What is SaaS | Software as a Service Explained in 2 Minutes
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Written By
The IoT Academy
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Published on
October 21st, 2023
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Updated on
October 30, 2023
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IaaS, PaaS, and SaaS may sometimes be referred to as cloud service offerings or cloud computing categories. But they all describe how you use the cloud in your company. Moreover, they define the level of service that you are in charge of in your cloud environments. “As a service” often implies that a third party offers the service model in the cloud. Platform as a Service (PaaS), Infrastructure as a Service (IaaS), and Software as a Service (SaaS) are the three main classes of cloud computing.
Furthermore, SaaS is also a way of delivering applications over the Internet as a service. The below blog will explain the basics of SaaS including its applications, companies, and models.
What is Software as a Service SaaS?
SaaS is a licensing model where access to the program comes on a subscription basis. Additionally, the software remains there on external servers rather than internal servers. Therefore, the users enter into a system using a username and password. Examples of popular SaaS products include Google Workspace, Zoom, Netflix, Spotify, and Trello.
Moreover, organizations in the technology, financial services, entertainment, and utility sectors also influence the use of a SaaS platform. Additionally, users can also access the program online rather than installing it on their computers.
Before SaaS, businesses who wanted to update the software on their computers had to buy CDs holding the updates. Therefore, first, they need to download software onto their systems which takes a lot of time. But now, Software as a Service user can easily connect to the network of the service provider. They only have to log in via the internet or web browser.
SaaS Application and Uses
Its applications can be seen in:
- Software Development SaaS Companies
Businesses apply collaboration SaaS technologies to manage, iterate, and deploy apps. Thus, they use only the apps that are fit for what they do. Example: Splunk
- Cybersecurity Companies
Cyber Security organizations also use the Software as a Service model. So, they can easily assist clients in identifying, planning, and tackling cyber threats. Therefore, the users can work effortlessly on their networks. Example: Okta
- SaaS Providers for Education
Businesses use SaaS solutions in education to assist teachers and students. Hence, they provide evaluations, course administration, and training on time. Example: CodeSignal
- SaaS Financial Companies
Businesses use financial SaaS solutions to assist with employee spending, accounting, and payroll. Moreover, the SaaS industry also helps with invoicing and payments. Example: Paychex
- SaaS Providers of Data Analytics
Businesses use SaaS data analytics firms to watch their data. Hence, they make informed decisions about their operations and corporate objectives. Example: Tableau
- SaaS Companies Providing Human Resources
There are many HR Software as a Service firm. But, only a few will provide employers with a full range of services. They can also manage the staff, while others have their areas of expertise. Example: Personio
- E-Commerce SaaS Businesses
E-commerce in SaaS is used by businesses to support their sales, marketing, and payment processes and boost revenues. Example: Zendesk
Characteristics of SaaS Model
- Architecture for SaaS is Multi-Tenant
An architecture known as multi-tenancy helps all SaaS vendor clients and applications. Therefore, they can share a single, centrally maintained infrastructure and code base. Moreover, this design enables manufacturers to innovate more quickly. There will be less effort spent on maintaining out-of-date code.
- SaaS Provides Simple Customization
Users can quickly modify applications to meet their business operations. Therefore, they won’t affect the shared infrastructure. A SaaS approach supports and maintains each user’s and business’s unique customizations through routine upgrades. SaaS providers can also upgrade more often because there is less risk to customers. Additionally, there is a lower cost of adoption.
- Better Network Device Access
With a SaaS model, it is simple to manage permissions and keep an eye on data use. Thus, you can ensure many people can access the same information at once. Moreover, data can be accessed remotely from any networked device.
Good Read: What is Platform as a Service and Its Advantage
SaaS Model: Types and Pricing
- Flat-rate Pricing Model
In a flat-rate pricing model, a product arrives with certain kinds of features for a specific cost. No features or price levels are additionally available but a “one size fits all” approach controls pricing. Thus, you bill your clients the same monthly/annual fee regardless of the number of users or the volume of usage.
Example: Streaming Service
- Tiered Pricing Model
The tiered pricing strategy is a basis for the tiered pricing model which works on the real-world price scenario. The product is also available in many versions and price points under this concept. Thus, the company chooses them based on features, the number of users, or usage. The provider can incrementally upsell features to the clients using this pricing strategy.
Example: Hubspot
- Usage Blades Pricing Model
“Pay as you go” is another name for the usage-based pricing concept in SaaS business. According to this pricing scheme, the client is billed according to the usage. Thus, if they use more, they will pay more; if they use less, they will pay less. Moreover, there are different ways to charge for use, such as by the amount of emails sent. Additionally, providers can also charge by API request or by transaction.
Example: Chargebee
Top SaaS Companies
Because of the greater cloud computing market’s rapid growth, SaaS businesses are clearly on growth. However, starting a company nowadays with only packaged software is difficult. Below is a list of top software as a service companies:
- Microsoft
- Oracle
- Intuit
- Google Workspace
- Practical Ignition
- Pipeliner CRM
- Slack
- Cisco
- GoodData
- Paychex
- Skyword
- Adobe Creative Cloud
- Atlassian
- Veracode
- Grammarly
- Blackboard
Furthermore, some businesses are dealing with large SaaS turnover. Many companies on this list have recently been acquired or integrated by other businesses. Additionally, many are updating their products to satisfy changing consumer demands.
Conclusion
It is clear why so many companies opt to outsource to cloud-based services. This is due to the demand for high-volume data, software performance, and backups rising every day. With the digital age developing faster than ever, the entire SaaS (Software as a Service) market and cloud adoption are also growing. This trend in SaaS will continue for some time to come. The above SaaS examples and companies help to constantly improve how you operate and run your organizations.
Frequently Asked Questions
Q. Which type of cloud is best? Ans. There are many options, and not all clouds are the same. Thus, study their features and pricing and give them a try to see how they match your goals.
Q. Is EC2 an example of PaaS? Ans. No, EC2 is an example of IaaS.
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