What is SaaS?

In the field of Cloud Computing, a new service concept has been gaining popularity recently, known as SaaS. The abbreviation SaaS stands for Software as a Service and refers to an IT application offered as a service. Instead of selling software products outright to customers, many companies provide their applications as web-based services. In recent years, the industry has seen a revenue increase of more than 20 percent annually, with market research firms predicting continuously rising figures. This comes as no surprise, as web services offer numerous advantages for both the service recipient and the service provider. Click here for a Cloud Server vs VPS Hosting Comparison.

How SaaS Works

In the traditional application model, software must first be purchased and then installed on the user's system before it can be used. This process requires qualified personnel familiar with the software's installation and configuration, as well as the necessary technical infrastructure. Particularly for performance-intensive applications that require significant computing power or extensive databases, maintaining suitable systems can incur high additional costs. Furthermore, the deployed software must be kept up to date or may even be tied to costly maintenance contracts. Larger updates can lead to disruptions in daily operations.

With SaaS, the service provider handles the entire operation of the application. In addition to managing the technical aspects, the service provider also takes care of the application's administration. This includes security updates or upgrades to new versions. The user only needs a simple computer with internet access to utilise the complete service. Payment is usually based on usage, which can be a monthly flat rate or a fixed amount per user. Different models are offered depending on the service provider and product. Often, a flat-rate model is available, with fees incurred on a monthly or per user basis. Another option is to offer basic versions of a service for free and charge a fee for optional additional features.

Benefits for Users

• Low administrative effort
• Low initial costs
• Increased flexibility

The use of Software as a Service, however, brings a certain dependency on the provider for the user. Since the software used runs entirely on the service provider's infrastructure, the user has no control over it. Therefore, individual customisations can only be done with great difficulty, if at all, and only in direct consultation with the provider. Additionally, the service provider has full access to the user's data and transactions that go through the service. It is crucial to ensure that data security regulations are correctly adhered to.

Disadvantages for Users

• Increased dependency
• Difficult customisation
• Lower data security

For providers of SaaS products, on one hand, there is the opportunity to expand their own offering with additional IT services, thus generating additional revenue beyond what simply selling the software would bring. On the other hand, the concept is ideal for retaining customers for a long time and generating regular income from customers acquired once. Software that is only available as a service cannot be pirated by hackers and illegally distributed. A good SLA (Service Level Agreement) is all the more important.

Advantages for Providers

• Expanded service offering
• Long-term customer contracts
• Protection against piracy

Risks for the provider are limited on the one hand to the high initial investment in software and infrastructure, as well as the slow but regular amortisation of the investment. On the other hand, strict security measures should be observed, as negative publicity, especially in sensitive areas like data security, can quickly lead to serious damage to the company's image.

Disadvantages for Providers

• High investment
• Security risk

Software as a Service is particularly suitable for companies that want to remain as flexible as possible when using applications. Companies that do not want to burden themselves with the installation and maintenance of software or the operation of the required systems can benefit from the new service concept. SaaS is especially ideal for project work with a variable number of employees or over limited periods, as licenses for individual users can be easily expanded and cancelled.

Examples of Software as a Service Applications

• Google services such as Gmail or Google Docs
• Google's numerous applications are known and used by almost everyone who is online. These are a classic example of free SaaS applications. Customers can access the services from anywhere on the internet without having to install software on their own computer. For more information, visit google.de.
• Microsoft Office 365
• Since 2011, Microsoft's well-known Office application has also been available as a web-based service. Users can easily create and edit PowerPoint presentations, Excel spreadsheets, and Word documents over the internet. For more information, visit Microsoft directly at https://office.microsoft.com/de-de/business/.
• Salesforce.com
• The American company is the largest provider of cloud computing solutions for businesses in the CRM (Customer Relationship Management) software sector. Companies around the world use the provider's services for the practical management of their customer data. For more information, please visit the website at http://www.salesforce.com/de/.
• Exchange Hosting
• Many web hosts offer their customers the opportunity to use Microsoft's professional email service for corporate communication with Exchange Hosting. Customers can access numerous features for scheduling, contact management, and group collaboration in addition to email communication. If you also want to benefit from the advantages of Software as a Service, you can find suitable offers in our Exchange Hosting Provider Comparison.