What does Software-as-a-Service mean?

SaaS definition: SaaS stands for Software-as-a-Service. Software-as-a-Service is a software licensing model where the cloud provides access to software based on subscription. In addition, in this model, an independent software vendor (ISV) contacts a third-party cloud to provide the host with the application.


The software is located on external servers rather than the servers at home.  Software-as-a-Service is accessible through a browser. Instead of installing the application, a user logs in to the system using a username and password to access the services through the internet.


How does SaaS work?

SaaS works on cloud computing. Cloud computing is a process where internet services are available through the internet. This often involves data storage, networking, and servers.  So, this eventually forms a cloud delivery system.


Earlier, Companies use to have tough times upgrading their computer systems. The primary reason for this was a costly purchase of compact disks for respective computers. SaaS made this easy and fast. The updates are now available via the internet also companies can buy additional licenses rather than additional disks.


For accessing a particular service users can log in using the internet or web browser by connecting to a service provider. Further, in the Software-as-Service model, the provider gives customers access to a single copy of an application that is made specifically for SaaS distribution. Apart from that, users also get direct access to software once they purchase the subscription.


The application source code is similar for all the customers. So whenever updates with new features and functionalities are rolled out each customer gets those benefits.


Software-as-as-Service (SaaS) Architecture



Multi-tenant cloud architecture

In multi-tenant customers have the ability to share computing resources in public or private? The reason is – both users and applications share a common infrastructure that is centrally maintained.


The typical multi-tenant architecture makes work easy for cloud service providers because it allows easy maintenance, updates, and fast bug fixing.


Additionally, multi-tenant makes a great bunch of resources available for a large group of people without compromising important features such as security, speed and privacy.

Features of SaaS

  • Simple accessibility
  • Familiar web-based interfaces
  • Speedy feature delivery
  • Open integration protocols and APIs
  • Collaborative social functions

SaaS and Cloud –Growth of SaaS

Both SaaS and cloud share a great relationship. Cloud helps companies consume computing resources. Nowadays companies do not have to worry about setting up computing infrastructure in-house.

Reasons for growth of SaaS

  • Increase in the number of users of mobile devices
  • Increasing broadband access
  • Standardization of digital technology 
  • The growing popularity of web-like interface

Software-as-as-Service (SaaS) Security and Privacy 

In Software-as-a-Service cyber security risks associated are different from the ones associated with traditional software. In traditional software, the vendor is expected to take care of code-based vulnerabilities, while the user is responsible for the execution of software on a secure network platform.


Hence, the independent software vendor and third-party cloud provider have a major responsibility in security.


Despite all this, many companies still have reservations about SaaS products. Why?

Here are the reasons:

  • Encryption and key management
  • Security monitoring
  • IAM – Identity and Access Management
  • Incident response
  • Poor integration in company-specific security environments
  • Data privacy
  • Third-party involvement cost
  • Minimal communication with technical and security experts while processing the sales

Also read about the latest trend these days: Wearable Technolgy

Software-as-as-Service (SaaS) Advantages and Disadvantages

SaaS Advantages 

  • Easy implementation
  • Accessible from any location
  • Elimination of high expense in hardware acquisition, maintenance, as well as software licensing
  • Scalable usage
  • Flexible payment
  • Easy Automatic updates
  • Easy debugging
  • Customization

SaaS Disadvantages

  • Security risks due to data storage on external servers
  • Slow internet connectivity will reduce performance
  • Loss of control
  • Lack of customization

SaaS Pricing Model

Using a SaaS product is more cost-effective than a traditional software license for enterprises. SaaS provides many subscriptions based pricing models for customers

  • Free

The service will be free to use at an entry-level but will limit users with functional restrictions to lure the customers to the premium level.

  • Ad-based 

Service may be free for users, with the SaaS provider generating revenue through selling advertisement space. In this model, there is an option to upgrade to a paid tier that doesn’t include intrusive ads.

  • Fix rate

Customers have access to the software’s full set of features for a fixed monthly or annual subscription fee.

  • User count

At times, pricing is set through criteria like, how many people will be using the service for each subscription? Often the price is fixed for every user.

  • Per-user tiers

Pricing tiers are based on a range of how many active users can exist on a single subscription.

  • Storage tiers

Customers generally have free access to the service but may have to pay for the storage in order to continue using the product.

  • Usage-based

To understand, just think of the postpaid concept. So, more the users use the service, the more they charge and vice versa. 

  • Per active user

Here, Subscribers are billed per user, but only if the user has been actively using the services beyond a specific limit.

  • Feature-based 

Here user gets access to a reduced version of the software. So, the cost is less. However, with the price being low software comes with limited features.


Software-as-a-Service Examples 

Well known SaaS products:

  • Salesforce
  • Netflix
  • Google workspace apps
  • Zoom
  • Amazon
  • Adobe creative cloud

Also Read: How do free apps make money?

SaaS vs IaaS vs PaaS

SaaS is not the only ‘as-a-Service’ option available. There are correspondingly two other major cloud services IaaS– Infrastructure-as-a-Service, and PaaS– Platform-as-a-Service.


The three services differ at a common junction –completeness of the product.





  • Complete and fully manageable applications
  • Custom packaging
  • Managing software maintenance through vendors


  • Used for Outsourcing data center and computer resources to the cloud provider
  • Provides components such as servers, storage, network, and virtualization 


  • Delivers a development platform and framework of resources
  • Useful for creating customized application

Future of SaaS

SaaS with Cloud computing has come a long way since its inception. In fact, the major boost in the popularity of SaaS is due to its increasing awareness. This further leads to the growth of SaaS Integration Platforms (SIPs), IaaS & PaaS.


The new innovations are possible because many companies are adapting to various “aaS” Services. Further, this will help grow a long-term relationship between the company and the outsource specialist providers.


In the upcoming future, high-performance computing will simplify the wide range of business uses such as –

  • Analysis of customer data (Big-Data)
  • Monitor application logs
  • Predicting customer behavior through patterns
  • Sorting out the best business practice for the particular business


SaaS provides subscriptions for services via the internet and also covers many business applications. Its easy implementation attribute is what makes companies choose it for their businesses.  


So what are you waiting for! Get your SaaS application ready and take your business to next level.

Published On: May 4th, 2022 / Categories: Software / Tags: /

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