In this day and age, almost every business would be associated and using a Software as a Service (SaaS) as part of their core functionalities. They are everywhere! Be it a Word Processor like Microsoft 365 or an Enterprise Resource Planning (ERP) system, most personnel in a corporation would be exposed to, and most likely operating, a software that follows this exact model.
But what is SaaS exactly, and why did it become one of the biggest changes in business transactions of the century? Here’s why!
To begin, Software as a Service (SaaS) can be defined as a software that is owned by separate providers that would allow for access to customers via a pay-per-use or a subscription basis.
So essentially, SaaS is a leased software whereby the customer is paying for the right to use the application for a length of time. This can be differed from the previous norm, which was to pay for software in a single sum, but at a higher price.
Confused? Let me explain with an example.
Take for instance Microsoft Office 365. The application used to be a one-time purchase for the different applications, such as Word, Powerpoint and Excel. But, in 2011, Microsoft launched their own form of SaaS in the form of Office 365, which they call a “cloud-based subscription to a suite of programs”. Microsoft Office 365 is just one of the many programs that have seen a drastic change in revenue model over the past few years. But the idea of an SaaS model dated back further than that.
Although the conception of an SaaS started as early as the 1960s by IBM, the growth and proliferation of the model only started from the popularity of Salesforce. As many of you know, Salesforce was the only Customer Relationship Management (CRM) solution that looked solely to the cloud for its functionalities. The application was built for the browser from the ground up, giving it an edge over its competitors in the market. The runaway success of Salesforce cause great disruption in the CRM market, causing many of its competitors to create alternate SaaS services of their own. This was the catalyst of the model you see today.
Considering that the individual does “make the market”, we got to be thinking if SaaS is truly good for the consumers. Does the subscription model of current products make it better or worse for the consumer? Maybe it does not make sense for individuals, but companies do still to gain a fair bit, big or small.
There are thus 3 benefits of using SaaS – Cost Effectiveness, Accessibility and Scalability.
1. Cost Effectiveness
SaaS offerings allow companies to avoid installing applications from their own computers, thus freeing up the need for additional hardware, maintenance costs and physical installation. With the absence of all these optional costs, the SaaS service starts to make ownership look like a losing proposition. Furthermore, the subscription service follows an expense per month as compared to a large payment up front. Companies would thus be more capable in budgetary terms, where they can reduce costs according to the number of users required.
2. Accessibility
The SaaS programs are only available on the Internet. As long as the user has an account and a Wi-Fi point, the company would practically be able to function anywhere through those applications, at any point in time and around the world. This means that the company is no longer tethered to a few devices, and can be used virtually everywhere.
3. Scalability
Because of the way that SaaS programs are structured, the business would have a high freedom of choice. From the amount of users subscribed to the kind of functionality that can be used, the company is able to scale the usage in accordance to the features that they need. Scaled up or brought down – it is up to the decision of the company.
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