Software as a Service (SaaS) revolutionizes software delivery by offering applications remotely over the internet rather than locally on machines (referred to as “on-premise” software). SaaS applications are alternatively termed:
- Web-based software
- On-demand software
- Hosted software
SaaS shifts the paradigm of software consumption from a one-time purchase of a product, downloaded onto your device, to a subscription-based service, delivering a set of functionalities.
Historically, IT departments installed business software on individual computers and managed manual updates and maintenance. This approach imposed storage constraints on users’ hard drives and necessitated purchasing individual licenses, hindering collaboration and database accessibility.
With SaaS, applications reside on providers’ servers, liberating users from licensing, hardware constraints, and maintenance duties.
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Cloud computing plays a pivotal role, providing accessible “software, data storage, and processing power” via the web. Consequently, users access cloud-based SaaS through websites and applications.
This guide introduces the fundamentals of Software as a Service, highlighting how SaaS:
- Simplifies software upkeep and management
- Lowers initial IT expenditures
- Facilitates collaboration
- Enhances flexibility and scalability
History of SaaS
In the 1990s, with the emergence of the internet, providers began hosting software accessible to customers online. This precursor to SaaS, known as the application service provider (ASP) model, had drawbacks. Each customer needed their own software version, requiring installation on users’ computers, which was both costly and time-consuming. Moreover, ASP solutions lacked efficient data collection and aggregation capabilities.
The late 1990s saw the birth of SaaS, introducing significant efficiencies over the ASP model. SaaS allowed a single application instance to serve multiple users, even customers, through its multi-tenant architecture. Local software installation became unnecessary, and it facilitated centralized data collection, aggregation, and storage.
Although the delivery model has remained consistent since the early 2000s, SaaS has undergone substantial evolution from its initial siloed solutions to contemporary SaaS suites. Modern SaaS platforms offer enhanced visibility across businesses and integrate advanced technologies like AI, machine learning, chatbots, digital assistants, IoT, blockchain, augmented reality, and virtual reality.
How Does Software as a Service Work?
Software as a Service eliminates the need for installing and maintaining software. Instead, you access it via the internet. The provider takes charge of application security, access, storage, and performance. Consequently, your IT department can focus on strategic tasks rather than software and hardware management.
What are the Advantages of SaaS?
Due to its capability for remote application hosting and delivery, Software as a Service (SaaS) offers a primary advantage: seamless access across various locations and devices. This advantage is particularly significant in organizations embracing a “work-from-anywhere” ethos. SaaS users benefit from avoiding the need to install, maintain, or upgrade hardware and software, with the sole requirement being a reliable high-speed internet connection.
However, enhanced accessibility is just one of the many advantages of SaaS. Other notable benefits include:
- Widespread adoption: Cloud computing inherent in SaaS facilitates broader user and departmental access, making its functionalities available across the entire organization rather than limited to a few users.
- Simple onboarding: Many SaaS providers offer comprehensive documentation and training, streamlining the process of adding new users. This results in increased software adoption among employees and maximizes the return on investment.
- Lower initial costs: SaaS eliminates the need for upfront expenditures on licenses, hardware, and infrastructure, thereby lowering the barrier to entry for companies of all sizes and stages of growth.
- Quick deployment: SaaS solutions typically require minimal installation and configuration, often being ready for deployment with just a few clicks. This enables organizations to start using them promptly, accelerating the realization of value.
- Seamless upgrades and updates: SaaS providers can update solutions in real-time via the cloud, enabling rapid iteration of software. Consequently, customers receive frequent updates with additional features, improved security, and fewer bugs.
- Real-time data access: Cloud-based SaaS applications provide instant access to real-time data updates, enabling users to make informed decisions promptly.
- Enhanced customization: SaaS applications are often designed to be customizable, allowing organizations to tailor them to their specific requirements.
- Advanced security: SaaS providers prioritize investments in privacy and security features, which may include zero-trust architecture and data encryption.
- Built-in redundancy: Unlike on-premise software, where data resides on local servers and computers, cloud-based SaaS solutions offer frequent and automatic backups, minimizing the risk of data loss due to unexpected events.
- Offline functionality: While SaaS inherently relies on internet connectivity, many solutions offer offline modes that continue to function even without internet access, with data automatically syncing once connectivity is restored.
- Scalability: SaaS solutions can easily scale in response to an organization’s changing needs, making them suitable for businesses of all sizes.
- Actionable insights: SaaS solutions leverage real-time data from multiple sources, leading to more accurate analytics and reporting capabilities.
The Future of SaaS
Industry experts are optimistic about the future of SaaS. As per a 2017 Gartner report, sales of SaaS solutions are projected to maintain robust growth, surpassing US$270 billion in 2020 and exceeding US$332 billion by 2021, with an annual growth rate of over 23 percent.
Innovations within SaaS solutions themselves are anticipated to be key drivers of this growth, including:
- The increasing adoption of Artificial Intelligence (AI) solutions, which are expected to become integral components of cloud applications across enterprises. AI will enable adaptive intelligence solutions, enabling both back-office and front-office applications to learn and adjust based on user data and behavior.
- Autonomous IT management, AI, and machine learning will also play pivotal roles in fostering more autonomous management across cloud applications and infrastructure, reducing reliance on human intervention.
- In addition to AI and machine learning, a range of adaptive intelligent technologies, such as chatbots, digital assistants, IoT, blockchain, virtual reality, and augmented reality, are reshaping SaaS applications. These technologies are becoming increasingly essential for digital innovation, with forward-thinking providers extending their SaaS offerings to incorporate them.
- Industry-specific SaaS solutions, or vertical cloud applications, are driving deeper integration and horizontal connectivity within organizations. While SaaS initially focused on delivering vertical solutions to individual departments, there is now a growing demand for cross-business visibility. As applications evolve, providers are expected to offer more vertical depth through cross-business suites, along with increased APIs and turnkey integrations for hybrid cloud solutions.
Can moving from on-premise to SaaS make employees more efficient?
Software as a Service (SaaS) can significantly benefit your IT department, your wider workforce, and your customer base.
Traditional software typically requires substantial upfront investments for limited installations. Updates are often in the form of new software versions that necessitate purchasing and installation. Moreover, your company must allocate resources for energy, servers, and storage to accommodate applications and data. Any issues that arise need to be addressed promptly, and the risk of data breaches or natural disasters jeopardizing access to critical applications and information is a concern.
In contrast, SaaS offers a different approach. It operates on a subscription basis, providing pricing options suitable for individual users as well as multiple users. Additionally, software resides on providers’ servers, eliminating the need for hardware maintenance, ensuring automatic backups of applications and data, and facilitating seamless updates. Many vendors also offer training to assist users in maximizing their investment.
These advantages enable your employees to derive greater value from business software, ultimately enhancing the value delivered to your customers.
FAQ’s
How does SaaS differ from traditional software delivery methods?
SaaS delivers applications remotely over the internet, whereas traditional software is typically installed locally on machines. SaaS operates on a subscription basis, offering a set of functionalities as a service, eliminating the need for large upfront investments and manual updates.
What are the advantages of SaaS over traditional software?
SaaS offers several advantages, including simplified software maintenance, lower initial IT costs, enhanced collaboration, flexibility, and scalability. It also eliminates the need for hardware maintenance and provides automatic updates and backups.
What role does cloud computing play in SaaS?
Cloud computing provides the infrastructure for SaaS, offering software, data storage, and processing power via the web. This enables users to access cloud-based SaaS applications through websites and apps, regardless of their location or device.
How has SaaS evolved over time?
SaaS has evolved from its early days of siloed solutions to modern suites that integrate advanced technologies like AI, machine learning, chatbots, IoT, blockchain, and virtual reality. These innovations enhance visibility, connectivity, and customization options for users.
What are the future prospects for SaaS?
Industry experts predict continued robust growth for SaaS, with sales projected to exceed US$332 billion by 2021. Innovations such as AI, autonomous IT management, and adaptive intelligent technologies are expected to drive further advancements in SaaS offerings.
Conclusion
Software as a Service (SaaS) offers significant advantages over traditional software delivery methods. Its streamlined maintenance, lower costs, enhanced collaboration, and scalability make it a compelling choice for modern businesses. With ongoing innovations driving its evolution, SaaS is positioned for continued growth and offers organizations the opportunity to enhance efficiency and deliver value to customers in the digital age.
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