WHAT IS SOFTWARE AS A SERVICE (SAAS)?

The software as a service (SaaS) model describes the distribution of software wherein a cloud provider hosts applications and renders them accessible to end users via the Internet. Within this framework, an independent software vendor (ISV) may engage a third-party cloud provider to manage application hosting. Alternatively, in the case of larger corporations like Microsoft, the cloud provider may also serve as the software vendor.

Over time, SaaS model became a competitor for traditional software, i.e. when applications are installed separately on every individual computer. Image credit: Austin Distel via Unsplash, free license

SaaS constitutes one of the primary classifications within cloud computing, alongside infrastructure as a service (IaaS) and platform as a service (PaaS). A diverse array of users, including IT professionals, business entities, and individual consumers, utilize SaaS applications. These products range from personal entertainment platforms such as PrimeVideo or Netflix to sophisticated IT solutions. Unlike IaaS and PaaS, SaaS offerings are commonly targeted at both business-to-business (B2B) and business-to-consumer (B2C) demographics.

According to a recent report by Statista, industry analysts within the technology sector anticipate continued expansion in the software as a service market, with projections indicating that the SaaS market could approach a valuation of $282 billion by 2024 and $374 billion by 2028 worldwide.

What are the basic principles of operation of SaaS?

How does the software-as-a-service model function? Let’s look into the fundamental principles.

• SaaS operates via the cloud delivery model, where a software provider hosts the application and its associated data using its own servers, databases, networking, and computing resources, or through a contracted cloud provider’s data center. This setup allows the application to be accessed from any device with an internet connection, typically through web browsers.
• In this setup, companies utilizing SaaS applications are relieved of the burden of setting up and maintaining the software. Instead, users simply pay a subscription fee to access the software, which comes as a pre-configured solution.
• SaaS is closely linked to other software delivery models like the application service provider (ASP) and on-demand computing, where the provider hosts the customer’s software and delivers it to authorized end users over the internet.
• In the software-as-a-service model, the provider grants customers network-based access to a single instance of an application tailored specifically for SaaS distribution. The application’s source code remains consistent for all users, and any updates or enhancements are universally deployed. Depending on the service-level agreement (SLA), customer data may be stored locally, in the cloud, or a combination of both.
• Organizations can seamlessly integrate SaaS applications with other software through application programming interfaces (APIs). For instance, a business can develop its own software tools and leverage the SaaS provider’s APIs to integrate these tools with the SaaS offering.