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What is the Purpose of SaaS? Industry Guide With Examples of How SaaS Works

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What is the purpose of SaaS?
The purpose of SaaS is to deliver on-demand computing services through applications over the internet. It improves accessibility, scalability, and reliability while minimizing overhead and maintenance costs. SaaS also allows easier and quicker integration with other platforms without the need to acquire expensive hardware and infrastructure.

While there are many interesting pieces of information that you could gather about cloud computing in general and Software-as-a-Service (SaaS) in particular, the critical takeaway that you could sense about them is this: many, if not all, are heading to the cloud.

If you are in business and intend to take it to the next level, you will want to learn as much as you can about this crucial development of our times. As purveyor of everything SaaS, FinancesOnline has gathered its experts to give you this sound piece of SaaS overview to give you good head start against the competition.

You will find all the essential information you need neatly organized in our SaaS guide below.

purpose of saas

It used to be that when you mention the word “computing,” everybody understood it to mean those interconnected pieces of computer hardware and the software that you have installed in order to run applications specific to your needs. Not anymore.

Now cloud computing has taken the forefront of computing and it is now not just the rage, it’s the new norm. You know that when even such longtime desktop behemoth and stalwart as the Windows operating system is going to the cloud.

Source: Synergy Research Group, 2018

As a metaphor for the Internet, “the cloud” is a familiar cliché, but when combined with “computing,” the meaning gets bigger and fuzzier. Some experts define cloud computing narrowly as an updated version of utility computing: basically virtual servers available over the Internet. Others go very broad, arguing anything you consume outside the firewall is “in the cloud,” including conventional outsourcing.

Cloud computing comes into focus only when you think about what IT always needs: a way to increase capacity or add capabilities on the fly without investing in new infrastructure, training new personnel, or licensing new software. Cloud computing encompasses any subscription-based or pay-per-use service that, in real time over the Internet, extends IT’s existing capabilities.

Cloud computing is now at an advanced stage, with a motley crew of providers large and small delivering a slew of cloud-based services, from full-blown applications to storage services to spam filtering. Yes, utility-style infrastructure providers are part of the mix, but so are SaaS (software as a service) providers such as HubSpot.

Based on the current state of affairs, here’s our SaaS guide with a rough breakdown of what cloud computing is all about:

What is SaaS?

Software as a service (SaaS) is a software distribution model in which a third-party provider hosts applications and makes them available to customers over the Internet. SaaS is one of three main categories of cloud computing, alongside infrastructure as a service (IaaS) and platform as a service (PaaS). Strong showing by companies like Salesforce in the nascent SaaS industry helped make SaaS a defining feature of the modern economy.

By means of what’s called multitenant architecture, SaaS strictly delivers business software to thousands of customers.  The cloud component simply implies an active connection to the internet and those devices and browsers that make access possible. All the elements that define a software, from scripts, codes and algorithms, as well as the physical hardware in the form of servers and the structures that house them are kept and maintained by the vendors in their own facilities, a notable reversal in how deployment is carried out as mentioned earlier. On the customer side, it means no upfront investment in servers or software licensing; on the provider side, with just one app to maintain, costs are low compared to conventional hosting. With SaaS vendors minding all the heavy lifting, customers acquire the option to just hire the services of external IT experts to oversee all the software they are using.

This substantial change in the vendor-customer relationship not only comes by way of the remote access: how customers pay for the right to access is also drastically changed, doing away with the old model of license purchase and extra annual charges for things like continued support and maintenance, which could go in the range of 15 to 20 percent. SaaS model, on the other hand, simplifies pricing via a fixed or negotiated monthly or annual subscription, simplifying all the purchasing-related processes. Some vendors also dispense with contracts, allowing their customers to terminate the relationship at any given time. As well, the arrival of third party applications and multiple add-ons enable that flexibility not possible in the on-premise model. The novel arrangement work both ways, sparing vendors of unnecessary costs that are widely prevalent in the on-premise delivery.

What is the purpose of SaaS?

Software as a Service (SaaS) largely evolved out of the growing recognition that the internet presents a viable option to on-premise installation which has dominated computing since the early days. SaaS removes the need for organizations to install and run applications on their own computers or in their own data centers, which typically requires a massive investment in terms of infrastructure, logistics and manpower. This eliminates the expense of hardware acquisition, provisioning and maintenance, as well as software licensing, installation and support.

What are examples of SaaS?

With thousands of SaaS companies vying for your attention, we turn to choice SaaS examples to guide you further on the specifics of how SaaS works and what you could be looking for when you turn your eyes on the SaaS cloud to help your business.

For a more comprehensive set of tools you can check our SaaS tools for small business guide here.

1. The HubSpot Suite

HubSpot CRM dashboard

HubSpot CRM: HubSpot also offers Marketing and Sales SaaS applications

As a prime example of a Software-as-a-Service vendor, HubSpot is a family of inbound marketing, sales, and CRM solutions that provide marketers with all the tools and functionalities needed to create compelling content, target the right audience, and sell at least three times faster than their competitors. Users who choose HubSpot can look forward to enlarge their contact lists and integrate email metrics directly to the system without complex export and merging. Delivery becomes more effective, and your approach towards customers is more personalized and brand-specific.

The vendor has an appealing free trial where you can tinker with the features at no cost by signing up for a HubSpot free trial.


An award given to products our B2B experts find especially valuable for companies

Try out HubSpot with their free trial

As a complete solution, HubSpot and its family of products all provide full-funnel tools that allow users to build, administer, and distribute compelling emails linked to the rest of their marketing tools and applications. You can use it to create dynamically updated membership lists and static one-off email distributions, and rely on the same system to tailor those emails as you want without coding expertise. HubSpot will also offer a gallery of installed templates and analytics that further facilitate delivery.

For each of the modules, HubSpot offers access to a reliable tech support team which you can contact by phone, email, or directly on their website.  A lot of training materials are also available in their database to help you maximize its potential and use all of the benefits it can provide you.

Detailed HubSpot Review

2. dashboard is the leading collaboration application for teams, whether working remotely or on-site. What it does best is that it syncs all information using a single, accessible hub called the Board system, which allows all members of the team to make important contributions.

You can see for yourself everything that has to offer when you sign up for a free trial.

An award given to products our B2B experts find especially valuable for companies

Try out with their free trial

In addition to this highly visual approach to collaboration, project management, and communication, also allows users to customize every part of the software. You can categorize conversations and projects into custom boards, and enable anyone from your team to post comments and modify each part of the project’s status. You can even upload files, interact with each task, and sync with your favorite social media feed to record discussions in real-time.

Apart from its collaboration-centric features, also features great support. With a lot of integrations that it comes with from the outset, also supports accurate analytics and reporting that can be exported to your favorite spreadsheet file. All in all, this software is a prime example of a SaaS-enabled project management and collaboration tool that can help you perform your tasks anywhere, anytime.

Detailed Review

3. Zendesk

Zendesk dashboard

Zendesk is a suite of customer support software that help you transform your customer service to the next level. As an all-in-one help desk solution, Zendesk empowers your customer service agents to engage with customers dynamically, nurture relationships and build trust, and pursue leads. Its product family consists of a support, chat, call center, and knowledge base solutions that you can mix and match as your company requires.

Zendesk has one of the most flexible plan structures not only in its field but across the entire SaaS spectrum. If you’re interested to see what makes it one of the most popular software in its category, you can simply sign up for a Zendesk free trial.


An award given to products our B2B experts find especially valuable for companies

Try out Zendesk with their free trial

The way Zendesk separated its program into different modules makes it affordable and attractive for startups and small businesses. They can easily upgrade and integrate additional Zendesk modules as their needs get more complex and/or specialized. Overall, Zendesk is a comprehensive help desk package with all your customer service needs in one platform.

Detailed Zendesk Review

4. Wix

Wix dashboard

Wix brings to the table 12 years of experience in the industry, enjoying largely positive website builder software reviews, and more than 100 million users worldwide confirm its position atop many shopping lists for SaaS ecommerce and shopping platforms anywhere.

You can easily sign up for a Wix free trial and get to know the features firsthand at no cost and without commitment.


An award given to products our B2B experts find especially valuable for companies

Try out Wix with their free trial

Some people will remember how Wix started out as the creator of stunning web pages, which it used as a launching pad for more sophisticated and mature features to address all the needs of an online seller and more. Wix simply makes it easy to find the desired product with suitable suggestions and recommendations, helped along by promotional coupons and gift offers. Robust payment system takes the pain of completing the buying process, and the smart Wix engine then takes over to update the inventory.

Wix provides a powerful shipping management that will allow customers to properly track their orders and ensure their products end up at their doors on time. While Wix easily completes a purchase from beginning to end, its global reach is second to none. These powerful Wix features are optimized for mobile platforms, integrates well with CRM tools and other applications.

Detailed Wix Review

5. FreshBooks

FreshBooks dashboard

A giant in the Finance and Accounting industry, FreshBooks is one of the early adopters of SaaS technology.

Planning, budgeting, forecasting with all the attendant core accounting, project management, billing and invoicing and time tracking should all matter to your small business and then some if you’re looking to level up ahead. A leading SaaS accounting software solution for your business needs, FreshBooks is all that and especially in collecting from clients, it lets you ease through the pain by tracking due dates and following up late payments without distressing you and the erring party.

The vendor offers a comprehensive free trial to get you up to speed with the features. You can sign up for a FreshBooks free trial.


An award given to products our B2B experts find especially valuable for companies

Try out FreshBooks with their free trial

Aside from monitoring your credit card and bank accounts, FreshBooks wields control of little unaccounted expenses that siphons a sizable chunk of your funds over time. After capturing photos of the receipts of these minuscule expenses, for example, FreshBooks will log and consolidate them for each employee. At the end of the day you know which little holes are bleeding your company and do something to plug them in.

The app consistently earn praises in many accounting software comparison reviews, especially from small businesses with hardly any accounting background, FreshBooks’ intuitive design will especially appeal to you: it simply automates calculations and processes, letting you run in-depth reports and look into financial patterns—almost turning you into an instant pro.

Detailed FreshBooks Review

What is SaaS deployment model?

SaaS deployment model refers to the way vendors use the internet to deliver software and bill their customers, who in turn simply run the applications on the browsers of their PCs or mobile devices—all the applications being processed by the vendor servers. This multi-tenant, vendor-hosted server and processing model is a direct contrast to the traditional on-premise model of software deployment. The low barrier to adoption of this model has supported freemium and trial opportunities through which most customers initially experience the product.

Due to its web delivery model, SaaS eliminates the need to download and install applications on each individual computer—a nightmare for any IT staff. With SaaS, vendors manage all of the potential technical issues such as data, middleware, servers, and storage, while businesses can simply streamline their maintenance and support.

This SaaS deployment is similar to the establishment phase of a utility service, which is followed by metering and billing at regular intervals for the services that have been delivered. SaaS deployment is typically initiated by a SaaS provider via a user provisioning process, which is often automated. Alternately, SaaS deployment can be initiated by a third-party-managed (hosted) services provider. SaaS deployment is considered complete once a user has the necessary means to access a SaaS offering, regardless of whether or not the consumer begins using the service at the time it is provisioned.

What are the differences between IaaS, PaaS and SaaS?

While the cloud is a constant burning topic from small businesses all the way to global enterprises, it remains a pretty broad concept that covers a lot of online territory. If you are late considering switching your business to the cloud, whether it be for application or infrastructure deployment, it is imperative that you understand the differences and advantages of the various cloud services.

You will want to start comparing the three models of cloud service: Software as a Service (SaaS), Platform as a Service (PaaS), and Infrastructure as a Service (IaaS). Since each of these has its own benefits and variances, it is necessary to understand the differences among SaaS, PaaS, and IaaS to know how to best choose one for your organization.

on-premise vs. iaas vs. paas vs. saas

SaaS: Software as a Service

Software as a Service is the most commonly utilized option for businesses in the cloud market. SaaS uses the internet to deliver applications to its users, which are managed by a third-party vendor. Many SaaS applications are run directly through the web browser, making it unnecessary for clients to download or install the application.

SaaS Delivery

Again due to its web delivery model, SaaS eliminates the need to download and install applications on each individual computer—a nightmare for any IT staff. With SaaS, vendors manage all of the potential technical issues such as data, middleware, servers, and storage, while businesses can simply streamline their maintenance and support.

Advantages of SaaS

SaaS provides numerous advantages to employees and companies by greatly reducing the time and money spent on tedious tasks such as installing, managing, and upgrading software. This frees up a lot of time for technical staff to spend on more pressing matters and issues within the organization.

Characteristics of SaaS

Here are a few ways to help you determine when SaaS is being utilized:

  1. Hosted on a remote server
  2. Accessible over the internet
  3. Managed from a central location
  4. Users not responsible for hardware or software updates

Why Choose SaaS?

There are many different situations in which SaaS may be the most beneficial, including:

  1. If you use applications that aren’t in-demand very often, such as tax software
  2. For short-term projects requiring collaboration
  3. If you are a startup or small company that needs to launch ecommerce quickly and don’t have time for server issues or software
  4. For applications that need both web and mobile access

Platform as a service (PaaS)

Cloud platform services, or Platform as a Service (PaaS), provide cloud components to certain software while being used mainly for applications. PaaS provides a framework for developers that they can build upon and use to create customized applications. All servers, storage, and networking can be managed by the enterprise or a third-party provider while the developers can maintain management of the applications. This form of cloud computing delivers development environments as a service. You build your own applications that run on the provider’s infrastructure and are delivered to your users via the Internet from the provider’s servers. Like Legos, these services are constrained by the vendor’s design and capabilities, so you don’t get complete freedom, but you do get predictability and pre-integration.

PaaS Delivery

The delivery model of PaaS is similar to SaaS, except instead of delivering the software over the internet, PaaS provides a platform for software creation. This platform is delivered over the web, giving developers the freedom to concentrate on building the software while still not having to worry about operating systems, software updates, storage, or infrastructure.

PaaS allows businesses to design and create applications that are built into the PaaS with special software components. These applications, or middleware, are scalable and highly available as they take on certain cloud characteristics.

Advantages of PaaS

No matter what size of company you may be in, there are numerous advantages for using PaaS:

  1. Easily available
  2. Scalable
  3. Greatly reduces the amount of coding
  4. Development and deployment of apps is simple and cost-effective
  5. Lets developers create customized apps without the headache of maintaining the software
  6. Automates business policy
  7. Allows easy migration to the hybrid model

Characteristics of PaaS

PaaS has many characteristics that define it as a cloud service, including:

  1. Offers a variety of services to assist with the development, testing, and deployment of apps
  2. It is built on virtualization technology—resources can easily be scaled up or down as your business changes
  3. Numerous users can access the same development application
  4. Web services and databases are integrated

Why Choose PaaS?

There are multiple situations wherein utilizing PaaS is more beneficial or even necessary. For instance: if there are multiple developers working on the same development project, or if other vendors need to be included, PaaS can provide great speed and flexibility to the entire process. PaaS is also quite handy if you wish to be able to create your own customized applications. It can also greatly reduce costs and simplify some challenges that come up if you are rapidly developing or deploying an app.

IaaS: Infrastructure as a Service

Cloud infrastructure services, known as Infrastructure as a Service (IaaS), are made of highly scalable and automated compute resources. IaaS is fully self-service for accessing and monitoring things like compute, networking, storage, and other services, and it allows businesses to purchase resources on-demand and as-needed instead of having to buy hardware outright.

IaaS Delivery

IaaS delivers Cloud Computing infrastructure to organizations, including servers, network, operating systems, and storage, through virtualization technology. These cloud servers are typically provided to the client through a dashboard or an API, and IaaS clients have complete control over the entire infrastructure. IaaS provides the same technologies and capabilities as a traditional data center without having to physically maintain or manage all of it. IaaS clients can still access their servers and storage directly, but it is all outsourced through a virtual data center in the cloud.

As opposed to SaaS or PaaS, IaaS clients are responsible for managing aspects such as applications, runtime, OSes, middleware, and data. However, providers of the IaaS manage the servers, hard drives, networking, virtualization, and storage. Some providers even offer more services outside of the virtualization layer, such as databases or message queuing.

Advantages of IaaS

There are many benefits of choosing IaaS, including:

  1. It is the most flexible cloud computing model
  2. It is highly scalable
  3. Hardware can be purchased based on consumption
  4. It easily allows for automated deployment of storage, networking, servers, and processing power
  5. It fives clients complete control of their infrastructure
  6. Resources can be purchased as-needed

Characteristics of IaaS

Some characteristics to look for when considering IaaS are:

  1. Services are highly scalable
  2. Dynamic and flexible
  3. Resources are available as a service
  4. The cost varies depending on consumption
  5. Typically includes multiple users on a single piece of hardware
  6. Provides complete control of the infrastructure to organizations

Why Choose IaaS?

Just as with SaaS and PaaS, there are specific situations when it is the most advantageous to use IaaS. If you are a startup or a small company, IaaS is a great option so you don’t have to spend the time or money trying to create hardware and software. IaaS is also beneficial for large organizations who wish to have complete control over their applications and infrastructures, but are looking to only purchase what is actually consumed or needed. For rapidly growing companies, IaaS can be a good option as you don’t have to commit to a specific hardware or software as your needs change and evolve. It also helps if you are unsure what demands a new application will need as there is a lot of flexibility to scale up or down as needed.

SaaS vs PaaS vs IaaS – Which one is best?

Overall, each cloud model offers its own specific features and functionalities, and it is crucial for your organization to understand the differences. Whether you are looking for cloud-based software for storage options, a smooth platform that allows you to create customized applications, or are wanting complete control over your entire infrastructure without having to physically maintain it, there is a cloud service for you. No matter which option you choose, migrating to the cloud is the future of business and technology as we know it, and it is necessary to be properly informed.

What benefits does SaaS provide?

Those who have opted to adopt SaaS typically cite the following benefits the cloud route has given them:

1. Saves Time

Instead of buying software and then installing it, SaaS users subscribe to the software on a monthly or an annual basis. The relevant applications are used online through files saved in the cloud.

Since the application is already configured, the user has a ready-to-use application. This not only reduces installation and configuration time, but also cuts down the time wasted on potential glitches linked to software deployment.

More traditional software models often come with cumbersome and time-sucking installations which can take several weeks to implement. SaaS drastically cuts down this time for users in the telecom industry.

All you need is a net connection and log in information to access the new software. As long as an Internet connection is available, the applications can be accessed from any location.

2. Scalability

Since SaaS systems are cloud-based, they are easily scalable and can be quickly integrated with other similar systems. So telecom users don’t need to buy additional software or servers — only a new SaaS offering has to be enabled. Also, the SaaS provider effectively makes the server capacity available to the user.

SaaS vendors help you receive upgrades and updates as soon as they are ready, saving time and resources.

Performance monitoring tools provide useful data on utilisation of computer resources, and it makes sense to invest in them.

Since SaaS systems are cloud-based, they are easily scalable and can be quickly integrated with other similar systems.

3. Ease of Use

SaaS apps can be accessed through the Internet and a number of mobile devices. The quality and consistency of user interfaces have also greatly improved in the past few years, and the adoptability learning curve is low.

Thus employees who have recently joined a telecom company can easily and quickly learn how to use SaaS applications. Good SaaS applications offer tutorials and guides to empower people using the software for the first time.

For telecom companies it is helpful to do some homework before latching on to a SaaS system to ensure that it has strong back-end support. This will allow the firm’s IT engineers to concentrate on their core competencies.

SaaS applications provide ample scope for customization to suit the requirements of specific industries such as telecom, and individuals.

4. Budget-Friendly: Flexible Payments

Generally, customers pay for this service on a monthly basis using a pay-as-you-go model. Transitioning costs to a recurring operating expense allows many businesses to exercise better and more predictable budgeting. Users can also terminate SaaS offerings at any time to stop those recurring costs.

Money is also saved on capital expenditure involving infrastructure and hardware as well as hiring staff to manage the application. Besides the lower up front costs linked with installing and implementing the system (which needs to be integrated with other software systems), SaaS also leads to lower maintenance.

The pay-as-you-go pricing models enable companies to pay only for what they are using and cut down heavy licensing fees.

5. Automatic updates

Rather than purchasing new software, customers can rely on a SaaS provider to automatically perform updates and patch management. This further reduces the burden on in-house IT staff.

6. Enhanced Security

Since SaaS-based data is hosted on the cloud and backed up by the provider, it is typically more secure than traditional systems. If there is a security emergency that hits the company server or an employee’s computer, most data remains secure on the servers and database of the SaaS provider.

This is also useful as employees often use their personal devices for office work, and these can be susceptible to data loss. But as the data is held on the cloud instead of the employee’s personal device, it remains secure.

7. Accessibility and persistence

Since SaaS applications are delivered over the Internet, users can access them from any Internet-enabled device and location.

Is SaaS the same as Cloud?

No, and it isn’t just semantics. The cloud is the more general, more encompassing term; specifically, it refers to a set of incredibly complex infrastructure technology. At a fundamental level, it’s a collection of computers, servers, and databases that are connected together in a way that users can lease access to share their combined power. The computing power is scalable so that buyers can dynamically increase, or decrease, the amount of computing power they lease.

The cloud can refer to anything that’s hosted remotely and delivered via the Internet. While all cloud programs are run by underlying software, SaaS refers specifically to business software applications that are delivered via the cloud. Given the widespread growth of cloud accessibility, it’s been easier, faster and less expensive for SaaS developers to roll out applications as compared to traditional on-premise software development. Today, nearly every type of core business function—from human resources to enterprise resource planning—is available via SaaS.

What is SaaS integration?

If you use a combination of multiple SaaS applications alongside legacy systems, you will appreciate the concept of SaaS integrations now typically delivered through an application programming interface (API) , software tools that provide clearly defined methods of communication among various application components.

SaaS integration refers to configuring two or more SaaS solutions or legacy applications to work seamlessly together to provide a more potent business tool for the user.

SaaS integration is essentially a private PaaS, or Platform as a Service. This is what makes cloud computing, which everyone is talking about, possible. A PaaS can magically deploy an application for you and make it available to the public. A SaaS is essentially this same thing, but designed for private, rather than public, use. This benefits your organization in many ways.

First, you will have all the convenience of a PaaS without any of the restrictions that come with using a public interface. The SaaS data integration allows you to distribute applications to those within your organization safely, securely, and without configuration, allowing you to easily share applications as well. It also allows you to work from that ambiguous cloud that everyone is raving about, without the public domain.

There are many other benefits to SaaS integration. One of these is that you have a boost in infrastructure utilization. You can enjoy up to ten times as much utilization that is made available by current virtualization technology through shared operating system multi-tenancy.

Another benefit is that you remove some of the manual burdens of managing a network, because these tasks are done invisibly and automatically by the SaaS database. You can also provide software layer high availability to guest applications on the server. All of this reduces the time it takes to build an application for your organization by 50 to 90 percent.

Finally, middleware doesn’t replace anything you have currently existing on your server or network. It simply acts as an intermediary between the main server or network and devices connected to it. This means that you can still utilize all your existing hardware and software investments with SaaS integration.

Is Your Business Ready For SaaS?

All in all, you have nothing to lose by making use of SaaS integration. In fact, you could have everything to gain. If your organization uses its own applications that need to be distributed widely to a number of individuals, computers, and devices, this may be the best solution for you.

Additionally, the SaaS databases can be updated at any time to be used with any application, so it is a wise investment that would last years for your organization. At the least, it bears a need for careful consideration of how SaaS integration can help your organization thrive.

With its multitude of benefits, this is the perfect time to finally shift to cloud-based services. It will allow you to prioritize various aspects of your business. Furthermore, you can eliminate redundant processes, unnecessary expenses, and redirect your personnel to more productive endeavors. If you want to explore more cloud solutions, you can read our in-depth article about Saas, PaaS, and IaaS.

By Jenny Chang

Senior writer at FinancesOnline who writes about a wide range of SaaS and B2B products, including trends and issues on e-commerce, accounting and customer service software. She’s also covered a wide range of topics in business, science, and technology for websites in the U.S., Australia and Singapore, keeping tabs on edge tech like 3D printed health monitoring tattoos and SpaceX’s exploration plans.

Amit Agrawal says:

Today, it’s becoming much easier and more common to customize your SaaS systems. And in fact, there are now armies of consultants that specialize in tweaking SaaS applications to fit your business processes.

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