What is Software as a Service?

What is Software as a Service?

Software-as-a-Service (SaaS), usually referred to as cloud-based software, has become commonplace. Nearly half (48%) of respondents to Gartner’s 2021 Emerging Technology Product Leader Survey who are investing in data and analytics chose cloud-based software as one of their top three emerging technology investments.

And it’s not without reason. Web-based business software doesn’t require complicated installations or long-term contracts, and they’re paid on an hourly basis rather than all at once. As a result, the solutions are usually more adaptable and economical for any budget.

Despite this, many of the business owners we contact with on a daily basis at Software Advice have questions about SaaS and why it would be a suitable fit for their firm.

What is SaaS?

Software as a Service (SaaS) is a cloud computing model in which software applications are delivered over the internet as a service. Instead of installing software on individual computers or servers, users can access and use the software through a web browser or mobile app, typically on a subscription basis. The SaaS provider is responsible for managing and maintaining the infrastructure, security, and software updates, while users are able to use the software from anywhere with an internet connection.

SaaS has become a popular delivery model for many types of software applications, including customer relationship management (CRM), enterprise resource planning (ERP), human resources management (HRM), project management, and more. SaaS offers many benefits to users, including lower upfront costs, scalability, accessibility, and ease of use. Additionally, SaaS providers often offer a variety of pricing plans and subscription options to fit the needs of different types of users.

Difference between SaaS and on-premise software

The main difference between Software as a Service (SaaS) and on-premise software is how they are deployed and accessed.


  • Deployed in the cloud and accessed over the internet
  • Hosted and maintained by the SaaS provider
  • Users typically pay a subscription fee on a recurring basis
  • Users do not have to install, manage or upgrade the software
  • Users can access the software from any device with an internet connection

On-premise software:

  • Deployed on the user’s own servers or computers
  • Installed, managed and upgraded by the user’s IT department
  • Users typically pay a one-time license fee, plus ongoing maintenance and support costs
  • Users have complete control over the software and data
  • Users can access the software only from the devices connected to the local network or via remote access tools

SaaS offers several advantages over on-premise software, including lower upfront costs, ease of use, scalability, and accessibility. On the other hand, on-premise software provides users with more control over the software and data, and can be more cost-effective over the long-term for larger organizations or those with specialized needs.

History of SaaS

“Computation may someday be structured as a public utility,” remarked John McCarthy, a renowned computer scientist who earned the Turing prize for his work in artificial intelligence (AI), in a 1961 address to MIT students. To put it another way, cloud computing started out as a shared computing resource.

While the concept has been around for a while, it wasn’t until the late 1990s that the web-based technology needed to support SaaS became robust. That’s when firms like Salesforce, which was formed explicitly to create cloud software, started delivering classic enterprise products like customer relationship management (CRM) as SaaS.

SaaS was initially dismissed by the enterprise software industry. However, SaaS has experienced fast expansion and adoption in the last decade, with a new set of enterprises adopting software for the first time (full content available to Gartner clients). Cloud adoption is outpacing other cloud technology sectors like Platform-as-a-Service (PaaS) and Infrastructure-as-a-Service (IaaS).

Is it possible to customize SaaS software?

Yes! Web-based software today is adaptable enough to be customised for unique company needs as well as individual users. Buyers can change the look and feel of the application by customising the user interface (UI), as well as adjust particular regions, such as data fields, to change the data that shows. At any time, you can turn on or off a variety of business process elements.

Users can often customise their own personal workplace, such as a dashboard or task list, to display exactly the information they need and improve their working style.

Although both on-premise and SaaS systems may now be customised from top to bottom for each customer, cloud-based software still provides significantly more agility and flexibility to the average business.

Who is the owner of SaaS data?

In the vast majority of circumstances, your data in a cloud-based system remains your own. Most service level agreements (SLAs) state that your organisation owns the data stored on the vendor’s servers and that you have the right to retrieve it.

Most SaaS contracts additionally include pre-paid contingencies that ensure access to your data in the event that the vendor goes out of business (see below) and that you control that data.

Furthermore, most SaaS suppliers will allow you to export and back up your data locally at any time. It’s uncommon for a provider to insist on keeping ownership of your data. If you find this in a clause, do not sign the dotted line.

This SLA is a critical and complex document that should be thoroughly reviewed with your stakeholders before committing to a new solution purchase.

In addition to data ownership, carefully examine the following characteristics of a SLA:

Support, updates, and security responsibilities of the software provider

As a client, it is your responsibility to notify the vendor of any difficulties as soon as possible.

Service guarantees, such as uptime and how a consumer can respond to unsatisfactory service.

Is my data secure on the cloud?

Clients are cautious of cloud security; therefore software suppliers work hard to demonstrate how safe data is on their servers. To install and store their software instances and data, many SaaS firms use highly secure public cloud services.

Data is more at risk in-house for most businesses, where there is less funding allocated to IT security and where workers or others may unintentionally leak data or establish security gaps. In fact, according to Gartner, users will be responsible for at least 99 percent of cloud security failures until 2023. (full content available to Gartner clients).

Although the discussion over cloud security for ERP systems continues, it is one of the last software areas to suffer from severe security flaws. Instead, according to 90 IT security managers who answered to our 2021 Data Security Survey, negligent personnel, insufficient remote work security, and code defects were among the top security dangers faced by US organisations.

In reality, data security is unaffected by whether the server is right next to you or across the country. Small to midsize businesses cannot afford to invest as much in security, backups, and maintenance as SaaS companies can.

What occurs assuming that my provider leaves business?

Software vendors come and go on a regular basis, whether as a result of industry consolidation or company failure. The information, on the other hand, is usually yours to retain.

To “keep the lights on,” most SaaS providers pay their data centre hosting business in advance. This prepaid charge is intended to protect businesses by ensuring that their data is available in the event that the SaaS vendor fails.

Look for the following characteristics in the vendors on your shortlist:

How long has the SaaS firm been in operation?

Is the number of customers and/or workers increasing?

Is there a technology roadmap in place?

The most crucial thing is to make sure that your service level agreement (SLA) includes a section that expressly indicates that you can export your data from your service provider, which is now commonplace. This clause should also specify how often you can access your data and in what format. SLAs frequently include a clause stating that the vendor will assist you in migrating your data for a fee.

Limitations of the internet and the operating system (OS)

The main disadvantage of SaaS is that it is dependent on a stable internet connection. However, unless your company is located in a distant place, your internet connection will be more than adequate to use today’s SaaS services.

While many people feel that on-premise solutions are more reliable, no system is completely fault-free. Electrical outages, hardware failures, and a variety of additional dangers can all affect on-premise software. Some SaaS companies have implemented “offline” capabilities as a safety net, allowing users to continue working even if the internet goes down. All data is synced to the system once a steady connection is restored.

Aside from internet connectivity, some purchasers are concerned about interoperability with other operating systems. Most are offered via web browsers and are completely OS agnostic, so you won’t have to worry about OS compatibility. It’s possible that you’ll need to download a different web browser to use with your SaaS system.

SaaS vs Cloud

The cloud is a collection of extremely complicated infrastructure technologies. At its most basic level, it’s a network of computers, servers, and databases that are linked together in such a way that users can rent access to share their total computing power. Buyers can dynamically raise or reduce the amount of computing power they lease because the computing power is scalable.

Anything that is hosted remotely and provided over the internet is referred to as the cloud. While all cloud programs are powered by underlying software, SaaS refers to business software that is distributed via the internet.

When compared to traditional software development, it’s easier, faster, and less expensive for SaaS developers to roll out applications because to the broad adoption of cloud accessible. SaaS companies now offer practically every type of essential business function, from human resources to enterprise resource planning.

Private Cloud

All of the infrastructure technology that powers a public cloud is stored on-premises in a private cloud. A web browser provides users with the same functionality and access to their data. Instead of being shared with the general public, computer power is shared among users within a single organization.

A private cloud, unlike the rapidly developing public cloud model (complete material available to Gartner clients), necessitates the management and care of an IT department. Creating your own private cloud can be expensive, and it necessitates an investment in the technology needed to build and maintain a cloud environment.

To earn a return on investment, private clouds also necessitate large or complicated projects. It’s an appealing alternative for huge organizations that don’t want to put their data in a publicly accessible cloud.

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