SaaS (Software as a Service) Development
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The concept of SaaS, or Software as a Service, dates back to the 1960s, with IBM being one of the pioneers in this area. Yet, it wasn’t until the 1990s that SaaS had the resources it needed to actually grow. Today, a majority of businesses (80%) use some type of SaaS application. On top of that, this industry expects to keep growing in the next few years. In this article, we'll cover everything you need to know about SaaS. We’ll start by explaining the concept of SaaS and differentiating it from PaaS and IaaS. We’ll also go over how the SaaS business model works and what the advantages of using SaaS are. As well, we’ll give you some examples of SaaS applications.
What does SaaS mean?
SaaS is software available online through third parties. Instead of installing software on your computer, you can access it online. In these cases, it doesn’t need complex software and hardware management. Google Apps (now Google Workspace), as we’ll see later on, is a good example of a popular SaaS product.
SaaS vs PaaS vs IaaS
These acronyms refer to three different types of cloud computing. Since they can create some confusion, we’ll go over them in this section. We have already explained the concept of SaaS, so we’ll move on to comparing SaaS vs. PaaS vs. IaaS. Let’s see what each one stands for below:
IaaS = Infrastructure as a Service
PaaS = Platform as a Service
SaaS = Software as a Service
On one hand, IaaS include cloud-based and pay-as-you-go services. These include storage, virtualization and networking, and are often handled by IT administrators. Meanwhile, PaaS are software and hardware tools, used by developers, available online. An example of IaaS would be Google Compute Engine while an example of PaaS would be Windows Azure.
The main difference is the level of given control. As you move from IaaS to PaaS to Saas, providing companies have more control. In summary, we use IaaS to move data, PaaS to build software and SaaS to make use of various tools. They’re all becoming more and more popular as more and more companies move to the cloud. Nowadays, at the time we wrote this article, IaaS were taking the lead.
The SaaS business model
So how does the SaaS business model work to make it so successful? As we’ve mentioned, SaaS is a product offered through the internet. This means SaaS are in charge of maintaining servers, databases and software. Meanwhile, SaaS users pay a subscription to gain access to the software.
As it relies on recurring payments, one of the bases of the SaaS business model is customer retention. And what is the key to customer retention in SaaS? Well, it seems to lie with customer service. In fact, the main reason SaaS customers switch providers is due to its customer service. This even comes above the existence of better or more complex products. Yet, it’s worth mentioning that another aspect of this model is regular updates. These updates don’t need to be big or mind-blowing. Some of them involve keeping SaaS up to date, improving security, and adding new features. Of course, there are some other reasons that make the SaaS business model work so well. We’ll take a look at them in the section below.
SaaS Pricing Models
We’ve discussed that SaaS is usually a subscription-based product. But, not only are there exceptions: there are also different subscription models.
Some companies choose to offer a SaaS product for a monthly or yearly flat rate. As a result, all customers get the same product for the same price. For instance, this is the case for Canva Pro Plan.
As it allows companies to offer different packages, this is one of the most popular SaaS options. Companies often have two or three packages, with increasing features and prices. For example, the Basic, the Pro, and the Enterprise package. At first, this gives smaller companies an affordable product. Also, it allows catering larger businesses in need of complex features or tailored solutions. QuickBooks is a great example of a SaaS product that uses this model.
Some companies charge a subscription based on the number of users. As they only pay for people using the SaaS, this can be effective for small and medium businesses. For example, Jira charges a flat rate per user. But, it also combines it with the tiered pricing model.
Other companies may charge you according to how much you use their product. This is the case with Stripe, where you pay for each transaction processed. PayPal also has a similar system. some companies may choose to mix and match instead of sticking to one pricing model.
Advantages of SaaS
There are many benefits that come with using SaaS platforms. Let’s take a look at some of them below:
SaaS platforms are available anytime and anywhere, as long as you have Internet connection. This is a great benefit for remote teams, both for those using the software and those installing it. Also, SaaS technology makes onboarding processes easier for new recruits. This means that they only need login credentials to access the tools they need to start working. Moreover, it allows IT professionals to focus on more pressing tasks. As a result, SaaS saves company’s time and increases efficiency.
Software licensing costs for SaaS are usually lower than for the traditional model. As different people and companies share an online software, in a way, costs are also shared. Often, companies gain access to features that allow quick scalability. In many scenarios, otherwise they may not be able to afford it. As a result, this increases chances for growth.
With tiered and user-based plans, companies can choose which plan suits them best. Also, they can upgrade to a better plan or add more users once they have financial resources. Last, but not least, SaaS is usually based on a subscription model. In this way, it’s easier to calculate expenses, saving companies both time and money.
As we’ve mentioned, SaaS offer different tiers, integrations and/or functionalities. In general, this depends on each venture’s size. This makes it very easy to scale up your company if needed. In these cases, there’s no need to find or develop new software. Also, migrating from one tool to another can be time-consuming, not to mention it may lead to data loss. With added features and higher tiers, companies can focus when planning future growth.
SaaS providers are always working on new upgrades for their products. When there’s a new upgrade, you don’t need to buy a new license for it, its availability is automatic. Besides, not having work downtime for update processes makes it time and cost-effective.
As we’ve mentioned, SaaS’ upgrades are automatic. This means there are no risks of team members working with different versions. Otherwise, it might translate into compatibility issues and prove costly.
Types of SaaS Products
These are products focused on a specific task for a specific industry. Vertical SaaS targets particular niches, and has a more limited target market. For instance, Creditcheck, developed by Capicua, and BioQ, are examples of this.
In contrast with vertical SaaS, horizontal SaaS products meet general business needs. This can cover a wide variety of industries, like retail, insurance and manufacturing. Office 365 and Salesforce are a couple of examples of this type of SaaS platform.
These types of SaaS help a company manage a particular process. For instance, improving customer relations or boosting marketing. This includes CRM software and financial management. An example of this would be HubSpot, a CRM platform.
Collaborative SaaS helps organize and improve teamwork. It can be anything from instant messaging and video conferencing to project planning. Slack and Asana are both good examples of this type of product.
In this case, SaaS focuses on managing or improving development or technical processes. An example of this can be CloudSponge, which aims to improve marketing outcomes.
Examples of SaaS Applications
SaaS applications are everywhere you look and have been around for quite a while. They also cover a wide variety of services. We’ll look at a few examples of this technology below. He hope to give you an overview of the amount of products available as SaaS technology.
Intuit came across in 1983, creating QuickBooks for .DOS. QuickBooks is a financial management software for small businesses, still popular today. While the company didn’t start out as a SaaS, it changed its model once tech became available. Besides QB, Intuit has released many other online products, such as TurboTax and Mint.
Atlassian has been creating products to help software developers since 2002. Its first product to hit the market was Jira, a project and issue tracker. Not long after, it released Confluence. Also, it has continued to deliver excellent SaaS tools since. The company has also acquired many SaaS products over the years, such as Trello and Bitbucket.
Founded in 1999, Salesforce has had a long run in the SaaS business. Their first product was a CRM system hosted online. Its most successful and popular product is their Customer 360 CRM. Within its purposes, it connects marketing, sales, commerce, service and IT teams. As a result, they’re able to provide better services for customers.
You’re most likely to know Workspace. Google’s package of cloud-based services focuses on communication, collaboration, and storage. This package, known as Google Apps and G Suite, was released in 2006. Some of the apps included in Google Workspace are Gmail, Calendar, Drive and Hangouts.
Dropbox has been offering cloud storage since 2007. As a SaaS, it’s available to share, collaborate and store files and data wherever you are. As a result, it has over 500 million users worldwide. Among them, it caters to both individuals and organizations.
Amazon Web Services (AWS) is a cloud platform that offers over 200 different services. Those services include storage, machine learning, blockchain, robotics and security. It launched as web services in 2002 and moved on to cloud computing in 2006. Today, AWS is able to cover a lot of ground, with 84 availability zones in 26 geographic regions.
Canva is an easy-to-use online graphics tool. Furthermore, it offers a tons of templates and tools to make graphic design easy for those of us who aren’t experts. The online tool released in 2011, and has accrued over 70 million users since then.
FR8 is a fleet management platform. Capicua built it for the San Francisco startup FR8 Star. The online software allows to locate shipments, identify freight capacity and optimize schedules. You can learn more about this project here.
Although we may not be paying them much attention, we use SaaS platforms daily. They have countless uses and are accessible to both individuals and companies. We hope this article has given you a clear idea of what SaaS is and how its business model works!
There are a lot of ways or organizing your business through cloud computing. But, did you know that you can have a SaaS specially creates for your product or service needs? Get in contact with Capicua, and together we'll rise your business to its top tier!