Software-as-a-Service (SaaS): Definition and Examples (2023)

What Is Software-as-a-Service (SaaS)?

Software-as-a-Service (SaaS) is a software licensing model in which access to the software is provided on a subscription basis, with the software being located on external servers rather than on servers located in-house.

Software-as-a-Service is typically accessed through a web browser, with users logging into the system using a username and password. Instead of each user having to install the software on their computer, the user is able to access the program via the Internet.

Key Takeaways

  • Software-as-a-Service (SaaS) is a software licensing model, which allows access to software a subscription basis using external servers.
  • SaaS allows each user to access programs via the Internet, instead of having to install the software on the user's computer.
  • SaaS has many business applications, including file sharing, email, calendars, customer retention management, and human resources.
  • SaaS is easy to implement, easy to update and debug, and can be less expensive (or at least have lower up-front costs) since users pay for SaaS as they go instead of purchasing multiple software licenses for multiple computers.
  • Drawbacks to the adoption of SaaS center around data security, speed of delivery, and lack of control.

Understanding Software-as-a-Service (SaaS)

The rise of Software-as-a-Service (SaaS) coincides with the rise of cloud-based computing. Cloud computing is the process of offering technology services through the Internet, which often includes data storage, networking, and servers. Before SaaS was available, companies looking to update the software on their computers had to purchase compact disks containing the updates and download them onto their systems.

For large organizations, updating software was a time-consuming endeavor. Over time, software updates became available for download through the Internet, with companies purchasing additional licenses rather than additional disks. However, a copy of the software still needed to be installed on all devices that needed access to it.

With SaaS, users don’t need to install or update any software. Instead, users can log in through the Internet or web browser and connect to the service provider’s network to access the particular service.

SaaS is considered an example of endogenous growth theory, which is an economic theory that subscribes to the belief that economic growth can be achieved through developing new technologies and improvements in production efficiency. Technology companies, financial services companies, and utilities have led the business world in adopting SaaS technology.

History of SaaS

SaaS can loosely trace its origins to a concept called time-sharing, which was developed in the late 1950s and early 1960s to make more cost-effective use of expensive processor time.

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Over the next few decades, hardware and computing became less costly. Organizations made the shift to individual ownership of personal computers using on-premise software. But unfortunately, the system still proved to be inefficient on a larger scale as companies were weighed down by ongoing software and hardware maintenance of the individual computers.

In the mid-90s, the Internet reached new heights in terms of e-commerce transactions, The growth of the Internet then fueled the birth of the "online cloud," which allowed organizations to access software from anywhere.

In 1999, Salesforce went all-in on SaaS by launching its own customer relationship management (CRM) platform. Thanks to its head start and "no software" mantra, Salesforce soon became the first superstar in the SaaS space. It remains one of the largest pure SaaS companies in the U.S.

With Salesforce having proved the viability of the SaaS business model, companies of all shapes and sizesfrom young startups to established industry giants including Microsoft, Oracle, and SAPwere eager to move toward it.

Today, SaaS is ubiquitous. With pure-play companies like Adobe, Salesforce, Shopify, and Intuit leading the way, the SaaS market is expected to reach $145 billion in 2022.

With SaaS, users can access software through a web browser from multiple locations, including outside the office. Remote desktop software can help employees securely access work computers from home or allow technicians to resolve computer issues without having to make an onsite visit.

Advantages and Disadvantages of SaaS

Advantages

SaaS offers a variety of advantages over traditional software licensing models. Because the software does not live on the licensing company’s servers, there is less demand for the company to invest in new hardware.

It is easy to implement, easy to update and debug, and can be less expensive (or at least have lower up-front costs) since users pay for SaaS as they go instead of purchasing multiple software licenses for multiple computers.

(Video) What is SaaS??? || Software as a Service क्या है? || Pratik Pandey

SaaS has numerous applications, including:

  • Email services
  • Auditing functions
  • Automating sign-up for products and services
  • Managing documents, including file sharing and document collaboration
  • Shared company calendars, which can be used for scheduling events
  • Customer relationship management (CRM) systems, which are essentially a database of client and prospect information. SaaS-based CRMs can be used to hold company contact information, business activity, products purchased as well as track leads.

Types of software that have migrated to a SaaS model are often focused on enterprise-level services, such as human resources. These types of tasks are often collaborative in nature, requiring employees from various departments to share, edit, and publish material while not necessarily in the same office.

Disadvantages

Drawbacks to the adoption of SaaS center around data security and speed of delivery. Because data is stored on external servers, companies have to be sure that it is safe and cannot be accessed by unauthorized parties.

Slow Internet connections can reduce performance, especially if the cloud servers are being accessed from far-off distances. Internal networks tend to be faster than Internet connections. Due to its remote nature, SaaS solutions also suffer from a loss of control and a lack of customization.

SaaS Advantages

  • Accessible from anywhere

  • Cost effective

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  • Easy to implement, update, and debug

  • Easy to scale

SaaS Disadvantages

  • Increased security risks

  • Slower speed

  • Loss of control

  • Lack of customization

Examples of SaaS

Google Docs

One of the simplest real-world examples of SaaS is Google Docs, Google's free online word processor.

In order to use Google Docs, all you need to do is log in on a web browser for instant access. Google Docs allows you to write, edit, and even collaborate with others wherever you happen to be.

(Video) 5-Minute Breakdown: Software as a Service (SaaS)

Google Docs was launched in October 2012.

Dropbox

Dropbox is another simple example of SaaS in real life. Dropbox is a cloud storage service that lets businesses store, share, and collaborate on files and data. For example, users are able to back up and sync photos, videos, and other files to the cloud and access them from any device, no matter where they are.

Dropbox was founded in 2007.

SaaS vs. IaaS vs. PaaS

As-a-service products continue to grow rapidly. But generally speaking, they fall into one of three main categories: SaaS, IaaS, and PaaS.

SaaS typically uses the Internet to deliver subscription software services, which are managed by a third-party vendor. Well-known SaaS examples include Dropbox, Google Workspace, and Salesforce.

Infrastructure-as-a-service (IaaS), meanwhile, offers access to resources such as servers, storage, memory, and other services. It allows organizations to purchase resources as needed. Some common IaaS examples include Amazon Web Services (AWS), Microsoft Azure, and Rackspace.

Finally, platform-as-a-service (PaaS) provides a software development platform over the web. Specifically, it allows developers to concentrate on software creation without worrying about things like storage and infrastructure.

SaaS FAQs

What Is SaaS Marketing?

SaaS marketing utilizes standard marketing practices to promote and acquire leads for cloud-based software applications and information services.

What Is B2B SaaS?

B2B SaaS simply refers to companies that sell software services to other businesses. These products help organizations optimize a wide variety of functions including marketing, sales, and customer service.

How Is MRR Calculated for a SaaS Business?

Monthly recurring revenue (MRR) is an important metric for SaaS businesses that utilize a monthly subscription pricing model.

(Video) Software as a service (SaaS) - definition

The calculation of MRR is simple: multiply the average revenue per customer by the total number of accounts for that given month.

FAQs

What is SaaS and examples? ›

SaaS platforms involve software that is available via third-party over the Internet. Examples of popular SaaS providers include: BigCommerce. Google Workspace, Salesforce.

What is SaaS software as a service defined? ›

What is SaaS? Software as a service (or SaaS) is a way of delivering applications over the Internet—as a service. Instead of installing and maintaining software, you simply access it via the Internet, freeing yourself from complex software and hardware management.

Which of these is an example of an SaaS software as a service )? ›

Examples of popular SaaS products include: Salesforce. Google Workspace apps. Microsoft 365.

Is Netflix an example of SaaS? ›

First, let's cover off the question in this title: yes, Netflix is indeed a SaaS company that sells software to watch licensed videos on demand. It follows a subscription-based model whereby the customer chooses a subscription plan and pays a fixed sum of money to Netflix monthly or annually.

What is an example of SaaS experience? ›

Microsoft 365 consists of apps for home, business, and enterprise that include Word, Excel, PowerPoint, Microsoft Teams, Outlook, OneDrive, and much more. Microsoft apps that we are using such as email, calendaring, and office tools are examples of a SaaS model.

Is Google an example of SaaS? ›

From a network that spans the globe to innovative solutions that transform organizations, Google Cloud has SaaS built into our DNA.

What is PaaS example? ›

Popular examples of PaaS include: AWS Elastic Beanstalk. Windows Azure. Heroku.

Is Facebook a SaaS? ›

Also, it is a digital platform for communication not a publisher or media platform. Hence, Facebook is not an example of SaaS.

Is Gmail an example of SaaS? ›

A simple example of SaaS is an online email service, like Gmail.

Is Zoom a SaaS? ›

Zoom is a cloud-based SaaS application that allows private individuals as well as businesses to virtually interact with each other.

Is WhatsApp a SaaS product? ›

Messaging applications like WhatsApp, Facebook messenger etc are SaaS? And how? No. “SaaS” has, like “Cloud”, become a term that no longer really reflects its current meaning.

Is YouTube a SaaS application? ›

While the application is hosted at a central location, businesses can easily access that software via the Internet using any device, anytime and from any location. Facebook, Gmail, Twitter, YouTube, and Yahoo are some popular examples of SaaS-based applications widely used by people today.

Is Uber an example of SaaS? ›

SaaS: Software as a Service

As these applications are accessed through the internet, they often need no implementation by the end user. Well-known examples of SaaS applications are Uber, Netflix, Salesforce, Dropbox and Microsoft Office 365.

What is IaaS PAAS and SaaS with example? ›

Unlike SaaS users, IaaS customers must manage the applications, runtime, middleware, operating systems, and data they access.
...
Common examples of PaaS, SaaS, and IaaS.
PlatformExamples
SaaSGmail, Slack, and Microsoft Office 365
IaaSAmazon Web Services, Microsoft Azure, and Google Compute Engine
1 more row
10 Feb 2021

What are the SaaS applications? ›

Software as a service (SaaS) allows users to connect to and use cloud-based apps over the Internet. Common examples are email, calendaring, and office tools (such as Microsoft Office 365). SaaS provides a complete software solution that you purchase on a pay-as-you-go basis from a cloud service provider.

Is Amazon a SaaS company? ›

AWS (Amazon Web Services) is a comprehensive, evolving cloud computing platform provided by Amazon that includes a mixture of infrastructure-as-a-service (IaaS), platform-as-a-service (PaaS) and packaged-software-as-a-service (SaaS) offerings.

Is Apple an SaaS? ›

Nevertheless, as they continue to increase profits generated by their software platforms, Apple's standing as a SaaS company will undoubtedly become stronger and stronger over time; their services now generate as much as 29% of the company's gross profit.

Which industry uses SaaS? ›

Project Management SaaSs are typically used by larger businesses in industries such as Services (IT, Consulting), Financial, Marketing and Advertising. Popular SaaS vendors include Trello, GitHub and Basecamp.

Is Facebook an example of PaaS? ›

Facebook is an example of PaaS. Developers can create specific applications for the Facebook platform using proprietary APIs and make that application available to any Facebook user. Some applications integrate a user's Twitter and Facebook account, others integrate a database with a Facebook profile.

Is Google Earth example of PaaS? ›

Amongst the Google Maps,Google Earth, Google Drive and Gmail, the Google maps is a PAAS offering as it is developed to an enterprise application.

How do you explain PaaS? ›

PaaS, or Platform-as-a-Service, is a cloud computing model that provides customers a complete cloud platform—hardware, software, and infrastructure—for developing, running, and managing applications without the cost, complexity, and inflexibility that often comes with building and maintaining that platform on-premises.

Is Excel SaaS or PaaS? ›

Office 365 is SaaS, which provides an online version of MS Office Suite (Office Web Apps) along with SharePoint Server, Exchange Server and Lync Server.

Is LinkedIn a SaaS? ›

Second to Salesforce, LinkedIn is the second largest SaaS company in the world. Unlike most SaaS companies which are B2B, LinkedIn is a B2C2B company. LinkedIn attracts hundreds of millions of consumers to post resumes online and sells this data and access to its audience to advertisers and recruiters and salespeople.

Is Skype an SaaS? ›

Is Skype SaaS? Yes! Skype for Business Server is cloud-based communication and collaboration solution, that offers the best communication and collaboration capabilities in the industry as part of Software as a Service (SaaS).

› questions › what-is-saas-paas-... ›

IaaS, PaaS and SaaS are cloud computing service models. IaaS (Infrastructure as a Service), as the name suggests, provides you the computing infrastructure, phy...
Considering that 86% of companies will be running entirely on the SaaS business model by 2023, here are 25 great examples of SaaS companies to inspire you.
An increasing number of businesses are choosing cloud services. If you aren't familiar with this topic, cloud computing is when hardware (servers, storage, ...

Is Gmail example of SaaS? ›

A simple example of SaaS is an online email service, like Gmail. If you use Gmail, you are not hosting your own email server. Google is hosting it, and you are simply accessing it through your browser-as-client.

Is Zoom a SaaS? ›

Zoom is a cloud-based SaaS application that allows private individuals as well as businesses to virtually interact with each other.

Is Amazon a SaaS product? ›

AWS (Amazon Web Services) is a comprehensive, evolving cloud computing platform provided by Amazon that includes a mixture of infrastructure-as-a-service (IaaS), platform-as-a-service (PaaS) and packaged-software-as-a-service (SaaS) offerings.

Is Facebook an example of SaaS? ›

Facebook is an example of PaaS. Developers can create specific applications for the Facebook platform using proprietary APIs and make that application available to any Facebook user.

Is Microsoft Word a SaaS? ›

Software as a service (SaaS) allows users to connect to and use cloud-based apps over the Internet. Common examples are email, calendaring, and office tools (such as Microsoft Office 365).

Is Apple an SaaS? ›

Nevertheless, as they continue to increase profits generated by their software platforms, Apple's standing as a SaaS company will undoubtedly become stronger and stronger over time; their services now generate as much as 29% of the company's gross profit.

Is Skype example of SaaS? ›

SaaS (Software as a Service): When the software is hosted and you pay for a subscription. “on-demand software” as well. Examples: Spotify, Gmail, Skype,…

Is a virtual call a video call? ›

Video conferencing and virtual meetings are terms that are treated as interchangeable; while they are both tools that can be used in collaboration and training, they involve different types of technologies and are used in different ways.

What is Zoom software called? ›

Zoom Meetings (commonly shortened to Zoom, and stylized as zoom) is a proprietary videotelephony software program developed by Zoom Video Communications. The free plan allows up to 100 concurrent participants, with a 40-minute time restriction.

What type of software Zoom is? ›

Zoom is a cloud-based video conferencing platform that can be used for video conferencing meetings, audio conferencing, webinars, meeting recordings, and live chat.

Is Spotify an example of SaaS? ›

Netflix, Spotify, Dropbox and Slack are common SaaS products, in which the product is then delivered to users over the internet on a subscription basis, giving users the flexibility to not have to worry about upfront installation purchases or ongoing maintenance costs.

What is PaaS example? ›

Popular examples of PaaS include: AWS Elastic Beanstalk. Windows Azure. Heroku.

What companies sell SaaS? ›

Biggest SaaS Companies
  • Salesforce. Salesforce owns 58 cloud-computing products that help employees collaborate with their customers. ...
  • ServiceNow. ServiceNow provides enterprise automation solutions for streamlining work and conversations across an organization. ...
  • Square. ...
  • Atlassian Corporation. ...
  • Workday. ...
  • Veeva. ...
  • Paycom. ...
  • Twilio.
4 Oct 2022

Is WhatsApp a SaaS? ›

Messaging applications like WhatsApp, Facebook messenger etc are SaaS? And how? No. “SaaS” has, like “Cloud”, become a term that no longer really reflects its current meaning.

Is YouTube a SaaS application? ›

While the application is hosted at a central location, businesses can easily access that software via the Internet using any device, anytime and from any location. Facebook, Gmail, Twitter, YouTube, and Yahoo are some popular examples of SaaS-based applications widely used by people today.

Is Gmail PaaS or SaaS? ›

Gmail is one famous example of an SaaS mail provider. PaaS: Platform as a Service The most complex of the three, cloud platform services or “Platform as a Service” (PaaS) deliver computational resources through a platform.

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