Software as a service is a way for users to use cloud based applications directly through means of internet using a thin client like a web browser. The application is centrally hosted and the business model revolves around customers paying a subscription fee to the software vendor.
Software as a service has become a very common way of software delivery and most of the applications such as email , payroll processing software, CAD software ,CRM software project management software, Learning management system, helpdesk software etc are delivered in a SaaS model.
In software as a Service Delivery model all the underlying infrastructure, application software, data of customer, middleware are located in the service provider's data centre. The software vendor provides a SLA or a service level agreement which ensures that the application will be secure and will have high availability. The biggest benefit of SaaS is that it allows companies and Enterprises of all sizes, whether small businesses or large fortune 500 companies to get up and running quickly with the applications at very low minimum upfront cost.
SaaS model of software distribution has lot of advantages over traditional models.
No upfront cost - it doesn't require customers to pay any upfront cost of buying the software or setting up the hardware for an on-premises installation.
Pay as you go business model - customers usually pay as they go which allows them the flexibility to test out a service quickly before rolling out internally to rest of the organisation
Access software from anywhere - since all the data of company is stored in the cloud it allows us to access the software from anywhere using their login credentials
Get software updates on the fly - software as a service allows on the fly rolling updates to the software on a continuous basis. Some of the modern software as a service companies deploy code as many as hundred times a day using continuous integration and testing.
No middlemen - Another important advantage of SaaS business model is that it doesn't require the traditional physical distribution channels and can be deployed almost immediately which remove traditional partners or middlemen from the process. SaaS application vendors follow a direct to consumer model.
Software as a service applications can have multiple pricing strategies and business models such as pay per user pricing model, pricing model based on usage of the product, freemium business model, flat fee pricing strategy etc , thus giving more options to the customer to choose from.
Saas applications have a multi-tenant Architecture. Multi-Tenant architecture simply means that a single instance of the software is able to serve multiple users all across the world who are called tenants. Tenants of multi tenant application can have their own data and their own customisation/configuration according to their own needs on the same instance of software. Multi tenant applications are designed in such a way that the data of different users are separated out and they don't have access to each others private data. This ensures that every business who has access to that Saas application will be able to get the same computing power, core features, data storage, security and availability as that of big businesses. Thus SaaS applications help to democratise technology. Multi tenancy have lot of benefits such as cost saving, better security, easier release Management which makes it the best possible choice for both the software vendors and the customers.
SaaS startups have seen tremendous growth in last decade or so and according to Gartner group it estimates the software and application service application industry has reached about 200 billion dollars in sales. So what are some of the common reasons why SaaS industry has witnessed such a breath neck speed.
One of the major driving factors for sacred option is the growing number of internet or web based users.
The standardization of integration protocol such as REST and SOAP is also one of the major driving reasons why Saas applications have become so popular
So what are some of the popular softwares As A Service companies :
Service Now - ServiceNow offers real time communicate relation in ERP solution for it human resources security and legal enterprise needs it focuses on IT services management and it operations functions of the business
Workday does workday provide financial human resources software suite for Enterprises in targets large to mid size customers
Salesforce is a suite of SaaS applications which has CRM as its flagship product and also has products in marketing, analytics,enterprise social networking space. It is one of the fastest growing SaaS companies.
Slack - slack is a popular enterprise collaboration platform
Atlassian atlassian is an enterprise software company which makes product for software developers, project managers etc. Its main product is called Jira which is an issue tracking and process management software
Shopify shopify the cloud based omnichannel e-commerce which considers small and medium-sized businesses as its target customer segment and it helps them run their website and store front with its simple and intuitive SaaS ecommerce software
Github - gitHub is a popular online software development tracking in version control SaaS product. It was recently acquired by Microsoft for $7.5 billion dollars.
Splunk - splunk provides operational intelligence around real time machine that includes log data and big data sources.
So what are some of the challenges for SaaS adoption
One of the biggest concern for Saas applications is data security because the data is stored on the vendor's data centre.
SaaS applications are hosted in the cloud and this causes latency in the environment and thus SaaS model is not really applicable for applications which require low latency.
Although multi tenant architecture have lot of benefits at the same time it reduces the scope of customisation and configuration that the large clients require, since the software runs through a single instance.
SaaS application depend upon internet as a conduit of data transfer, so that means the speed of transfer will be limited depending upon the bandwidth of internet rather than on internal network speed.
Another issue that slows down the SaaS adoption is the uptime guarantee and availability products.