What is Saas: Software-as-a-Service explained

Software-as-a-Service (SaaS) is a booming business in the IT world. It is not for nothing that players like Adobe and Salesforce have a turnover of well over 180 billion dollars. The technology is therefore more than just selling software without hardware.

The idea behind centralizing business applications has been around for some time. Since the globalization of the Internet in the 1990s, it has taken the form of Application Service Providers (ASP). Some applications were hosted by so-called vendors, although the user still had to install a lot of software on their own computers.

Software-as-a-Service is actually the logical evolution of the APS model. With the difference that vendors still offer their software, but no longer requires an installation on the user’s site. Everything takes place via the internet and the cloud. SaaS’s breakthrough was largely due to the more stable internet connections and the standardization of digital technologies.

With Software-as-a-Service, the responsibility and maintenance of software shifts completely to the supplier’s side.

Get rid of disks and downloads

As a company, you don’t buy a one-time version of a product with SaaS. No more hassle with cumbersome installations, updates, limited users and sufficient storage capacity. Due to a vendor’s central distribution, subscribing to a product is sufficient. High-speed Internet and modern browser technology such as HTML5 and JavaScript allow the user to operate software directly via a web browser.

SaaS’s business model differs from traditional software. The buyer (usually) no longer owns the software because a copy of the product has not been purchased. The user, on the other hand, gets a license by paying a subscription. Compare that to streaming services like Spotify, Amazon Prime or Netflix. SaaS offers a great degree of flexibility, both to the user and the developer of the software.

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Advantages of SaaS

Software-as-a-Service can put several trump cards on the table to convince a company. Besides the practical side of things, SaaS is simply more convenient and cost-effective for many organizations. An overview:

  • Low setup and infrastructure costs with no software to install or storage space required
  • No need for solid hardware internally for complex applications
  • Everywhere at your fingertips via any connected device. An interesting benefit for those who regularly work from home or to prevent loss of productivity
  • Fast implementation from purchase to download to use the software
  • Scalability of use often calculated on the number of users. As a company, you only take what you need from employee access
  • Automatic updates from the vendor, eliminating the need for maintenance costs or in-house support
  • Improvements to the software are made by the supplier, often in consultation with the user. The IT manager doesn’t have to worry about that either
  • Highest level of security for each user, with the supplier as responsible
  • Vendors prefer SaaS offerings because that way they have guaranteed monthly (yearly) spread revenue, ensuring consistent finances and happy shareholders

Scalability and flexibility are the key words in this section. From the number of people working with the software to the time saved for the company’s IT specialist. A SaaS product usually comes in the form of a subscription, sometimes even with a free trial. The finance director therefore does not have to cough up a (gigantic) amount in advance. Users always receive the latest version of the program.

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Players in the SaaS field

The Saas playing field is a multi-billion dollar business where major players are active. The biggest in 2021 was, with a street leader, Adobe, the provider of all kinds of layout programs such as PhotoShop and InDesign. Last year, Adobe had a turnover of 315 billion dollars. Salesforce was a nice second place with 251 billion. Shopify ($185 billion), Intuit ($154 billion) and Servicenow ($128 billion) rounded out the top five.

Striking: Salesforce saw its revenue grow by $90 billion in six months. The biggest growth was registered with Shopify, which registered no less than 225 percent growth in one year.

The business model completely flipped

With Software-as-a-Service, the responsibility and maintenance of software shifts completely to the supplier’s side. With traditional software, everything was ‘in-house’: the application(s) itself as well as data, runtime, middleware, virtualisation, servers, storage and the network were among the IT manager’s bread and butter.

SaaS shifts that responsibility to the supplier, so lost ICT can focus on other and at least equally important tasks. The mode of consumption is suitable for both small businesses and global actors. Perhaps this is especially true for smaller organizations, where the scalability and cost-saving benefits of SaaS are exactly the same.

SaaS is an increasingly fast-growing and innovative industry with affordability, flexibility, reliability and availability at its core.

Be careful with data and security

In addition to the various benefits of SaaS for businesses, the service also entails certain risks. The main focus is the security of sensitive data. No organization wants to experience data being exposed. Therefore, the importance of a good login procedure cannot be underestimated. At the same time, data from the SaaS application must be shared securely with everyone.

Speaking of data: suppose a company changes provider or supplier, then all data must be able to be transferred in a secure way. Good deals make best friends, also in this story. Especially because by outsourcing everything, the customer leaves the control of the application and the storage of data to the supplier. Good management of software assets is therefore of vital importance.

The future is SaaS-ig

Software-as-a-Service is already a multi-billion dollar ($141 billion in 2021) business and will only grow in the coming years. Its value is expected to increase to more than $720 billion by 2028. The ways to offer SaaS are also constantly evolving. Five trends are on the threshold of the SaaS world.

  • AI as a red thread through the company, which is already standard in many organizations. Automation can and will increase in SaaS applications as well. The security aspect as described above also applies here
  • Vertical SaaS focuses on specific audiences and niches. This adaptation to certain sectors requires more effort, but at the same time brings even more flexibility and opportunities for both customer and supplier.
  • MicroSaaS offers a solution to the market dominated by large players such as Adobe. MicroSaaS developers are marketing tools, extensions and plugins for other SaaS platforms and products. Grammarly for Google Docs is an example.
  • From Software-as-a-Service to Platform as-a-Service to increase customer loyalty even more. Due to the fierce competition, more and more providers are looking for ways to serve customers better and in a unique way. PaaS offers .customer-customized applications that meet their individual needs
  • SaaS and Blockchain to guarantee transparency and security, even if the technology is not yet ready. Blockchain technology, among other things used in cryptocurrencies, can contribute to customers’ data security through a transparent way of working. In addition, customers could pay via cryptocurrencies. On the other hand, Blockchain can help suppliers develop customer-friendly systems

SaaS is an increasingly fast-growing and innovative industry where affordability, flexibility, reliability and availability are at the center. Central for both providers and customers who want to increase their market share or reach targets.

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