What is SaaS? Definition and Examples

What is a SaaS Company? Everything You Need to Know about Software as a Service

In today’s post, I’ll explain what SaaS is, the advantages and disadvantages it has for business owners, and how to go about finding the best SaaS for your business needs.

I think you’ll agree with me when I say: the process of buying software for your business needs is a tedious and complicated process.

Or is it?

What if I told you that there is a better and easier way of using software in your business?

Instead of relying on purchasing a physical disc with the software on it and then going through a long installation process, all you have to do is sign up with your email address, log in, and you’re ready to get to work.

This model is known as Software as a Service (SaaS).

What Is SaaS?

SaaS stands for Software as a Service. The term refers to the software delivery and licensing where end users access the software online. The end users usually pay a regular subscription fee to be able to use the software.

SaaS is not a new concept. It has been around since the 1960s. Back then, computers were not only large but also expensive. Many businesses couldn’t afford to invest in a computer. As such the SaaS model was born. At first, it involved several terminals that had keyboards and monitors without CPU. They were networked to a mainframe where all the data was stored.

You’d input data through the terminal keyboard and send it to the mainframe which then sent it to the appropriate monitor.

Over time, this system has evolved much like computers and the SaaS industry gradually migrated to the cloud.

By this point you might be thinking that SaaS is the same as cloud computing. And you’re right…somewhat.

SaaS is a subset of cloud computing. Cloud computing refers to a broad range of services where some aspects of the service are accessed or handled online instead of entirely on your own computer or company servers.

Software as a service is a piece of software that’s accessed through the cloud. When you use software as a service, all the data associated with that software is also stored in the cloud.

For example, if you buy Microsoft Office as a one-time purchase and then use the online collaboration features to share the documents, you’re using cloud computing.

But if you pay for Microsoft Office 365, you’re using SaaS because you can access the software online as well as have the desktop version automatically updated to the latest version.

What Is The Purpose Of SaaS?

The main goal of SaaS is to help you reduce costs and deployment time associated with installing and using necessary business software.

Think about it: with SaaS, you don’t have to waste time installing the software on each user’s computer or worry about keeping the software secure from malicious hacking attempts. Instead, SaaS vendors take care of the technical aspects of developing and maintaining the software so you can start using it as soon as you create an account with a particular service provider.

Isn’t that great?

What Is The Difference Between SaaS, PaaS, and IaaS?

I mentioned earlier that SaaS is a subset of cloud computing. Another two subsets of cloud computing include Platform as a Service (PaaS) and Infrastructure as a Service (IaaS).

Platform as a Service refers to cloud platform services that allow you to use their platform to develop, deploy, and manage applications. Common examples include Microsoft Azure or Google App Engine. In this scenario, the cloud provider is responsible for managing servers, storage, networking as well as virtualization services while your IT team is responsible for developing and maintaining applications.

Infrastructure as a Service refers to virtualized computer resources such as servers, storage, and networking. You can use these resources to install an operating system for your server and develop, deploy, and manage your applications. Common examples include Amazon Web Services or Google Cloud Platform. When using IaaS, you are responsible for virtualization as well as for managing the applications.

SaaS differs from both IaaS and PaaS because the SaaS provider is responsible for managing everything. From virtualization and app development to servers, storage, and networking, everything is taken care of by the SaaS provider itself.

So How Does SaaS Work?

As I mentioned earlier, installing software used to require a physical disc and a tedious installation process. Software as a Service is hosted in the cloud and in most cases, doesn’t require installation.

Instead, you will visit the software’s website and register for an account using your email address. You will also need to create a password or request that a password be sent to you.

Once you’ve registered or received your password via email, you will use those credentials to log in and access the software’s tools and features.

However, there is some SaaS that offers both a web browser version as well as a desktop version. Both the browser version and the desktop version require internet access to work.

The benefit of offering both a browser and a desktop version is that the desktop version allows the users to stay signed in instead of having to enter their username and password every time.

The signup and registration process is the same, only in this case, you will also have the option to download the desktop version if you so choose. You can then use your email address or account name and password to sign into the desktop version and use the software on your desktop.

What Are Some SaaS Examples?

There is no shortage of SaaS solutions nowadays and their number keeps growing. They typically fall into two categories: Business To Business SaaS (B2B SaaS) and Business To Consumer SaaS (B2C SaaS). In some cases, you’ll find an overlap where a particular application serves both the consumer and the business sector.

Shopify

shopify

Shopify is an eCommerce platform that makes it easy to create an online store without having to hire a designer. Although the primary purpose of the platform is to allow you to sell both digital and physical products, Shopify also has a plethora of tools that make it easy to manage and promote your store.

For starters, once your Shopify store is up and running, you can connect it to platforms like Facebook and Amazon and sync your products.

Secondly, their app marketplace has thousands of apps that add extra features and functionality to your store. From additional payment gateways and shipping options to integrations with email marketing platforms, you can quickly turn a basic store into a powerful eCommerce website.

SendinBlue

SendinBlue aims to take care of all your digital marketing needs. They offer a variety of marketing tools geared towards businesses, agencies, and eCommerce owners. They include:

  • Email and SMS marketing
  • Live chat
  • CRM and marketing automation
  • Transactional emails
  • Landing pages and signup forms
  • Facebook ads management
  • And more

Sendinblue integrates with plenty of other SaaS platforms like Shopify so you can focus on nurturing your customers and subscribers.

Squarespace

Squarespace is an all-in-one website builder that uses a drag and drop functionality to make it easy to create a website. The platform offers a website builder as well as marketing tools such as the ability to collect email addresses and send email campaigns.

Squarespace has basic ecommerce functionality. You can create a simple online store and sell digital and physical products. It integrates with other tools such as Stripe and PayPal and MailChimp if you need more advanced marketing features. Other integrations are possible via Zapier, an online service that allows you to connect third-party apps with one another.

BigCommerce

BigCommerce is another popular eCommerce platform that offers plenty of features for online store owners. It’s geared more towards enterprise store owners, although it does have the Essentials plan for small businesses. The platform, like Shopify, allows you to create your store and sell on multiple channels such as Facebook, Amazon, and more.

You can easily manage your inventory right from your dashboard and see how your store is doing in terms of sales. BigCommerce integrates with Google Shopping and has an app marketplace where you can find thousands of apps to add extra features to your store.

Square Online Store

Square Online Store allows you to start a free online store and sell your products from anywhere. You can sell on Facebook, Instagram, in person and anywhere else you want.

Square Online Store is a great choice if you’re on a budget. You can set up and run your store for free and only pay when you sell something. You can sell for free for as long as you want. The basic charge is equal to Square’s standard invoice processing fees.

The free store has basic functionality. If you want more advanced features such as using a custom domain, removing Square branding, and similar, you can upgrade to one of their paid plans.

HubSpot

HubSpot offers a range of services geared for business owners. Their most notable product is the free CRM software which allows you to keep track of your clients and incoming leads.

Other products that HubSpot offers include:

  • Marketing Hub which allows you to create and manage ad campaigns, add live chat or marketing bots to your site, automate your email marketing, and more.
  • Sales Hub which allows you to keep track of your sales pipeline, schedule meetings, and email, handle customer outreach, and track sales rep performance.
  • Service Hub which includes tools such as ticketing, conversational bots, live chat, calling, canned emails and snippets, and more.
  • HubSpot CMS which allows you to create landing pages and blogs complete with live chat, conversational bots, and email marketing forms.

HubSpot also offers a number of free tools which you can use to give their products a try before making the final purchasing decision. Pricing for their products is based on the number of contacts you have stored in their database and starts at $50 for 1000 contacts.

Dropbox

Dropbox is a great example of a SaaS that serves both the B2B and B2C sector, with different plans for business users and private users. They offer cloud storage for all your important documents and files. Thanks to their desktop and mobile app, you can access your files on your computer and any mobile devices you own. You can also sync files from your computer and smartphone to Dropbox servers.

Salesforce

Salesforce is one of the most popular CRM solutions for both small businesses and big enterprises. They offer an integrated solution that allows all your departments, from human resources to marketing and sales department to keep track of your customer’s journey and follow up at the right time with the right offer.

QuickBooks

QuickBooks makes it easy to manage your books, send proposals and invoices, and see how your business is doing financially. You can easily share the information with your accountant and they can take care of your books online without coming to your office.

QuickBooks is a great example of a SaaS tool that offers both a web browser version and a desktop version. They also have a few different plans available to choose from, based on the size of your company.

Benefits Of Adopting SaaS

So now that we’ve covered what SaaS is and how it works, let’s go over how your business can benefit from adopting software as a service.

Access The Software From Anywhere

One of the biggest benefits of using software as a service, as opposed to the traditional, on-premise software, is that thanks to its delivery model it can be accessed from anywhere. Whether you work from home, an office, a co-working space or your local coffee shop, all you need is an active Internet connection to access various cloud services.

Nowadays, working remotely is becoming more commonplace. If you or your employees have to spend a few days working from home, they can continue to do so even without having a company laptop or computer.

This means you don’t have to worry about signing off on employees checking out company property and stressing over whether it will get damaged or mishandled in some way.

Instead, they can use their own laptop or a desktop computer to perform the same duties as always. This ensures that the employee productivity won’t be compromised, whether you want to start implementing remote work policy occasionally or completely transition into a remote team.

Time To Launch

SaaS is already preconfigured and preinstalled in the cloud. That means it’s ready to use as soon as you sign up for it.

There’s no need to wait for your IT department to finish the installation process on all the machines on-premise. There is also no need for an even lengthier configuration process.

Better Scalability

Imagine this: your business has 30 employees and you’ve just purchased 30 copies of Microsoft Office so they can collaborate and share documents.

But all of a sudden, your business is booming and you need to hire more people. Now you have to buy more copies of Microsoft Office for the same price you paid for the first 30 copies.

Pretty expensive, no?

Not so expensive if you use software as a service. More often than not, the more users you add to your plan, the less you’ll pay for each individual user.

Not only that, but adding users is quick and easy and if you need more storage or extra features, you can upgrade your plan with a simple push of a button.

And to make things even better, you don’t have to worry about procuring better computers that can handle the software requirements as all of this is handled by the software provider themselves.

Lower Costs

Along with better scalability and quicker time to launch, it’s only natural that your costs will be lower. Here’s how:

  • Total Software Cost Over Time — an ongoing subscription might seem costly at first. But when you take a closer look, it’s actually cheaper in the long run. For starters, you aren’t forced to buy expensive upgrades when a new version of the software is released. Secondly, you don’t have to worry about maintaining your own servers or other hardware to run the software you need.
  • Lower Upfront Cost — in most cases, when you use SaaS, there are no extra setup fees charged unlike with traditional software.
  • No extra maintenance or support fees — as I’ve said before: all the technical aspects associated with using software as a service are handled by the software provider. They are in charge of the maintenance, updates, and support as well as making sure they have adequate hardware needed to run the software. You don’t have to pay for technicians to come setup or update the software. You also don’t have to have staff on hand to make sure the software runs as intended.

Integration With Other Software And Tools

If you’re like most business owners, you’re probably using more than just one piece of software to run your business. Nowadays, almost every major business application, from accounting software to enterprise resource planning, can be accessed as a SaaS. As a result, you can easily integrate all your programs, tools, and apps and make them work together.

It’s easy to connect your Customer Relationship Management software (CRM) with your email marketing software, send your sales numbers from your spreadsheet to your accounting software, and more. This means you can eliminate the need to manually transfer data from one program to the other.

You also don’t have to spend time switching between different tools which means you’ll have more time to get things done.

Near Instant Updates And Saves

How many times have you been working on something only to be interrupted by an update notice? And then having to restart your computer to apply the update?

That doesn’t happen when you use software as a service. All new features that get added to the software are almost instantly available in the browser. All you need to do to access them is refresh the page.

In addition to that, you don’t have to worry about saving your progress as any changes you make are instantly saved to the cloud. They are also instantly visible to other team members and employees which in turn means faster collaboration.

Disadvantages Of Adopting SaaS

Unfortunately, as great as SaaS is, there are also some disadvantages associated with it. You’ll need to consider them carefully when deciding if SaaS is the right choice for you.

Internet Reliance

Software as a Service relies on Internet connection to work. That makes it available no matter where you are or where you work from. You can take a business trip and still be able to access your software. Or you can work from home and still be able to collaborate with others on your team. This is especially useful when unforeseen circumstances come along and force you to adopt a new way of doing business.

But as useful as working remotely and only needing Wi-Fi sounds, it also comes with its own set of challenges. For example, what happens when you have to travel and your destination doesn’t have high-speed Internet available? Chances are, you won’t be able to complete your tasks as quickly as you normally could.

High-speed internet isn’t the only issue. In cases where your electricity goes out due to outside circumstances, your Internet will go out too. This means you’ll have to find a different place to work, such as relying on your local coffee shop or your local library. Again, if those places don’t have reliable or fast Internet, your productivity and workflow may suffer.

As an alternative, in such scenarios you can go back to using traditional business applications and SaaS alternatives. However, be aware you’ll need to transfer your work to your regular cloud applications once you’re back to having reliable Internet access.

Security Concerns

Another disadvantage to consider when it comes to SaaS is the security risk that comes with it. Given that the number of online threats is rising, it’s only natural to be worried about the possibility of losing sensitive information.

Some of the security concerns associated with SaaS include:

  • Poor identity management — not all SaaS providers offer secure access. On top of that, some of them don’t provide support for role-based access controls. Some of them don’t offer an encrypted connection between your data and their applications.
  • Access anywhere problem — the primary benefit of SaaS is the ability to access the application or a program from anywhere. But that also means accessing it from an unsecure or unencrypted connection. This leaves your data vulnerable to hacking attempts and other security vulnerabilities.
  • You don’t always know where your data is — SaaS providers rely on virtual machines to deliver the software to their customers. Typically, those virtual machines will be distributed all over the world to ensure round-the-clock availability. They will also move data between machines to ensure better deliverability and deal with load balancing needs. While this provides a better user experience, it also means you can’t really be sure where your data is as there is no way of knowing on which virtual machine it’s stored on. For example, if you travel to Paris for business and you usually reside in Los Angeles, your data may be moved to a data center in Europe so you can access your data faster.

It’s worth mentioning that even though your data is stored in the cloud, you still own it. Most SaaS providers have service level agreements (SLA) in place that state your data is still yours. They also ensure you have the right to retrieve your data at any point in time.

However, if you’re handling sensitive information and security is of utmost importance, a private cloud might be an attractive option for you. A private cloud allows you to run SaaS on-premise. The difference between a private cloud and a public cloud is that in a private cloud, you’ll share computing power with the rest of your employees.

Keep in mind, though, that while this improves security significantly, you will need an IT department to handle the maintenance and upkeep instead of the SaaS provider.

Customization Concerns

You also need to consider the level of customization. Most SaaS applications have integrations with third-party tools through extensible Application Programming Interfaces (APIs).

Some of the tools even allow users to use their own set of colors or fonts to make the interface more visually appealing.

These customization and integration options are nice and they do considerably improve your workflow and productivity. However, they cannot compare with a fully custom enterprise software.

Support Response Times

The last thing you need to consider is the support response time for any SaaS application. I mentioned earlier that any technical aspects associated with using the software are handled by the SaaS provider. This includes not only updates, maintenance, and development but also providing support for their users when something goes wrong, like service outages.

Unfortunately, this means that if there is a global issue with a particular application, you won’t be the only one looking for support. You might be stuck in a long wait line before a support agent can deal with your problem.

And in some cases, you might have to resort to email support if there is no phone or live chat support which can cause even longer wait times. This delays your work unnecessarily. While these situations are not common, they do happen so it’s worth keeping them in mind.

What To Consider When Purchasing SaaS For Your Business

So far I’ve covered what SaaS is, how it works, and the pros and cons of using it. I’ve also shown you a few examples of both B2B and B2C SaaS applications and tools. Now, let’s go over what to consider when purchasing SaaS for your business.

Determine The Need

The first step is to determine the need for a software tool. For example, maybe you’re tired of manually keeping track of your clients and potential client inquiries. Or maybe you want to have an easier time doing payroll each month. In this case, you probably immediately know you need some sort of accounting software or a customer relationship software.

But in some cases, the answer may not be so obvious. You may deal with a minor inconvenience and do things the hard way because you aren’t aware of any existing solution. Perhaps you want to see more engagement on your social media posts but don’t know there are tools to help with this.

In the above scenario, you’ll eventually get fed up with the situation and realize there must be a better way. This will then lead you naturally to the second step in the process: knowing what features you need.

Make A List Of Necessary Features

So you’ve determined you need a better way of handling whatever the issue is. The most logical step is to make a list of necessary features that the solution should have.

If you work alone, then this step is relatively easy. But if you work in a large business, it gets more complicated. You’ll need to listen and get feedback from multiple people. A couple of things to consider are:

  • The goals for a particular tool — ask yourself as well as others in your company what specific goal should this tool help you accomplish.
  • List of tasks — you’ll also want to note down a list of all the tasks this tool should help you with

Don’t be afraid to get explicit in your instructions and ask your employees what features they want to see in a tool and encourage them to do their own research. You can even set a timeline for everyone to think about these questions, take notes, and then review and compare them.

Search For A Solution

Now you’re armed with a list of features, tasks, and goals your preferred tool should have. Now is the perfect time to take the next step and search for a solution.

Research is time-consuming and not particularly exciting. However, if you don’t do your research, you could wind up with the wrong SaaS application which will end up costing you more in the long run.

Research will not only ensure that the tool is the right solution for your business and your situation but it will also prevent you from wasting time, money and resources on unnecessary software.

There are several ways to go about this and the simplest one is to Google it. Nowadays, there’s plenty of information about SaaS applications. From professional review sites to Youtube videos and more personal reviews, you’re spoilt for choice.

All you have to do is search for a term that describes your problem. For example, you could search for “how to share my screen with others” or “how to record my screen for a tutorial”.

In some cases, you’ll get an instant answer in the form of a video or a blog post that explains the process and links to recommended software. This might even help you determine the type of software you need.

But sometimes, you’ll get thousands of results, each of which recommends a different tool. Obviously, that’s not very helpful.

So what do you do then?

You move on to the next step: asking your peers and professional network.

Ask Your Peers And Network

Aside from good ole Google search, there are a few other ways to research the perfect SaaS for your needs. It’s roughly the same as researching where to go for your next vacation or which grill to buy for upcoming summer gatherings.

Instead of relying on a software vendor to come to your door and pitch their product, you’ll turn to your professional and personal network.

For starters, talk to other decision makers in your industry and ask them for software recommendations. A phone call or an email is a great way to get in touch or you can take it a step further and discuss it over lunch.

You could also ask your employees if they know of a tool that would work or look at their recommendations if they’ve included it during the second step of the process.

If you’re in a Facebook group with other business owners in the same industry, you can make a post and ask them to share their preferred tools as well as what they love and hate about it.

Another great place for getting recommendations includes LinkedIn groups or even LinkedIn connections.

Don’t ignore local business events and meetups as you can use them as an opportunity to get your peers’ input and genuine recommendations.

Lastly, don’t ignore your personal network. Sometimes your friends and family can be a great resource when looking for a new software tool.

No matter who you ask, they’ll be more than happy to share their experiences with you and point you in the right direction.

Read Third-Party Reviews

Another way to decide whether a particular software is the right choice is to read third-party reviews.

There is no shortage of third-party review sites that aim to give you an objective overview of what each software provides. They often post side by side comparisons as well as real customer experience so you can get a complete picture of what to expect.

Take Advantage Of Free Trials

By now you should have a pretty good idea of the type of software you need. You might even have a few specific recommendations. The next step is to see if those particular SaaS products offer a free trial.

Most SaaS offer a 14-day free trial period during which you can explore all the features they have to offer. Some even have a detailed onboarding process to help you get accustomed to using and working with the tool.

Remember, though, that you won’t be the only one using the software. Consider asking a few of your employees to sign up for the trial as well so they can help onboard others in your company. This will also give you invaluable feedback on whether you’ve found the right tool or not.

It’s worth mentioning that some SaaS applications will offer a free version which might be perfect if you run a smaller business with fewer employees. Don’t forget to check the pricing plans and software licenses to see what’s available and how you’ll be billed if you decide to sign up for it.

Contact Different Vendors

Once you’ve done your research and you’ve tried a few applications, I recommend you reach out directly to software vendors, especially if they don’t have a robust onboarding process in place.

The reason behind this is simple: they are the best qualified people to tell you if their application is the right choice for your business. You can also discuss various pricing and software licensing options and they can even create a custom onboarding solution or implementation process.

This will ensure that your employees adopt the software quickly so they can get back to doing their job.

As you’re talking to the vendors, keep in mind that you’re in charge as you’re the one making the buying decision. They need to be able to tell you how their software helps and provide you with the best practices for using it. If you don’t feel comfortable with their service or how they respond to your questions, consider moving on and finding a better solution.

In the end, deciding on a software for your business is not something to be done lightly. Doing your research before making the final decision and knowing when to say no is crucial. By doing so, you’ll end up with the software that not only solves your problem but you also enjoy using.

Bottom Line: Is SaaS For You?

Overall, SaaS has many benefits for businesses both small and large. It’s a great choice and a great solution if you want to improve your company’s workflow, collaboration, and productivity. It’s also a great fit if you want to reduce your operational costs and only pay for the features you need and use.

However, if you deal with highly sensitive data, a custom-developed solution might be a better choice as it can provide you with better security features. It’s also not the best fit if you don’t have a reliable and fast Internet connection as the SaaS software delivery model needs an Internet connection to work properly. This is another situation where on-premise, custom software applications might be a better fit.

And that’s a wrap. I hope you loved my article about the advantages and disadvantages SaaS has and that you learned how it works.

You should now be fully prepared to find the best SaaS for your business needs so get to work.

Have you used SaaS in your business before? Let me know in the comments below!

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