What is SaaS? A Guide to Software as a Service

Dec 13
2021

It’s more than likely you already interact with SaaS (or Software as a Service) on a daily basis. And whether you’re familiar with the term or you’ve never even heard it before, it’s already established itself as the main distribution method for companies that host software on the internet. After all, recent surveys found that 86% of organizations expect SaaS to fulfill most of their software needs by 2022. But what is SaaS? And how does this type of software service impact your regular life? This guide will answer those questions and give you a better understanding of what software as a service really is.

Defining SaaS 

Alright, so what is Software as a Service? SaaS is the software licensing distribution model by which providers host automatically-updating applications on the internet so that users don’t have to download and update the application software themselves. Technically, SaaS falls under the cloud application umbrella, meaning it processes and stores data online. In essence, companies that utilize SaaS are able to give their users access to application software that they’d otherwise have to download and update on their own, streamlining the user’s experience by saving them immeasurable time and hassle. 

All SaaS can be categorized into one of two groups: vertical and horizontal. Vertical SaaS work within the bounds of a single industry. They focus on clients with more specialized needs, such as Clio, which is a SaaS that only addresses law firms. Meanwhile, horizontal SaaS work across multiple industries, addressing multiple needs at once. A good example of a horizontal SaaS is Quickbooks, which works for any type of bookkeeping you might need done, from time tracking to accounting. Though both groups of SaaS employ the same distribution method, the main difference between vertical and horizontal SaaS software lies in who their customers are and how the SaaS serves them. 

Popular Examples of SaaS That You’ll Probably Recognize

Remember, even if you’ve never before heard the term SaaS, you’ve almost certainly used a SaaS software company in the recent past. Below are some examples of well-known SaaS platforms to give you a clearer idea of how Software as a Service functions.

  • Google Drive: an automatically-updated platform that allows users to create documents, spreadsheets, and presentations
  • Salesforce: a platform that focuses on managing customer relations
  • Slack: a platform that allows co-workers to communicate via direct messaging
  • DocuSign: a platform that enables users to virtually sign and exchange documents
  • Dropbox: a platform that acts as a file-hosting service, allowing users to easily share files and back up work

The Advantages and Disadvantages of SaaS

Now that you’re familiar with Software as a Service, and you’ve seen some examples of it in the real world, it’s time to analyze the pros and cons of SaaS platforms before you decide to make the switch.

Advantages:

  • Eliminates the need for all hardware maintenance and associated costs
  • Potential to save money on IT costs—studies show companies saved an average of 15% in IT spending
  • Data is more easily accessible through a centralized platform
  • Changes and updates are done automatically 
  • Updates are done faster since hardware isn’t involved

Disadvantages:

  • The option to stick with older software versions is taken away from the customer, thus forcing users to keep up with changes, which may be challenging for some users 
  • Software-integration problems can occur when switching to a SaaS model
  • Companies (rather than the cloud vendors) are held directly reliable in case of a data breach, and may face legal repercussions 
  • Many SaaS companies charge monthly fees as opposed to a one-time charge for downloading a software, which some people prefer
  • Slow internet speeds can mean slow software performance

Staying up-to-date in the software industry can be challenging. At KitelyTech, we work with companies to develop and implement new software solutions. We can help you build the software that you need, as well as help you find the best way to manage it. Call us at (800) 274 2908 to discuss your software needs and how we can help.

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