Understanding SaaS: Definitions & Concepts

‍Introduction

SaaS - which stands for Software as a Service - is a cloud-based service where instead of downloading the software to your PC or business network to run, you can access it via the Internet. This software application can be anything and offers various advantages, hence why more businesses are adopting this and integrating SaaS products into their business. 

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What is SaaS?

SaaS is a relatively new software distribution model but has garnered a lot of popularity in recent years. SaaS products are typically hosted by a provider who automatically maintains and updates the software. Customers can also access and use them via web or mobile browsers. This new model has revolutionized how software is delivered. It removes the hassle of waiting for an application to download before actually using it.

SaaS is highly popular in the U.S, with more than 17.000 companies offering such services, far beyond any other country in the world:

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Key Facts about SaaS

Understand what SaaS is all about with the following metrics:

SaaS applications are considered an important technology in business for 3/4 of surveyed experts (Source: Harvey Nash Group Technology and Talent Study). Additionaly, 93% of CIO  - Chief Information Officers - claim that adopting SaaS helps them reach business goals.

99% of firms and 78% of small businesses operations rely on at least one SaaS tool (Source: SaaSWorthy.com).

The SaaS industry is worth approximately $172 billion (Source: Gartner).

The top 5 largest SaaS Companies are : SalesForce (with 9.3% of market share in 2020), Microsoft (8.7%), SAP (4.7%), Oracle (4%), and Google (3.8%) (Source: ExplodingTopics.com).

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Types of SaaS products

There are a few types of SaaS products; each comes in different shapes and sizes and fits with your business in different ways. 

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Packaged SaaS: This product helps businesses manage a specific process in an organization, like improving employee engagement or strengthening customer relations.

Collaborative SaaS: This application improves teamwork by providing tools like messaging and video conferencing or collaboration on documents. The main purpose of this type of SaaS is to support collaborative efforts and boost productivity.

Technical SaaS: This type offers tools to manage and improve developmental or technical processes. An example would be using this to improve the search experience or import contacts in the products.

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SaaS pricing models

Different companies have different ways to charge their SaaS products. Find out these pricing models and which will best suit your project.

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Freemium: Freemium lets you use some of the basic features for free; however, end-users - businesses or individuals - usually need more advanced features to use the service productively. Dropbox is an example of that.

Flat-rate pricing: A company will use this pricing model to sell a single product with a standard feature set at a flat rate. An example would be Basecamp which charges one rate for all its features.

Tiered pricing: This is the most popular SaaS pricing model because there are different pricing offers in tiers. Each package includes different feature sets designed to suit different purposes. It could start from a free package and go up in tiers, suitable for each end user's size and needs.

Per-user pricing: As the name suggests, per-user pricing charges for every service member. This pricing model is popular for companies targeting businesses and teams. Asana charges companies a flat rate for every user.

Usage-based pricing: Also known as "pay as you go", usage-based pricing only charges you when you use the service or for every transaction processed.

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Benefits of SaaS

More companies are on board with SaaS, whether using SaaS applications to improve their business or building their own business with SaaS. Why so? Here are SaaS advantages that will surely convince you to start implementing the software!

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Accessibility: This is the main feature that is also an advantage of using SaaS products. This software can run via the Internet, so the operating system doesn't matter. More importantly, not only can you use it on your office desktop, but also on your mobile devices.

Updates and patches: Because they run on the cloud, vendors who host your SaaS can easily maintain and update the software. This saves time and cost for SaaS users while ensuring that using the SaaS product is continuously effective.

Market reach: For vendors who own a SaaS company, this means that they can extend their reach to a wider market and not be limited to a specific one. This means pricing can be cheaper and more accessible to its users. 

Saving and storage: Because it is connected to the cloud, all the valuable data stored for your business will also be backed up and saved. There is no need for a disaster recovery plan because SaaS will routinely save your data on the cloud anyway.

Data and analytics: Not only will data be saved but it could also be easily captured and provided for analytics use. Businesses using the SaaS software usually have access to reporting and intelligence tools that can provide insights into operational productivity, allowing workflows to be streamlined.

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SaaS: Examples

SaaS solutions can be used for an infinite amount of applications: IT & Security, Customer Support, Human Resources, Project Management, Finance, Marketing, Sales...

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To better understand what SaaS is and what it can do for your business, let's take a look at three famous examples of SaaS companies. Some other SaaS examples are Dropbox, DocuSign, Salesforce, Google Workspace, Canva, and Microsoft.

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Slack: Slack is a popular chat tool, mainly used in a professional setting, and can be used for internal messaging, video conferencing, and productivity bots. This tool is used by many famous companies, including Netflix and Uber. This application is an example of collaborative SaaS. Slack is a web-based application that can be easily installed through the Internet; no special hardware or software is required.

Zoom: Similarly to Slack, Zoom is a collaborative SaaS. It has risen in popularity, especially during the pandemic, and provides a video conferencing tool to host meetings. This platform is cloud-based, so it's easy to install and use right away.

Atlassian: Atlassian is a packaged SaaS and offers many products like Jira, Confluence, and Trello that aim to improve software development, project management, collaboration, and code quality. Many of Atlassian's products are cloud-based, while others are server and data center products.

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Conclusion

Dirox is a software development firm with a very talented and enthusiastic team. We are ready to help you develop your SaaS, whether it's to improve your organizational productivity or the whole essence of your business. Contact our expert consultants, who are happy to receive your call or message and guide you through how Dirox can bring your project to reality. 

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