Understanding Software as a Service

If you’re still fuzzy on exactly what the term “software as a service (SaaS)” entails, it helps to picture the transition that Microsoft Office made in 2011. Prior to that year, you purchased Office on physical media along with a registration key. When Microsoft began to offer Office 365, that was the SaaS alternative to the traditional physical media model. Rather than owning a physical copy of one particular version of the software, the SaaS model has you pay for an annual subscription that grants you access to cloud-hosted software on the publishing company’s computers.

The SaaS Advantage

Initially, this seems like it represents an added cost over time, and that can be true in some situations. The SaaS subscription model ensures that users always have access to the latest possible version of the software without having to pay again for a new version, however.

To go back to the Office 365 example, subscriptions also offer a range of additional benefits:

  • You can access the software from multiple devices with a single login
  • Subscriptions come packed with a substantial amount of cloud storage (business plans come with a minimum of one TB of storage and sharing)
  • You gain the ability to store work and access it from just about anywhere without having to manually sync files across multiple devices

All of this illustrates the central advantage of any SaaS model for a business: simplicity and reliability.

SaaS products don’t have to be manually upgraded and won’t cause legacy issues down the road for systems that have been adapted to work with them. You also don’t have to deal with the hassle of syncing files, which is enough of a headache for a lone individual between their different devices, let alone a team working on a collaborative project across several locations. Got a computer or device that can access the internet? Then you’ve got access to the latest upgraded and patched version of your software along with all of the most recent versions of your files.

How SaaS Can Save Money

The previous business costs of licenses, IT infrastructure and planned downtime for upgrades and patching are traded in for the monthly or yearly subscription fee. When taking all of the possible costs into account, including the ability to rapidly scale up or down without having to make physical on-premise infrastructure changes and manual patching and upgrades, SaaS can actually represent significant savings to a company over the long haul.

Office 365 is just one very common and familiar example of SaaS. Some others are WordPress, Salesforce, NetSuite and SurveyMonkey. Not all forms of SaaS are necessarily based on a paid subscription model; there are even open-source efforts such as Drupal, which is distributed under the GNU General Public License and can be found in use in over 2% of all of the web sites in the world.

So if we’ve always had the potential to do this sort of thing over the internet, why is SaaS only just starting to boom now? To answer this question, we asked Jason Kulpa, CEO of UE.co – a San Diego based tech company that has been developing enterprise grade software since 2008. “It’s due to the confluence of increasing standardization in web design technologies, increasing demand for and development of web-based work interfaces, the adoption of HTTP Secure (https) as a common yet robust security protocol, and the increasing presence of broadband and high-speed WiFi networks. All of these different cornerstone technological factors have finally developed to where the remote transfer of complex software and large files can now feasibly be done from most locations in a secure way” said Kulpa.

So What’s The Catch?

The one potential major downside to the SaaS model is that you’re trusting all of your critical data to a remote server you don’t have direct access to. You’re relying on the SaaS provider to be on top of their game in terms of security and maintaining uptime. It’s another cost savings in terms of not having to physically secure your own data center, but to at least some degree the safety and accessibility of any data that is in the cloud is not completely in your own hands.

Security is actually the lesser of these two concerns, as recent data shows that there isn’t necessarily a significant difference in overall risk between local servers and cloud-based servers, provided the cloud-based provider is a reputable one. High-profile outages, such as the nearly 24-hour outage of Salesforce software earlier this year, instead tend to be the main factor that causes businesses to think twice about shifting to SaaS.

And while installation of SaaS systems is easy, integration with existing systems and data is where things can potentially get troublesome and expensive. The more a company requires highly customized software solutions, the more trouble they’re likely to have in finding a SaaS solution that fully works for them, and the more time and expense they’re looking at during the changeover.

Continuing Integration

For most companies, it isn’t an either-or proposition, however. Companies that are adopting SaaS are generally only making partial or gradual shifts to it, maintaining an integrated system of on-site legacy software and SaaS applications. Certain companies will always have at least some highly specialized software that more general SaaS services won’t be flexible enough to address, meaning that there’s likely to always be at least some role that requires a traditional IT department to fill.

Up until recently, SaaS was seen by many businesses as a sales-only enhancement tool, but given the consistent and impressive growth of SaaS companies in recent years, it is becoming increasingly integrated into core business functions as well. When implemented properly and handled by a trusted provider, SaaS can end many of the IT headaches that medium-to-large companies with multiple locations and employees using a variety of devices commonly experience.

Adam Richards

About Adam Richards

Adam Richards is a semi-retired business professional originally from Bangor, Maine. He spent the majority of his career in sales and marketing where he rose to the marketing lead of a Fortune 1000 company. He then moved on to helping people as a career counselor that specifically helped bring families to self-sufficiency through finding them rewarding careers. He has now returned to Bangor for his retirement and spends his free time writing. This blog will be about everything he learned throughout his career. He'll write on career, workplace, education and technology issues as well as on trends, changes, and advice for the Maine job market and its employers.