Software as a Service (SaaS) is a software licensing model in which access to software is provided on a subscription basis, with the software being located on external servers rather than on physical servers. placed internally.
Software as a service is typically accessed through a web browser, with the user logging into the system with a username and password. Instead of each user having to install the software on their computer, the user can access the program over the Internet.
Lessons learned:
- Software as a Service (SaaS) is a software licensing model that allows access to software on a subscription basis using external servers.
- SaaS allows each user to access programs through the Internet, instead of having to install software on the user’s computer.
- SaaS has many business applications, including file sharing, email, calendars, customer retention management, and human resources.
- SaaS is easy to deploy, easy to update and debug, and can be less expensive (or at least has a lower upfront cost) because users pay for SaaS as they use it instead of buying multiple licenses software for multiple computers.
- The limitations to SaaS adoption focus on data security, speed of delivery, and lack of control.
Understanding Software as a Service (SaaS)
The rise of Software as a Service (SaaS) coincides with the rise of cloud-based computing. Cloud computing is the process of providing technology services over the Internet, usually including data storage, networking, and servers. Before SaaS, companies that wanted to update the software on their computers had to purchase compact discs containing the updates and download them to their systems.
For large organizations, updating software is a time-consuming endeavor. Over time, software updates became available for download over the Internet, with companies purchasing additional licenses instead of additional discs. However, a copy of the software still needs to be installed on all devices that need access to it.
SaaS is considered an example of endogenous growth theory, an economic theory that supports the belief that economic growth can be achieved through the development of new technologies and improved production efficiency. Technology companies, financial services companies, and utilities have led the business world in adopting SaaS technology.
History of SaaS
SaaS can loosely trace its origins to a concept called time sharing, which was developed in the late 1950s and early 1960s to make more efficient use of expensive processor time. money.
Over the next few decades, hardware and computers became less expensive. Organizations have moved to personal ownership of personal computers with on-premises software. But unfortunately, this system still proved ineffective on a larger scale as companies were burdened by the constant maintenance of the hardware and software of individual computers.
By the mid-1990s, the Internet had reached a new level of e-commerce transactions, The growth of the Internet then spurred the birth of the “online cloud”, allowing organizations to access software from anywhere.
In 1999, Salesforce entered into a full partnership with SaaS by launching its own customer relationship management (CRM) platform. Thanks to a good start and “no software” mantra, Salesforce quickly became the first superstar in the SaaS space. It remains one of the largest pure SaaS companies in the US
With Salesforce proving the viability of its SaaS business model, companies of all shapes and sizes — from fledgling startups to established industry giants including Microsoft, Oracle and SAP — both eagerly moving towards this model.
Today, SaaS is ubiquitous. With pure companies like Adobe, Salesforce, Shopify and Intuit leading the way, the SaaS market is expected to reach $145 billion by 2022. 1
With SaaS, users can access the software through a web browser from multiple locations, including outside the office. Remote desktop software can help employees securely access work computers from home or allow technicians to solve computer problems without having to be on-site.
Advantages and disadvantages of SaaS
Favorable
SaaS offers many advantages over traditional software licensing models. Since the software does not exist on the licensing company’s servers, there is little need for the company to invest in new hardware.
It’s easy to deploy, easy to update and debug, and can be less expensive (or at least has a lower upfront cost) because users pay for SaaS as they go, rather than buying multiple licenses. software for multiple computers.
SaaS has many applications, including:
- email service
- audit function
- Automatic registration of products and services
- Document management, including file sharing and document collaboration
- Shared corporate calendar, which can be used to schedule events
- A customer relationship management (CRM) system, which is basically a database of customer and prospect information. SaaS-based CRM can be used to keep company contact information, business activity, purchased products as well as track leads.
The types of software that have moved to the SaaS model often focus on enterprise-class services, such as human resources. These types of tasks are often collaborative in nature, requiring employees from different departments to share, edit, and publish documents while not necessarily in the same office.
Defect
The limitations to SaaS adoption revolve around data security and speed of delivery. Since data is stored on external servers, companies must ensure that the data is secure and cannot be accessed by unauthorized parties.
A slow Internet connection can degrade performance, especially if the cloud server is being accessed from a long distance. Intranets tend to be faster than Internet connections. Due to its remote nature, SaaS solutions are also out of control and lack customizability.
Advantages of SaaS
- Accessible from anywhere
- cost effective
- Easy to deploy, update and debug
- Easy to scale
Disadvantages of SaaS
- Increased security risk
- slower speed
- Lose control
- Lack of customization
Example of SaaS
Google Docs
One of the simplest real-world examples of SaaS is Google Docs, Google’s free online word processor.
To use Google Docs, all you need to do is sign in to a web browser for instant access. Google Docs lets you write, edit, and even collaborate with others anywhere.
Google Docs was launched in October 2012.
Dropbox
Dropbox is another simple example of a real-life SaaS. Dropbox is a cloud storage service that allows businesses to store, share, and collaborate on files and data. For example, users can back up and sync photos, videos, and other files to the cloud and access them from any device, no matter where they are.
Dropbox was founded in 2007.
SaaS vs. IaaS vs. PaaS
Products and services continue to grow rapidly. But in general, they fall into one of three main categories: SaaS, IaaS, and PaaS.
SaaS typically uses the Internet to provide subscription software services managed by a third-party vendor. Well-known SaaS examples include Dropbox, Google Workspace, and Salesforce.
Meanwhile, infrastructure as a service (IaaS) provides access to resources like servers, storage, storage, and others. It allows organizations to purchase resources as needed. Some popular examples of IaaS include Amazon Web Services (AWS), Microsoft Azure, and Rackspace.
Finally, a platform as a service (PaaS) provides a software development platform on the web. Specifically, it allows developers to focus on creating software without worrying about things like storage and infrastructure.
Frequently asked questions about SaaS
What is SaaS Marketing?
SaaS marketing uses standard marketing methods to promote and attract potential customers for information services and cloud-based software applications.
What is B2B SaaS?
B2B SaaS simply refers to companies that sell software services to other businesses. These products help organizations optimize multiple functions including marketing, sales, and customer service.
How is the MRR calculated for a SaaS business?
Monthly recurring revenue (MRR) is an important metric for SaaS businesses that use a monthly subscription pricing model.
The MRR calculation is simple: multiply the average revenue per customer by the total number of accounts for that month.
