What Is SaaS?

Date First Published: 30th October 2023

Topic: Computer Systems

Subtopic: Computer Software

Article Type: Computer Terms & Definitions

Difficulty Level: 5/10

Learn about what SaaS is in this article.

Stands for Software As A Service. SaaS is a distribution model of cloud computing that hosts software applications, called web services. Software is accessed online with a subscription instead of being purchased and installed on individual computers. After purchase, users can log into the SaaS from any compatible device with an internet connection. Google Drive and Microsoft 365 are examples of SaaS.

Advantages and Disadvantages Of SaaS

• Users can access the software from any device, over the internet. This offers more flexibility as users from all over the world can operate and access their files, wherever they are.
• There is no need for updates and installations. The provider will take care of all updates and when they release updates, those changes will take effect for all users without the need for any software downloads. This reduces the risks of users being left with an outdated version of software that leaves them vulnerable to bugs and security risks.
• It does not require software to be installed on individual computers, saving storage space. All that is required to access the software is a compatible web browser. This makes SaaS more suitable for devices with limited storage space.
• Since users save files in a central location, it offers an easy backup of information. Even if a computer crashed or the hard disk got corrupted, the information would still be accessible over the cloud.
• Reduced costs. SaaS eliminates the need for internal IT costs, like servers and infrastructure that support the application. The only cost to businesses is the subscription cost of the application. SaaS also gives users the option to access more or fewer services on demand so that they only pay for what they need.

• It could be hacked into. With SaaS, files are not stored on individual computers or kept in an internal network. Instead, they are stored on external servers. If someone stole the login credentials, they could gain unauthorised access to sensitive information. This is why strong security mechanisms are required, such as strong passwords and two-factor authentication.
• It relies on having a stable and fast internet connection. Accessing SaaS might require a high bandwidth.
• There can be difficulty switching providers. Switching cloud computing providers is more difficult as customers may have to migrate very large amounts of data. Some providers also use proprietary technologies and data types, which can make it even harder to transfer between different providers.
• When the cloud servers are down, usually due to maintenance or network congestion, it will be impossible to access the SaaS application for a certain period of time.

SaaS Pricing

SaaS providers usually charge customers on a subscription-based pricing model. Examples include:

• Ad-based - SaaS can be free for users with the provider generating revenue through ads. There is usually an option to upgrade to a paid subscription which doesn't include ads.
• Freemium - SaaS can be free to use with restrictions in place, like maximum storage space, that can be removed by upgrading to a paid subscription.
• Flat rate - Customers can access the full features of the application for a monthly or yearly fee.
• Per user - Fees are determined by how many people will be using the service for each subscription.
• Pay-as-you-go - Customers only pay for what they use. The more they use, the more they will be charged.

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