What is Software as a Service (SaaS)?

Software as a Service (SaaS) has changed the software distribution paradigm and offers solid competitive advantages to companies. Learn why it is fundamental for digital transformation.

Fidel Chaves
4 min read

What is SaaS?

Software as a Service, or SaaS for short, has changed the software distribution paradigm and offers solid competitive advantages to companies. Today we will review why it is fundamental for digital transformation.


Among the solutions brought by using the cloud in business environments, Software as a Service is perhaps one of the most relevant. Its success began taking shape in the 2000s, owing to the path taken by companies such as Netflix, Dropbox, Spotify, Google Apps, and Kubernetes, true pioneers of the modern digital era.


With SaaS, users can connect to cloud-based applications through the Internet. This model has changed the paradigm: any employee can gain online remote access to the whole business infrastructure. The days are over when the software was purchased to be installed on every device.


A subscription to a cloud service provider guarantees the availability, security, and functioning of the applications and data within a company. Therefore, when it comes to cloud providers, it is essential to choose wisely since they will need to deliver an end-to-end solution to store and control an entire business infrastructure in their data center.


SaaS is often associated with Infrastructure as a Service (IaaS) and Platform as a Service (PaaS), but it actually implies a higher level of abstraction. Inside de SaaS package, there are the following elements:


  • Hardware
  • Virtualization
  • OS
  • Runtime
  • Data
  • Application


Typically, IaaS goes up to the virtualization level, and PaaS stops at the runtime element. As such, SaaS takes care of the data and application in its subscription model. SaaS covers all the components required for anyone to use a fully-fledged application, such as Office 365, Netflix, Slack, and many others.

Benefits of the SaaS model

Say goodbye to licensing fees. Software as a Service did away with the old system of companies needing to allocate a large portion of their budget to purchase software licenses, which led to additional support and update costs. But this is not the only concrete benefit, as there are other multiple advantages.


  • #1 No more hardware costs: the cloud service provider is responsible for the processing power.
  • #2 No more installation costs: applications are ready to be used online just by subscribing.
  • #3 Pay-as-you-go: the service is hired only for the period requested, with the chance to cancel it when it is no longer needed.
  • #4 Scalable use: services can be incorporated as a project when needed, with vertical and horizontal scalability.
  • #5 Automatic updates: they are usually free of charge and installed by the service provider, a concern the company won't need to address.
  • #6 Compatibility: applications can be accessed from anywhere and any device with an Internet connection.
  • #7 Security: every user gets equal security parameters. Smaller companies benefit from having the same levels of security as big companies.
  • #8 Integration: adding a new collaborator to the structure is very simple as there is no need to install software on a particular workstation. All that is needed is online registration.


All these benefits are appreciated when companies attempt to develop every application they will use. Imagine having your own email, chat, and time management apps, to name a few. When expanding a company's reach rapidly, there are difficulties in having everything developed in-house.

What are the risks of SaaS?

The model is proving to have fewer cons with each day that goes by. And these are also lessened by the massive commercial competitiveness it provides to companies. Still, there are three aspects to be considered:


#1 Privacy: this is always a conflicting issue as an organization's entire data is now shared with the service provider. Even though privacy is guaranteed, there is always the risk that the data stored by the provider could be leaked, receive cyberattacks, or suffer from any other incidents.


#2 Service interruptions: if the service goes down, the software cannot be accessed, and data could be lost. Creating security backups to store on external servers is the most reasonable solution.


#3 Internet connection: a fast, stable Internet connection is a must-have for the software to work correctly. Some providers reduce this risk by offering an offline service that enables working without an Internet connection.


#4 Over-reliance on others: this economic model can make companies dependent on big corporations that huddle every application under their increasing area of influence.


Finding the perfect balance between doing everything yourself and delegating can be tough. In any case, at Awkbit, we understand the risks and benefits of letting someone else take care of your apps and services.


Are you looking to embrace digital transformation?

Reach Out!

Sources & further reading