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Software as a Service (SaaS)

What is SaaS?

SaaS is a method of software delivery that allows data to be accessed from any device with an Internet connection and web browser. In this web-based model, software vendors host and maintain the servers, databases and code that constitute an application. This is a significant departure from the on-premise software delivery model. First, companies don’t have to invest in extensive hardware to host the software, and this in turn, allows buyers to outsource most of the IT responsibilities typically required to troubleshoot and maintain the software. The SaaS vendor takes care of it all.

In addition to allowing remote access via the web to the software applications and data, SaaS also differs from on-premise software in it’s pricing model. On-premise software is typically purchased through a perpetual license, which means buyers own a license to the software. They also pay 15% to 20% per year in maintenance and support fees. SaaS, on the other hand, allows buyers to pay an annual or monthly subscription fee, which typically includes the software license, support and most other fees. A major benefit of SaaS is being able to spread out costs over time.

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.

A good way to understand the SaaS model is by thinking of a bank, which protects the privacy of each customer while providing service that is reliable and secure—on a massive scale. A bank’s customers all use the same financial systems and technology without worrying about anyone accessing their personal information without authorisation.

A “bank” meets the key characteristics of the SaaS model:

Multitenant Architecture

A multitenant architecture, in which all users and applications share a single, common infrastructure and code base that is centrally maintained. Because SaaS vendor clients are all on the same infrastructure and code base, vendors can innovate more quickly and save the valuable development time previously spent on maintaining numerous versions of outdated code.

Easy Customisation

The ability for each user to easily customise applications to fit their business processes without affecting the common infrastructure. Because of the way SaaS is architected, these customisations are unique to each company or user and are always preserved through upgrades. That means SaaS providers can make upgrades more often, with less customer risk and much lower adoption cost.

Better Access

Improved access to data from any networked device while making it easier to manage privileges, monitor data use, and ensure everyone sees the same information at the same time.

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.
Organisations are now developing SaaS integration platforms (or SIPs) for building additional SaaS applications. The consulting firm Saugatuck Technology calls this the “third wave” in software adoption: when SaaS moves beyond standalone software functionality to become a platform for mission-critical applications.
 

Disadvantages

But SaaS also poses some potential disadvantages. Businesses must rely on outside vendors to provide the software, keep that software up and running, track and report accurate billing and facilitate a secure environment for the business’ data. Providers that experience service disruptions, impose unwanted changes to service offerings, experience a security breach or any other issue can have a profound effect on the customers’ ability to use those SaaS offerings. As a result, users should understand their SaaS provider’s service-level agreement, and make sure it is enforced.