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What is SaaS (Software as a Service)? 10 FAQs
Linsey Knerl
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January 12, 2023
The SaaS industry is rapidly growing and boasts an estimated market size of $145.5 billion in the U.S. alone. This technology empowers businesses to do their best work across the globe, in the office and remotely, and is a major focus for IT leaders as they look for ways to streamline and secure their companies.
In our SaaS FAQs guide, we explore what you need to know about the way this tech is changing every industry.
What does SaaS stand for?
SaaS stands for “software as a service.” It’s common to use either the full term or its abbreviation when speaking about the technology. Some professionals refer to SaaS as "on-demand software."
What is SaaS?
SaaS is a virtual software solution for individuals and teams. Rather than purchasing software for use on an individual device, the SaaS model connects users with applications stored on the Cloud. You then use the apps just like you would locally, but they run through a web interface or mobile app.
Many SaaS products work on a subscription model. They typically renew monthly or annually and are not a one-time purchase.
What are some examples of SaaS?
SaaS covers all software niches. Any software offered through a cloud-based subscription or pay-as-you-go business model may qualify as SaaS.
Here are some notable SaaS examples:
- Trello and Slack: These two collaborative tools are great for remote teams and anyone who wants to connect with others and manage projects.
- Dropbox, Google Drive, and Zoho: These tools make it easier for teams to share large documents, organize digital files, and work together on projects.
- Mint and QuickBooks: Small businesses and sole proprietors use this software to manage expenses, income, and reporting through online interfaces on mobile or desktop.
- Salesforce and Microsoft’s Dynamics 365: These are two options for businesses that use customer relationship management (CRM) systems to manage customer information and sales outreach.
These are just a few Software as a Service examples. There are also large-scale services that handle almost all aspects of your business, from development and deployment to complete software management. There are eCommerce SaaS products, too, and they’re vital to growing businesses.
In short, if you’re performing a work-related task on your computer, chances are you can do it through a SaaS platform.
What is SaaS in cloud computing?
SaaS is a form of cloud computing where the user accesses a service through an internet connection and web browsers, rather than on a local device. Organizations purchase access to these web-based software services as part of a subscription, instead of buying them outright for each user or device.
What is SaaS sales?
SaaS sales is the industry surrounding the business of SaaS services, which sales teams must market and sell like any other tech product or service.
What is SaaS software?
SaaS software is software hosted on a cloud platform that is then delivered virtually to the end user. If you buy bookkeeping software through a SaaS model, you subscribe to access the software and to host all of your data (your own and that of your customers) virtually, locally, or a combination of both (hybrid).
As soon as you don't need the software anymore, you can simply stop paying for the software service. However, you will also lose access to your data, customer support, and the software itself.
Is SaaS data in the cloud safe?
The data in the cloud is only as safe as your internal business practices. While SaaS providers follow industry best practices, frequently upgrade their security, and perform routine maintenance, they have no control over how you handle security on your end.
Even if you use the top SaaS products and services, your data may be compromised if you or your staff use compromised passwords, share logins, or fail to use antivirus or malware protection on your own devices.
Cloud server attacks can happen, too, which means no solution is 100% foolproof. But if you prefer to not continually update and patch your traditional software solutions, the SaaS option helps to offset some of the work of protecting your data.
What are SaaS’s benefits over traditional software?
SaaS is an incredible leap forward for anyone who remembers the days of purchasing a CD-ROM and installing it directly on one machine after the other. But its perks go beyond simplicity, and they’re the reasons why many companies switch over to these business applications from outdated, local software options.
Here are the top benefits of choosing SaaS.
Price
SaaS is often more affordable than buying individual licenses for each machine or user, because most SaaS products are priced with teams in mind. While the cost generally goes up as you add more users, these products typically include pricing efficiencies. For example, it's often not much more expensive for a team of 30 to use a service than a team of 20.
Cloud accessibility
One way that SaaS creates efficiencies is through the Cloud. It’s easier to work from multiple devices, across different departments when your data is tied to your account and not your individual device. This allows remote teams to access the same software systems and organization tools as those working directly in your office.
Enhanced security
While it’s certainly feasible to make your internal data networks as secure as those hosted in the cloud, do you really want or need to do this in-house? Most major brands offer SaaS with encryption, SSL, and industry-standard security methods to keep your company data safe from unauthorized users.
Data incidents have happened, but these SaaS providers take responsibility for upgrading and managing security technology. That’s something most SMBs just don't have the time or money to execute themselves.
Regular updates
When you host software locally, you have to keep up with security updates, new features, and patches. If you use dozens of software tools to run your business, this can become its own job.
With SaaS offerings, the provider uses automated updates to address upgrades and security concerns. Also, as part of the conditions of using the service, you agree to upgrade as needed.
It's a win-win for companies who want cutting-edge tech designed to stand up against modern security threats – with a completely hands-off approach to maintenance.
What are the advantages of SaaS?
SaaS applications have many upsides:
- Scalability: Buy 1 license or 100 with pricing that grows with you.
- Maintenance included: Get security patches and features upgrades as part of your licensing agreement. These tasks typically run automatically while you sleep.
- Training and support: The most popular tools have their own academies and learning centers to help you use their products. Pricing generally includes access to these training tools.
- Cloud services accessibility: Employees who work from home one week and in the office the next can still access their data and tools, thanks to the remote-friendly nature of this trend.
Because SaaS solutions are made to flex and grow with your business, they can capture market trends and respond to the needs of customers much more frequently, as well. Instead of waiting a year or more for the next software update for your traditionally-purchased tool, get real-time upgrades as they become available, often without any need for you to take action.
Why is SaaS important?
SaaS is taking over the market share for software solutions thanks to 3 key reasons. SaaS addresses the needs of today's industries in these significant ways:
- It provides the remote flexibility needs of the virtual office, especially in light of post-pandemic workplace shifts.
- It keeps security tasks in the hands of dedicated experts and reduces the need for business office managers and local IT teams to continually adjust their workflows – saving you computing resources.
- It simplifies budgeting and expense projections by offering clear-cut pricing models for businesses, even as they grow. Scaling down is often as easy as scaling up.
If you aren’t already using SaaS in some way, it would be surprising. If you buy anything online through a subscription model where you use the internet to do the work, it’s likely your workplace is already taking advantage of SaaS.
Summary
SaaS practices mirror the way modern businesses operate. As business needs change, expect this software model to implement additional benefits and features to match.
