What is SaaS?

What is SaaS?

Software-as-a-Service, commonly called “SaaS,” is a distinct form of cloud computing in which users access a complete software solution from an internet-connected device. Unlike traditional software, where a customer pays once for a perpetual license plus, often, fees for maintenance and updates, SaaS users pay on a subscription basis for the right to access the software.

SaaS subscriptions function like any other utility service, with customers receiving monthly bills.

Besides the distinct pricing model, SaaS software functions differently. With traditional software, the code runs locally on a client device or server. With SaaS, the software is hosted in a multi-tenant cloud. Rather than installing a program onto a device, SaaS requires only a browser or mobile app and internet access to use the software.

While all customers access the same instance of the solution, each customer’s data is kept separate from that of all other customers.

SaaS providers install and manage the software in their own data centers or one owned by a third party. Vendors with a lot of customers typically run their SaaS solutions in multiple cloud data centers spread across the globe to ensure reliability and redundancy in case of a disaster or outage event. That’s especially true for vendors that provide business-critical software, including that used for functions like accounting, ecommerce, customer relationship management (CRM) and enterprise resource planning (ERP).

When a customer accesses a SaaS application, the software renders as a web or mobile user experience on a client device. Major SaaS solutions are based on internet and popular mobile application frameworks and therefore are not tied to a specific type of device or operating system.

SaaS has existed for decades, but it is quickly becoming the preferred way for companies to purchase and use software. Although many catalysts are driving this shift, businesses favoring OpEx over CapEx, pervasive internet access and the fact that people no longer use just one connected device have played a major role in SaaS becoming the best option for many businesses, both technically and financially.

The COVID-19 pandemic of 2020 has also convinced many organizations previously considering SaaS to make the move. SaaS is ideal for a decentralized, work-from-home reality because the business doesn’t need to install, configure and manage software on every device. Additionally, most SaaS systems offer a user-friendly interface, minimizing training and end-user support.


One type of SaaS that’s become increasingly popular is enterprise resource planning (ERP).

An ERP solution provides a single database that connects various applications for accounting, supply chain (including inventory and order management), human resources, customer service and more. It puts all this information in one place, so there is a single source of accurate data for the entire company.

On-premises client/server ERP systems, however, are notoriously expensive and time-consuming to implement and maintain: The business must rent or purchase servers on which to run the software, house those servers in its own or a hosted data center and pay an IT team to manage the system and all the security compliances.

SaaS ERP resolves many of those issues.

With SaaS ERP, the vendor handles hosting and maintenance. A SaaS ERP solution can also be up and running much more quickly versus its on-premises counterpart.

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