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.
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.