What is SaaS?

9 min
Dec 08, 2022

If you’re just beginning to research the idea of SaaS, this is the place to understand what SaaS can accomplish for you, how it works and differs, what are the main examples and what the future holds for SaaS development.

What is a Software as a Service (SaaS)?

A method of distributing programs via the Internet is known as software as a service (or simply SaaS model). You may avoid complicated software and hardware maintenance by just accessing the software via the Internet rather than installing and maintaining it.

SaaS applications are sometimes referred to as hosted software, web-based software, and on-demand software. Whatever name they go by, SaaS apps run on the servers of a SaaS provider. Security, performance, and availability of access to the application are all managed by the supplier.

How does SaaS work?

SaaS functions as an on-demand software for delivering software for on-demand computing. Application service providing is comparable (ASP). Online user interfaces are used to offer custom software that is hosted by third parties using ASP.

Customers are given access to apps by SaaS providers. Local or cloud storage options are available for customer data. An API can be used to link SaaS with other current programs.

SaaS work

Software vs Saas

SaaS is used by IT experts, CIOs, and business users from small businesses to global corporations to support common technological configurations like:

  • Email;
  • Customer relationship management (CRM);
  • Human resource management (HRM);
  • Financial management;
  • Sales management;
  • Billing.

Examples of software as a service

There are many advantages to SaaS, but what about some concrete examples of SaaS? You probably already use SaaS applications without even realizing it. SaaS solutions may be offered primarily to B2B, B2C, or both markets. It might include, for instance:

  • Salesforce;
  • Google Workspace apps;
  • Microsoft 365;
  • HubSpot;
  • Trello;
  • Netflix;
  • Zoom;
  • Zendesk;
  • DocuSign;
  • Slack;
  • Adobe Creative Cloud;
  • Shopify;
  • Mailchimp.

SaaS vs. PaaS vs. IaaS

SaaS vs. PaaS vs. IaaS

As-a-service goods are still expanding quickly. However, in general, they may be divided into one of three groups: SaaS, IaaS, or PaaS.


All business IT workloads today consist of 24% software as a service. SaaS platforms offer consumers online access to software without installation in exchange for a subscription fee that is frequently based on a monthly price structure.

In other words, organizations don’t require IT personnel to maintain many instances of computer software. SaaS enhances user experience because everything takes place in the cloud and is handled and maintained by your external service provider for a fixed fee.

Although the service is expandable to bigger, enterprise-level corporate demands, basic software may be put up in a couple of hours. Businesses looking for little IT involvement and the assurance that a qualified team is on hand to assist may consider SaaS.

benefits software as a service


Right now, the most widely used cloud computing approach is a platform as a service. It now holds a 32% market share majority and is predicted to continue expanding. On the internet, hardware and software tools are provided by PaaS companies.

These internet resources are used by companies and organizations to create their unique apps. So, developers make up a large portion of PaaS consumers. Using PaaS allows developers to save time and money. They are not required to create a ton of new code.

To use PaaS solutions, you don’t need to have a lot of technical expertise. This implies that rather than managing software, developers can concentrate on creativity and brand identity. Clients only need to upload and keep an eye on their apps.


12% of the market is now occupied by infrastructure as a service. IaaS technologies provide businesses with cloud-based networking, virtualization, and storage options. This is a fantastic substitute for costly and labor-intensive on-premises infrastructure.

Businesses may pay as they go—again, often every month—and scale up proportionately instead of making significant investments in specialized IT infrastructure and labor. IaaS consumers don’t need specialized assistance to access and manage their systems.

IaaS is a fantastic option for organizations to future-proof their operations since it gives them autonomy, savings, scalability, and continuing support.

disadvantages of the SaaS model

Pros and cons of the SaaS model

Organizations no longer need to install and operate apps on their PCs or in their own data centers thanks to SaaS. The advantages of SaaS remove the cost of purchasing, procuring, and maintaining hardware as well as purchasing, installing, and supporting software.

Benefits of software as a service:

  1. Low cost for setup
    Without making capital investments that must be gradually depreciated on your balance sheet, you just pay for what you need.
  2. Easy access
    Using a desktop, laptop, tablet, or another networked device, all you need to do is connect to the internet and start working from anywhere you need to be.
  3. Scalability
    As your organization expands, you may modify your requirements to account for the system’s user base, data volume, and functional needs.
  4. Industry-leading service level agreements (SLAs)
    You now have guarantees that the product will be usable when you need it, which is something internal teams find challenging to guarantee.
  5. Constant and automatic updates
    Due to their size and the input, they get from their clients on their needs, providers frequently provide upgrades. Your IT department may now focus on other, more crucial business activities as a result.
  6. High level of security
    All users profit from the security level that has been established for those with the highest demand because the service is shared by all users.

Disadvantages of the SaaS model:

Data security and delivery speed are the main drawbacks of SaaS adoption. Companies must ensure that data is secure and cannot be accessed by unauthorized parties since it is kept on external servers.

Performance can be affected by slow Internet connections, especially if cloud servers are being contacted from a great distance away. Internet connections are typically slower than internal networks. SaaS solutions experience a loss of control and a lack of customization as a result of their distant nature.

  1. No full customer control
    The ability of customers to use the SaaS offering may be significantly impacted when service interruptions, unwelcome changes to service offerings, or security breaches occur at the providers. Customers should be aware of and ensure compliance with their SaaS provider’s SLA to prevent these problems from occurring.
  2. New versions might cause issues
    No matter whether a customer wants the more recent version of an application, if a provider adopts it, it will be made available to all of its clients. The company may need to devote more time and money to training as a result of this.
  3. Difficulty switching vendors
    Switching suppliers may be challenging, as it is with utilizing any cloud service provider. Customers must move extremely huge volumes of data to change vendors. The usage of proprietary technologies and data formats by some suppliers can also make it more difficult to move consumer data between multiple cloud providers. When a consumer finds it difficult to switch service providers as a result of these circumstances, vendor lock-in occurs.

What is the future of SaaS?

SaaS and cloud computing has advanced significantly in recent years. SaaS Integration Platforms (SIPs) like Infrastructure as a Service (IaaS) and Platform as a Service have emerged as a result of increased awareness and adoption of SaaS products (PaaS). Companies will continue to hire specialized service providers that can execute non-core IT tasks better to handle them for them.

The cloud approach can assist businesses in creating comprehensive, integrated solutions and free them up to focus on their core competencies while leaving a variety of hardware and software IT issues to service providers.

High-performance computing will be useful for a variety of business applications in the future, including the analysis of huge amounts of customer data and the monitoring of application logs. SaaS may one day be able to assist with important business challenges like identifying which customers will leave or what cross-selling strategies are most effective for your company.

by Ivan Klyzhenko
UX Startup Advisor, Uitop


What are the key characteristics of the SaaS model?

Multitenant SaaS Architecture

SaaS providers can innovate more quickly and save important development time since all of their clients use the same infrastructure and code base. Previously, vendors would have had to maintain various versions of obsolete code.

Better Access

Improved access to data from any networked device while making it simpler to control access rights, keep track of data use, and guarantee that everyone is viewing the same information at once.

Easy Customization

Each user should be able to quickly alter programs to meet their unique business processes without negatively impacting the shared infrastructure. As a result, SaaS providers may provide updates more often, with substantially lower adoption costs and less client risk.

What Is SaaS Marketing?

SaaS marketing makes use of conventional marketing techniques to publicize and gather leads for websites or web-based software programs and information services.

How Is MRR Calculated for a SaaS Business?

A crucial indicator for SaaS companies that use a monthly subscription pricing model is monthly recurring revenue (MRR) MRR is easily calculated by simply dividing the total number of accounts for the month by the average revenue per client.

What Is B2B SaaS?

Organizations that offer software services to other businesses are referred to as B2B SaaS. These tools assist businesses in streamlining a wide range of operations, such as marketing, sales, and customer support.

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