What is Software as a Service (SaaS)?

What is Software as a Service (SaaS)?

The “cloud” phenomenon is causing massive disruption on how businesses are done. Not only does that technology make the world smaller by bringing people together, especially with the use of the Internet, it helps businesses to take off easily. But despite all these technological advancements, a lot of people are not familiar with cloud computing, and they even confuse the terms like Software as a Service (SaaS) and Infrastructure as a Service (IaaS).

Now, if you are so new to all of this, you have come to the right place as we will make things clear for you. Although the cloud should be discussed as an entirely different topic of its own, we will give you an overview here. The first thing to remember is that it is not just about software. Cloud computing is an on-demand service like data storage, which is available online, and thus it is easily accessible to users and does not require direct active management. It has popular subsets with distinct characteristics: SaaS (Software as a Service), IaaS (Infrastructure as a Service) and PaaS (Platform as a Service). For more information there is a short video for you below.

In this article we focus on SaaS, which is a type of cloud computing. You may think that Software as a Service is something new, but in fact it is not! You may have been using it for some time now. To better understand how you can utilize it to help your business, the following points will be about SaaS definition, its benefits, possible disadvantages, and how to balance its pros and cons.

Definition and Explanation of SaaS

SaaS is a software distribution model available over the Internet, where a third-party provider hosts applications to serve customers (users). This means that SaaS technologies do not need to be downloaded and locally run on the user’s PC since the program is hosted by the provider. Instead, it can be easily accessed via a web browser interface.

The main advantages of Software as a Service is that it is cost-effective and time-saving. With SaaS you only need to subscribe, set-up your account, and you are ready to go! It will not be necessary for you to pay for new features or upgrades and licensing. And you do not need to invest upfront in buying servers, security and storage — with all these things you just pay for what you use. Thus, it will also significantly cut costs since there is no need to install, maintain and spend on IT resources.

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If you have a business or managing one, you should consider SaaS because it is a simple yet effective way of running your organization. Business applications such as CRM, accounting software, inventory software and HR management software are all the forms of software technologies that can help you save up to 96%.

If you are still confused, Microsoft Azure’s simple example will help you understand SaaS better. As Microsoft mentioned in the past, they were selling MS Office in the form of DVDs—that means people need to buy the hard copies of the MS Office to use it. At present, however, instead of providing hard copies, users now need only to register for Office 365. Once registered, users can now easily access the product (software) as a service.

Advantages and Disadvantages of SaaS

Like all the elements of programming and the Internet, SaaS has its positive and negative aspects of usage. Below there are these points and their explanations.



SaaS has been enjoying a good deal of popularity these days because of its advantages. The following are some benefits of Software as a Service: 

Easy Deployment and Mobilization

Since the software does not need to be installed and configured on individual computers as it is run on the provider’s server, it can be easily deployed. Although some apps may require plugins, users do not need to download and install SaaS apps as they can be accessed directly from their web browser. This also means that it will not be necessary to upgrade or buy hardware requirements, provisioning and maintenance. Licensing, installation and support expenses will also be eliminated. 


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In general, SaaS offers a subscription model (pay-as-you-go) usually on a monthly basis. This flexible payment method allows businesses to better predict their budget as you only pay for what you use. It also allows users to terminate offerings at any time to prevent recurring costs. 

Automatic Updates

With SaaS you can rely on your provider to automatically perform updates, as well as patch management. This is a good thing instead of requiring you to purchase new software, thus consequently reducing the need for in-house IT support. Considering the updates are automatic, you can rest assured that you have access to the latest version of the software.

Minimized Risk of Losing Data

Another advantage of SaaS is that since data is stored in the cloud, the risk of losing data is lowered even when the user’s device fails or malfunctions. Thanks to SaaS your business can easily mobilize your workforce.

Global Presence

Seeing that SaaS applications can be easily accessed over the Internet, it is possible to use them from any internet-enabled device — anytime, anywhere. Users can easily collaborate with team members too as data is stored in the cloud.

These are the major positive sides of Software as a Service.



While there are several promising pros of SaaS, it also poses some cons. Below are some of its potential drawbacks: 

Vendor/Provider Dependence

Considering that SaaS technologies rely on outside vendors/providers to keep them up and running, this can pose a disadvantage. The reason is that there are possibilities that may be not under control, such as service disruption, unwanted service offering changes or security breach. All those things are likely to leave you vulnerable. 

Data Security

While data security is a topmost priority of SaaS providers, issues with access management, security and privacy may still be raised. This is especially true with the finance, healthcare and legal sector, as with using SaaS the sensitive information ends up on a third-party server.

Version Issues

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There may be instances that users will prefer the old version of the software, however, it will not be possible as SaaS offerings ensure that all users have the latest version. 

Internet Connectivity

SaaS apps require users to be connected to the Internet. Although most of the time it is an advantage, it can potentially become a disadvantage as well. This is for instances where users are disconnected from the Internet or when the Internet speed is so slow.

These are the minuses that can take place when working with SaaS.

Balancing Pros and Cons

It is indeed crucial to consider the pros and cons of SaaS. However, with the continuous growth of the SaaS market, and with success stories from established companies it is the perfect time to contemplate shifting. While there are potential minuses, the pluses greatly outweigh them. Choose your SaaS service provider carefully and make sure to understand their service-level agreement.

SaaS Examples


The most common examples of SaaS technologies are:

  • Email services, e.g. Outlook, Gmail and Yahoo!;

  • Calendaring tools;

  • Office tools, e.g. Microsoft Office 365;

  • Customer relationship management (CRM);

  • Enterprise resource planning (ERP);

  • Document management;

  • HR management.

As you see from the above list you deal with SaaS technologies almost every day.


Software as a Service, which is a cloud computing type, is a software deployment model. With the help of SaaS the businesses have the opportunities to raise their potentials due to these conditions:

  • Save and eliminate costs;

  • Pay only for specific software and avoid recurring payment;

  • Easily mobilize the workforce of the business;

  • Take advantage of automatic updates;

  • Access software easily and collaborate.

Even though there are potential drawbacks to SaaS, such as possible security breach and version issues, the advantages outweigh the disadvantages. Software as a Service, therefore, can help businesses save valuable time and resources while helping them focus more on their core business.

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