users to connect to and use cloud-based apps over the Internet. Common examples are email, calendaring, and office tools (such as Microsoft Office 365). SaaS provides a complete software solution that you purchase on a pay-as-you-go basis from a cloud service provider.

What is SaaS easily explained? ›

Software as a service (or SaaS) is a way of delivering applications over the Internet—as a service. Instead of installing and maintaining software, you simply access it via the Internet, freeing yourself from complex software and hardware management.

What is SaaS and its example? ›

Key Takeaways. Software as a Service (SaaS) is a software licensing model, which allows access to software on a subscription basis using external servers. SaaS allows each user to access programs via the Internet, instead of having to install the software on the user's computer.

What is software as a service SaaS quizlet? ›

software as a service. any cloud where consumers access software applications via the internet. hosted by cloud. uses of SAAS. may be used for accounting, invoicing, sales tracking, planning.

Is Netflix A SaaS? ›

Yes, Netflix is considered a SaaS company because it meets all the criteria of a SaaS company: It is a cloud-based service, meaning that users can access it from anywhere with an internet connection. It is delivered on a subscription basis, meaning that users pay a monthly or annual fee to access the service.

Is Netflix a SaaS app? ›

Netflix is indeed an SaaS company that sells software to watch licensed videos on demand. It follows a subscription-based model whereby the customer chooses a subscription plan and pays a fixed sum of money to Netflix monthly or annually.

How do you explain SaaS to a child? ›

Software as a Service (SaaS): SaaS is a cloud computing model that delivers software applications over the internet. Users can access the software from any device with an internet connection, eliminating the need to install and maintain software on their own computers.

What is SaaS in interview questions? ›

Software-as-a-service (SaaS) refers to a business model where users pay to access cloud-based software instead of installing and maintaining the applications on personal devices. If you are seeking a related role, you might get asked to attend a job interview as part of the hiring process.

What is the key benefit of SaaS? ›

Advantages of SaaS Technology

Accessibility: Ability to run via an internet browser 24/7 from any device. Operational Management: No installation, equipment updates or traditional licensing management. Cost Effective: No upfront hardware costs and flexible payment methods such as pay-as-you-go models.

Which two are examples of SaaS? ›

SaaS platforms involve software that is available via third-party over the Internet. Examples of popular SaaS providers include: BigCommerce. Google Workspace, Salesforce.

What are 3 examples of IaaS? ›

Examples of IaaS include Rackspace, Amazon Web Services (AWS) Elastic Compute Cloud (EC2), Microsoft Azure, Google Compute Engine (GCE) and Joyent.

Is Facebook a SaaS company? ›

There is no payment involved for end users in using a platform. The closest thing Facebook has to a SaaS is its Ads Manager, which works in the backend, and business users can access it. You basically pay to display your ad to other FB users. But Facebook, on its own, is not a SaaS.

What is the difference between PaaS and SaaS? ›

PaaS, or platform as a service, is on-demand access to a complete, ready-to-use, cloud-hosted platform for developing, running, maintaining and managing applications. SaaS, or software as a service, is on-demand access to ready-to-use, cloud-hosted application software.

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