What is SaaS? The modern way to run software


One of the most popular forms of cloud computing is software-as-a-service (SaaS), defined as a software distribution model in which a service provider hosts applications for customers and makes them available to these customers via the internet.

SaaS is one of the three major categories of cloud services, along with and .

Given its ease of access, SaaS has become a common delivery model for many types of business applications, and it has been incorporated into the delivery strategies of enterprise software vendors.

There are SaaS offerings available for a variety of business applications, including email and collaboration, customer relationship management (CRM), billing/payroll processing, sales management, human resources management, financial management, database management, enterprise resourcing planning (ERP), content management, and document editing and management.


Another benefit is easy scalability. Cloud services in general allow enterprises to ramp services and/or features up or down as needed, and SaaS is no different. That’s especially important for enterprises whose businesses are cyclical in nature, as well as for organizations that are growing quickly.

SaaS customers also benefit from the fact that service providers can make automatic updates in software—often on a weekly or monthly basis—so enterprises don’t need to worry about buying new releases when they are available or installing patches such as security updates. This can be especially appealing to organizations with limited IT staff to handle these tasks.

The risks and challenges of SaaS

SaaS comes with a set of risks and challenges that enterprises need to be aware of to maximize the benefits of the delivery model.

Similar to other cloud services, users of SaaS rely their service providers to be up and running at all times so that they can access applications as needed. They also depend on the providers to ensure that the software is kept up to date in terms of new features, security patches, and other changes.

Although SaaS providers take great measures to ensure continuous uptime and availability, even the largest vendors can experience unexpected interruptions in service. Companies that use SaaS can expect to lose some level of control when it comes to accessibility, which is one of the trade-offs of cloud computing in general.

This loss of control can extent to other areas, such as when a service provider adopts a new version of an application but an enterprise is not ready to make such a change or doesn’t want to incur the costs of training users in the new version.

If enterprises decide they want to switch to a new SaaS provider, they might confront the difficult task of moving extremely large files over the internet to the new provider. By contrast, changing locally deployed software usually doesn’t change the location of the files, which tend to reside in the enterprise’s own datacenter.

Security and privacy are also issues, as they are with other cloud services. If a , that can compromise safety of the enterprise’s data and the availability of the services.

Other potential risks relate service quality and user experience. Despite improvements in networking technology, because SaaS applications might be hosted far from where users are located, there can be latency issues that affect response times for applications.

Many organizations do not have a broad cloud strategy, and this has led to a rise in business users acquiring SaaS applications on their own—without the knowledge of IT—to fill in gaps that exist. That can lead to wasteful spending, poor data management, and extra work to move processes and data from one non-integrated system to another.

SaaS vendors and the trend to greater integration

Among the leading enterprise SaaS providers are ADP, Adobe Systems, Box, Citrix Systems, Dropbox, Google, IBM, Intuit, Microsoft, Oracle, Salesforce.com, SAP, ServiceNow, and Workday. But hundreds of companies offer their software as SaaS, from mobile management tools to expense report management, from video transcoding to financial calculations, from customer data cleanup to computer-aided design (CAD).

Because SaaS offerings can come from so many providers, a key trend is the rise in integration among vendor offerings. There are both services meant to integrate multiple SaaS applications, such as to provide single signon and access management across them, and efforts within the SaaS vendor community to create integrations across multiple providers’ software so enterprise processes can flow more easily across those applications sourced from multiple providers.