Almost 60 years ago, one scientist, giving a speech to students, claimed that “computation may someday be organized as a public utility.”

It was John McCarthy, but we’ll say a couple of words about him below. The main idea is that the scientist was absolutely right.

As you can see, the idea has been around for half a century. Still, the web-based technology required to support SaaS started to mature only in the early 2000s.

What is SaaS? How can it benefit your company? In this brief post, we cover the key points about the SaaS importance and the pros and cons of applying this model.
Let’s start with the SaaS definition.

What is SaaS?

SaaS means software as a service. It is a model of software distribution where a third-party provider hosts apps and makes them available to customers over the Internet. 

SaaS is one of the three core categories of cloud computing. The other two are IaaS — Infrastructure as a Serviceand PaaS — Platform as a Service.


SaaS is related to the ASP (application service provider) and on-demand computing software delivery models. The SaaS management model is rather similar to ASP because the provider hosts the software of a customer and delivers it to end-users. 

In SaaS, the provider gives customers network-based access to a single copy of an app. The source code of the app is the same for all customers. When new features do appear, they are spread out to all customers. 

The customer’s data may be stored both locally and in the cloud. SaaS solutions can be easily integrated with other software with the help of APIs (application programming interfaces). 

SaaS examples

Among the various SaaS solutions, there are apps for fundamental business technologies (sales management, email, customer relationship management, financial management, HR solutions, billing, etc.)

You’ve definitely heard about such leading providers as SAP, Salesforce, Intuit, Oracle, and, of course, Microsoft.

What is a common SaaS scenario?

If you think that you have never used SaaS solutions at work, then most likely, you are mistaken. You are probably an active user of Yahoo!, Outlook, or Hotmail. To log in to these services, you use the Internet.

The email software locates on the network of the service provider. Your messages are also stored there, and you can access them from any PC or Internet-connected device.

The examples of SaaS mentioned above are free for personal use. You may also rent apps for organizational use and access them by subscription.

The roots of the SaaS concept

Surprisingly, but the origin of cloud computing dates back to the 1960s. In 1961, the scientist John McCarthy won the Turing award for his work in Artificial Intelligence, and that was the beginning. 

A shared resource of computing power is an integral element of the cloud computing concept. In the late 1990s, the web-based technologies required to support SaaS totally matured.

That was the time when market-leading companies began offering traditional enterprise solutions, such as CRM or ERP, as software as a service.

Software as a Service advantages

It’s not a surprise that SaaS has gained such popularity because it gives users a range of benefits, such as:

  • Scalable toolkits. SaaS provides high vertical scalability, which means that customers get the option to access more or fewer features on demand.
  • Flexible payments. Customers willingly subscribe to a SaaS offering rather than purchase software to install. They pay for the service monthly according to the popular pay-as-you-go model. For businesses, transitioning costs to a recurring operating expense is a way to make more predictable budgeting.
  • Automatic updates. Customers rely on a SaaS provider to automatically perform updates instead of purchasing new software. It reduces the burden on the IT staff.
  • Accessibility. In order to gain access to a SaaS app, it takes just a browser and the Internet. It allows logging in from anywhere. 
  • Hardware. As the software runs on a server, individual PCs do not need upgrades to meet the hardware requirements.
  • Quick deployment. SaaS solutions can be much more rapidly deployed because the software does not need installation on individual machines.

Software as a Service disadvantages

The SaaS model also poses some cons. The following ones are the most essential:

  • Lack of choice. There are more software tools delivered in line with the traditional model than with the SaaS model. 
  • Security. Confidential information ends up outside the end-user’s server. It complicates access management, data security, and privacy protection. For this reason, companies in such spheres as healthcare or the legal sector are suspicious of SaaS products.
  • Internet connection. Users must have an Internet connection to use a SaaS app. Sometimes (say, while traveling on an airplane or if the Internet goes down on the business premises), the SaaS solution will be unavailable too.
  • Slow work. A SaaS app may perform more slowly than the software hosted locally. This depends on the Internet connection speed and the required resources.
  • Lack of integration. There are fewer available options to integrate SaaS software with other tools.

Key SaaS risks

Companies working with SaaS should know the possible risks and challenges to maximize the benefits of such tools. 

SaaS users typically think that their service providers are up and running at all times and that they can access apps when needed.

Providers definitely take great measures to ensure continuous availability; however, even the largest vendors can experience unexpected interruptions. This can lead to the unavailability of business-critical services, like a booking solution or a support system outage. 

In addition, if the company decides to switch to another SaaS provider, it might face the difficulties of migrating extremely large files.

Final words

The categories of cloud computing keep providing immense opportunities for a variety of businesses. 

Software as a service is an integral part of the current and future business model with its unlimited usage options and space to grow. SaaS products are gaining momentum because millions of people all over the world have already experienced their advantages, and the figure keeps growing.