What is Software as a Service (SaaS)

What is Software as a Service (SaaS)?

SaaS is one of the three classic cloud computing service models and makes software applications available as a service from the cloud. Customers do not have to install or operate their own software and do not need classic software licenses. Cloud providers host the applications on their platforms and make them available via network connections. Billing depends on the number of users, the functions provided, or other features.

The acronym for Software-as-a-Service is SaaS. Along with Platform-as-a-Service and Infrastructure-as-a-Service, it is one of the three classic cloud computing service models. SaaS makes software applications available as a service from the cloud. Typical applications provided via SaaS are CRM applications, email applications, office applications, collaborative applications, and many more. The software is managed by a cloud provider and operated on its multi-tenant cloud platform. The provider manages and maintains all software and hardware components required to provide the applications. In some cases, the cloud providers are both manufacturers and providers of the software. But you can also host and deploy third-party applications.

The applications can be accessed via a network connection. As a rule, use takes place via internet connections and web browsers. There are various tariff and subscription models for billing the use of the application. The services can be billed monthly or annually, for example, based on the number of users, the transactions carried out or the functions provided. Under certain circumstances, the basic functions of the applications can be used free of charge. There are also advertising-financed SaaS offers.

There are now a large number of companies that offer their own or third-party software applications in the form of SaaS. Well-known players in the SaaS market include, for example, Amazon, Google, Microsoft, Apple, Salesforce, Adobe, SAP, Slack Technologies, Dropbox, Box.com, IBM, Oracle, Atlassian, Mailchimp and many more.

The other classic cloud computing service models

Of the three classic service models of cloud computing, SaaS represents the highest level of cloud services. Platform-as-a-Service is located below it. PaaS provides the environments and resources needed to develop, run, and manage software applications, such as runtime environments, operating systems, program libraries, databases, developer tools, SDKs, and others. The lowest level of cloud services is Infrastructure-as-a-Service. IaaS aims to provide the typical resources of a data center infrastructure such as computing (processing power), storage (storage space), and networking (network resources). Some definitions also list Function-as-a-Service (FaaS) and Serverless Computing as classic cloud computing service models.

Example of software applications provided as part of SaaS

The range of software applications provided as part of SaaS is huge. Typical applications include office applications, email, messaging and video conferencing, collaborative applications, content management systems (CMS), document management, customer relationship management (CRM) applications, human resources (HR) applications, financial management applications, ERP Applications (Enterprise Resource Planning), databases, eCommerce applications and much more.

Delivery models for Software-as-a-Service

The typical delivery model for SaaS is to deliver the applications over a public cloud. Users access the software applications via internet connection and web browser or other tools. In addition, the private cloud and hybrid cloud delivery models are also possible. Applications in a private cloud are not accessible to everyone. They are operated exclusively for certain customers or customer groups and can be reached via secure, private network connections. A hybrid cloud combines the delivery of applications from a private and a public cloud. In this way, the specific advantages of both delivery models can be used, for example by operating sensitive applications in a private cloud and obtaining less critical applications cost-effectively from a public cloud.

The advantages and disadvantages of Software-as-a-Service compared to traditional on-premises software delivery

Compared to classic local provision of software, SaaS offers the following advantages, among others:

  • no own investments in hardware or software and licenses for the provision and operation of the applications necessary
  • the provider assumes all tasks for the operation and maintenance of the applications (e.g. installing patches or updates)
  • Applications can be deployed quickly without a long lead time
  • the application performance is flexibly scalable
  • the services are billed in a transparent, usage-based cost model
  • Applications can be used from any location and with different end devices
  • low demands on the local computer to run the applications (internet connection and web browser)
  • central storage and processing of data prevents local data leakage
  • new program versions and functions are available promptly

Typical disadvantages of the SaaS service model compared to classic on-premises software delivery are:

  • Customers become dependent on a cloud provider and its products, services, availability, quality or security standards, and price models
  • Changing providers can involve a great deal of effort
  • sovereignty over the applications and the processed or stored data is lost
  • Individual adjustments to the software can only be implemented to a limited extent
  • the use of the services of external cloud service providers can lead to violations of data protection regulations and compliance guidelines
  • bad internet connections cause problems in using the applications
  • public cloud platforms are popular targets for cyber attacks
  • other customers of the platform may influence the performance of the application
  • individual service-level agreements may need to be negotiated and monitored
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