SaaS definition: What is Software as a Service?

SaaS Definition

SaaS definition: What is Software as a Service?

You’ve probably heard of Software as a Service (also known as a SaaS), but what is it? Let’s see the SaaS definition:

SaaS definition

Simply put, SaaS is a software licensing model in which access to the software is provided on a subscription basis, with the software being located on external servers rather than on servers located in-house. Most of the time the customer has to use the software as-is. But they can enjoy some limited customizations that are already available on the platform, as opposed to using custom-made software, specially developed for the particularities of the customers’ businesses.

This is the simple definition. Let’s get a bit more into detail.

In other words, think of “Software as a Service” as the rental or leasing of software. As opposed to buying or owning it outright.

SaaS digital products are typically accessed through a web browser, with users logging into the platforms using a username and password. Instead of each user having to install the software on their computer, the user is able to access the program via a browser or an app. It can be a computer, tablet, or smartphone. This makes SaaS very popular among businesses and organizations that have a geographically dispersed workforce. Because it allows employees to access the software from any computer with an internet connection.

Why use a SaaS solution instead of custom platforms?

There are many reasons to use a SaaS solution for most of your business operations.

For example, the cost for a SaaS solution is generally lower than for traditional software licensing.

It also allows a business or organization to avoid the risks associated with operating its own software. Some examples are hosting, security, updates, digital environment changes, platform changes, changes in APIs so on and so forth. This is because the software is located on external servers and managed and maintained by the developer. This way you move the risks and the effort to the company that operates it.

The advantages of using SaaS tools in your business

SaaS can be a very cost-effective solution for small businesses. Since the software is located on a server in the cloud, companies don’t have to purchase licenses or software development kits. Since there’s no desktop software to purchase, companies can also get rid of their on-site resources. The software is also generally easier to deploy.

  • Accessibility: You can use it through (almost) any internet browser, 24/7, 356 days, from any device;
  • Operational efficiency: No installation required, no equipment updates from your side, nor traditional licensing management;
  • Cost-effective: No upfront custom-made costs, flexible payment methods. Most times you pay for what you use in terms of features, number of users, etc;
  • Scalability: Most SaaS solutions are easy to scale to accommodate evolving needs. Which makes them especially helpful for early-stage startups that require a lot of flexibility and scalability;
  • Data storage: Your data is saved in the cloud with several backups. Most SaaS solutions have contingency plans that will bring your data back online in case of a security breach;
  • Embedded analytics: Most SaaS tools have robust data reporting and intelligence tools that help you get the most out of the solution;
  • (potentially) Better security: SaaS developers invest heavily in security technology. Especially since most of them rely on the trust the market has in them to secure further rounds of investment.

The disadvantages of using SaaS tools

  • Lack of control: The provider manages everything, making you dependent on the vendor’s capabilities and development roadmap;
  • Limited customization: Most apps offer little in the way of customization;
  • Security risks: While the SaaS provider secures the application itself and the data, there are some risks associated, including internal risks. Since user can access these solutions from any device connected to the internet, they could be prone to social hacking, losing smartphones, or poor security on their end;
  • SaaS solutions can become more expensive than traditional software: Since the company is paying for the software on a subscription basis, there’s a monthly fee that the company needs to pay. And since a lot of software as a services solutions out there have a pricing policy based on the number of users, it could become expensive really fast if the company grows at an accelerated pace.


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