The Ultimate Guide to Software as a Service (SaaS)

Understand how SaaS works, when to use it, and what it can do for your business.

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What is Software as a Service (SaaS)?

Software as a Service (SaaS) is a service model that allows users to access and use the application over the Internet. Users don’t need to download or install the software on their computers. Instead, they can access it through a web browser or as a standalone application. Typically, SaaS applications are paid for by monthly or yearly subscriptions.

The benefits of SaaS include lower upfront costs, ease of use, and regular updates. Because users access the software via the Internet, they can also access it from anywhere in the world. It makes SaaS an ideal solution for businesses with employees who work remotely.

What are the Different ‘As A Service’ Trends?

SaaS is only one of the many cloud computing solutions for business IT needs. Other common ‘as-a-Service’ options are:

  • Infrastructure as a Service (IaaS)
    Using Infrastructure-as-a-Service (IaaS), users can access virtualized resources, such as storage and software, over the internet. The provider hosts the hardware and other infrastructure components needed for these services.
  • Platform as a Service (PaaS)
    A Platform-as-a-Service (PaaS) provides users access to hardware and software tools via the Internet. It’s usually necessary to use these tools when developing applications. The hardware and software are hosted on third-party infrastructure by PaaS providers.
  • Everything as a Service (XaaS)
    XaaS is a service that delivers anything over a network, typically the Internet, as an alternative to providing it locally or on-site.

SaaS Characteristics

SaaS applications have a few key characteristics that set them apart from other types of software. These include:

Multitenant Architecture

A multitenant architecture means that all users and applications share a single infrastructure and code base. The SaaS vendor centrally maintains it. Because all clients are on the same infrastructure, the vendor can innovate more quickly. They can save time on developing numerous versions of outdated code.

Easy Customization

It is possible to customize SaaS applications to fit specific company processes without compromising the quality or integrity of the shared infrastructure. With SaaS upgrades being more frequent and less complex, providers can offer these services at a much lower cost while maintaining customer satisfaction.

Better Access

Anyone with access to the network can easily access the data from all the devices. It is easy to track who can see what data and when they can see it. This way, everyone has the same information at the same time.

SaaS Harnesses the Consumer Web

With the SaaS model, businesses can take advantage of the same technologies consumers use daily. These include social networking, mapping, and search. It makes it easier for employees to use the applications and get the most out of them.

Examples of SaaS Applications

There are many different types of SaaS applications available. Some common examples include:

  • Project management software
  • Customer Relationship Management (CRM) software
  • Non-profit software/Donation management software
  • Enterprise messaging software
  • Social media management software
  • Employee engagement software
  • Digital signature software
  • Business phone system software
  • Team communication software
  • End-to-end analytics platform
  • Website hosting software
  • Document management software
  • Digital adoption software
  • Live streaming software
  • Lead management software
  • Accounting software
  • Automation platform/Cloud integration software


SaaS is a way for organizations to use applications without installing or running them on their computers. They do not need to spend money on additional hardware, software licenses, or installation. Other benefits of using the SaaS model include the following:

Flexible Payments
Rather than buying software licenses to install or getting new hardware, customers can subscribe to a SaaS. Thus, businesses can better plan for it. Users can also stop the SaaS offering anytime if they want to.

Scalable Usage
SaaS offers customers the ability to vertically scale their service, meaning they can have more or fewer features as needed. It’s helpful for businesses that experience seasonality or sudden growth spurts. They can add features when needed and remove them when they don’t. Check out 10 Best Business Continuity Software of 2023.

Automatic Updates
Users don’t have to waste time or money on updates and patch management because the provider will take care of them. In other words, SaaS takes a load off of your company’s in-house IT staff.

SaaS applications can be customized to fit your needs and can be integrated with other business applications, especially if they come from the same software provider.


SaaS also poses potential risks and challenges that organizations should be aware of. These include.

Issues Beyond Customer Control
If providers experience security breaches or service disruptions or make changes to their offerings that customers don’t want, it can cause serious problems. To prevent these issues from occurring, customers should be aware of their SaaS provider’s Service Level Agreement (SLA).

Customers Lose Control Over Versioning
Any new version of an application released by the provider will automatically be applied to all customers, regardless of whether they want it or not. It may cause hardships for the organization, which will have to spend more time and resources training its employees to use said updated application.

Difficulty Switching Vendors
It can be challenging and time-consuming when customers want to switch cloud service providers. They have to migrate petabytes of data, which is no small feat. And if the vendor uses proprietary technologies or data types, that further complicates things and creates what is called “vendor lock-in.”

Security Concerns
When using SaaS applications, businesses must trust that their provider will keep their data secure. If the provider needs adequate security measures in place, it could risk the customer’s data.

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What are the Different SaaS Security Concerns?

Although most software products are now cloud-based models, organizations still have concerns about SaaS products and whether they are secure. Some of these concerns include the following:

  • Encryption and Key management
  • Identity and access management (IAM)
  • Security monitoring
  • Incident response
  • Poor integration into broader, company-specific security environments
  • Fulfillment of data residency requirements
  • Data privacy
  • Cost of investing in third-party tools to offset the SAAS security risk
  • Lack of communication with technical and security experts during the sales process
  • Different SaaS Pricing Models

SaaS providers have different subscription models for customers. Below are some examples.

  • Free or ad-based – The SaaS provider generates revenue by selling advertising space on the free version of their service. Users can upgrade to a paid tier that doesn’t include ads.
  • Flat rate – Customers subscribe to the software for a monthly or annual fee and have access to every feature.
  • Per user – The subscription fees are fixed, and the amount is determined by how many people will use the service.
  • Per-user tiers – The pricing tiers for this subscription depend on how many people can actively use the service at one time.
  • Storage tiers – After customers exceed the free storage limit for a product, they will be required to pay a fee if they wish to continue using the service.
  • Pay-as-you-go, or usage-based – Customers who use the service more frequently have higher bills, and those who use it less have lower bills.
  • Per active user – This strategy includes features of the “per-user” and “pay-as-you-go plans.” A per-user fee is charged only to subscribers who actively use the service.
  • Feature-based tiers – The software’s price depends on how many features the subscriber wants. A reduced version of the software with limited features is cheaper than the maximum functionality tier. There may also be additional feature tiers between the minimum and maximum functionality tiers.
  • Freemium – Although the service is overall free to use, there are some features that customers will have to pay for if they want full access.

FAQs About SaaS

It’s possible to customize most SaaS software to a certain extent. You can add your company’s branding, change the color scheme, and add or remove features. Some users can optimize their workspace, like a task list or dashboard, to only show the needed information and boost their productivity.

In nearly all cases, your company still owns the data in a cloud-based system. Most service level agreements (SLAs) confirm your ownership of the data on the vendor’s servers and your right to retrieve this information. Most contracts have built-in provisions and prepaid fees that will allow you to maintain access to your data. Additionally, vendors usually permit users to export their data and create local backups at any time.

To ease cloud security concerns, software providers go to great lengths to show how well-protected client data is in their servers. Many SaaS providers use public cloud services that boast high levels of security to deploy and store their software instances and data. Most companies put their data at more risk by keeping it in-house. There needs to be more money allocated to IT security, and employees or others could unintentionally leak data or introduce security gaps.

Although software vendors may not always stick around, your data usually does. Most SaaS vendors prepay their hosting fees to ensure the customers’ data will still be accessible in case something happens to the company. This way, if the vendor goes under or is consolidated, at least the customer’s information will be safe and sound.

Rob Paredes
Article by
Rob Paredes
Rob Paredes is a content contributor for SafetyCulture. He is a content writer who also does copy for websites, sales pages, and landing pages. Rob worked as a financial advisor, a freelance copywriter, and a Network Engineer for more than a decade before joining SafetyCulture. He got interested in writing because of the influence of his friends; aside from writing, he has an interest in personal finance, dogs, and collecting Allen Iverson cards.