Back in the year 2005, the term Software-as-a-Service, or SaaS, was first coined by John Koenig. Since then, SaaS solutions have emerged as one of the most fast-growing segments of IT services.

Located centrally on remote cloud networks and operating on subscription-based plans, Software-as-a-Service products are increasingly gaining popularity for multiple reasons, including affordability and flexibility.

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A recent report from ResearchAndMarkets predicts that the market for Software-as-a-Service products will reach 219.5 billion dollars by 2027, registering a compound annual growth rate of 18.2 percent during the period 2020 to 2027.

The rising adoption of SaaS by enterprises around the world makes it crucial for both entry-level professionals and software company employees to master cloud computing skills to stay relevant in the industry today.

This article provides an in-depth understanding of what is SaaS, how SaaS works, the SaaS architecture, SaaS challenges, SaaS risks, SaaS security, and the benefits of SaaS for businesses.

What Is Saas (Software as a Service)? 

Software as a Service, or SaaS, is among the three most important cloud computing categories, alongside IaaS (Infrastructure as a Service) and PaaS (Platform as a Service).

A software delivery model, SaaS, is offered by cloud service providers that host various applications in the cloud and make them accessible to users via the Internet.

An organization that leases software using a cloud-based, centralized system can qualify as a Software as a Service provider. The SaaS vendor maintains servers, databases, and other hardware to ensure seamless delivery of SaaS products.

Unlike PaaS and IaaS, Software as a Service is marketed to B2C and B2B users. There are various SaaS products on the market today for everyone, ranging from productivity tools, such as Google Workspace, to personal entertainment, for instance, Netflix.

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How Does SaaS (Software as a Service) Work?

Software as a Service delivers SaaS products through a centralized, cloud-based system. SaaS applications can either be hosted on servers, databases, and network resources of a cloud service provider or applications can be hosted by an Independent Software Vendor (ISV) in the data center of a SaaS provider.

The Software as a Service model is intricately related to on-demand software delivery and ASP (Application Service Provider), where an ASP can host customer software and then facilitate its delivery to authorized users over an Internet connection.

End-users can connect to applications via a web browser, on any device, by simply paying a subscription to get access to ready-made SaaS solutions without the hassle of setting up an infrastructure for maintaining software products.

Users also have the liberty of incorporating SaaS apps with any other software, leveraging the Application Programming Interfaces (APIs). For instance, organizations can write software tools and integrate them with SaaS offerings using the APIs of the service provider.

The most popular SaaS models include:

SaaS Architecture

Software as a Service (SaaS) applications typically use the multi-tenant SaaS architecture, meaning that a single, shared instance of SaaS applications runs on a host server, and that shared, single instance will cater to each cloud tenant or subscribed customer.

The multi-tenant SaaS architecture enables cloud service providers to easily and quickly manage, maintain, troubleshoot, and update software, as opposed to taking the time-consuming route of implementing changes across several instances.

In addition, the multi-tenancy SaaS architecture also provides the availability of a larger pool of computing resources to a greater number of people without compromising critical cloud computing functions, such as speed, privacy, and security.

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Benefits of SaaS

One of the core benefits of SaaS is that organizations no longer need to install applications and run them in their data centers or in-house computers. This cuts down the expenses of software licenses, as well as the costs of acquiring, provisioning, and maintaining hardware. Other key benefits of SaaS include:

  • Flexible Payment Options: Instead of buying additional hardware for software support, companies can subscribe to Software as a Service products offered by a SaaS provider. For many businesses, recurring operating costs allow for better, predictable budgeting. Organizations also have the freedom to terminate subscriptions for SaaS products at any point.
  • Unmatched Scalability: Cloud computing services, such as SaaS, offer vertical scalability, allowing users to access fewer or more features and services on-demand.
  • Automatic Software Updates: Leading SaaS providers automatically perform patch management and software updates, reducing the load on internal IT staff.
  • Persistence and Accessibility: SaaS products and applications are delivered via the Internet, facilitating easy access to applications from any geographic location. All that is required is an Internet-enabled device.
  • Customization: Software as a Service applications are highly customizable, and they often provide smooth integration with other business-oriented applications.

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SaaS Challenges and Risks

SaaS presents some challenges and risks, as companies have to rely on third-party vendors for software requirements and maintenance. Here are some other SaaS risks and SaaS challenges that one must know before choosing SaaS. 

  • Computing issues beyond user control: Problems may arise due to frequent service disruptions, imposition of unwanted modifications, or security breaches. All of these can profoundly affect a user's ability to utilize a SaaS offering.
  • Need for tighter access control: Since SaaS applications live in the cloud, stricter identity verification becomes immensely crucial.
  • Low control on versioning: When a SaaS provider rolls out a new application version, it is delivered to all users, irrespective of whether a user needs the latest version or not. A more recent version can cost organizations more to provide training and resources to their personnel.
  • Difficulty in switching SaaS vendors: Often, businesses become overly dependent on a SaaS provider, as migrating to a new provider is an expensive and time-consuming endeavor, especially if a company's entire data resides with a particular service provider.

SaaS Security and Privacy

Despite the accelerated adoption of SaaS products and applications in recent years, many companies still have concerns regarding SaaS security. Some of these SaaS security concerns include:

  • Encryption
  • IAM (Identity and Access Management)
  • Incident response
  • Security monitoring
  • Integration issues with a business-specific security environment 
  • Data privacy
  • Communication gap between security and technical experts
  • Investments related to offsetting of SaaS risks

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SaaS Examples

Ranging from analytics software to productivity tools to online video streaming, the Software as a Service market incorporates a range of SaaS products that both companies and individuals can benefit from. Listed below are top software as a service (SaaS) examples:

  • Google Workspace
  • Adobe Creative Cloud
  • Microsoft 365
  • Salesforce
  • Slack
  • Zendesk
  • Netflix
  • Zoom
  • Shopify
  • HubSpot
  • DocuSign
  • Trello
  • Mailchimp
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Final Thoughts

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