SaaS: Definition, Meaning, Advantages, Disadvantages

What is SaaS?

SaaS (Software as a Service) is a method of delivering software allowing multiple users to access it remotely via the Internet as a Web-based service. It is also called “on-demand software”. SaaS services are accessed by users using a thin client using a web browser.

The full form of SaaS is Software as a Service. SaaS providers offer software for users over the Internet using a web browser. This software distribution model for cloud computing eliminates the need for installation, storage space, or data loss. A cloud computing provider handles all that and delivers the software to your web browser

How does SaaS Works?

SaaS Model works through the cloud delivery model.

SaaS Solution Provider Delivery Chain

  • A software provider will host the application and related data using its database, servers, computing resources, and network.
  • Here, the service provider hosts the customer’s software and delivers it to the approved end users via the Internet.
  • In the cloud computing model, the application’s source code remains the same for all customers, and whenever new functionalities and features are released, they are rolled out to all customers. However, it depends upon the (SLA) service-level agreement (SLA).
  • The customer’s data for each cloud computing model may be stored locally, in the cloud, or both locally and in the cloud.
  • For example, the SaaS provider’s APIs can integrate a company’s software tools with the SaaS Cloud computing model.

This cloud computing service is closely related to the on-demand computing software delivery models.

On-premise vs. Cloud Computing

Here are the differences between On-premises vs. Cloud Computing:

On-Premise vs. Cloud Computing

On-premises Cloud Computing
It is an on-demand computing paradigm wherein various workloads are hosted in the cloud. The company or organization hosts everything in-house in an on-premises environment.
It demands substantial upfront investment and operating expenses. The cloud provides everything from infrastructure management to program execution.
It provides limited options for customization. It offers plenty of options for customization.
On-premises environments offer less flexibility because of physical servers. The scalability that a cloud environment offers is highly superior to on-premises models.
Enhancement of bandwidth and capacity based on physically deploying new servers. Cloud allows enterprises to upgrade their requirements, be it memory, software, server space, etc.

Difference between Single vs. Multi-Tenant SaaS architecture

 Single vs. Multi-Tenant SaaS architecture

Here are a few important differences between Single vs. Multi-Tenant:

Parameters Single Multitenant
Definition Single-tenant SaaS architecture caters to only one customer at a time. Multi-Tenant SaaS architecture supports multiple customers simultaneously.
Security Every user/client has a dedicated secure database. Data breaches can cause more damage.
Customization It’s easier to customize the dedicated architecture. Every Cloud architecture update will affect multiple clients.
Scaling Capabilities Scaling up is a highly challenging task. Scaling up becomes smooth and seamless
Pros Easy to manage database with no duplication. Needs very little code modification to ensure the client’s data is not mixed.
Cons Resource-heavy architecture, so it is costly to maintain. Harder to customize.

Key characteristics of SaaS

Key Characteristics of SaaS

Here are the critical characteristics of SaaS:

  • Easily Customizable: The SaaS cloud computing model is designed to fit any organization’s unique requirements without significantly changing its infrastructure. Even frequent upgrades can be done in the background without affecting customer information.
  • Built on Multitenant Architecture: It is built on a multitenant architecture, meaning that all users and applications share one centralized infrastructure and code. It enables SaaS vendors to innovate and saves time for code revision.
  • Improved Access: SaaS architecture offers better access to data than any other network so that all users have secured access to the same information, making it easier for them to collaborate.
  • Subscription-Based Pricing Model: SaaS offers a subscription-based pricing model that allows you to subscribe whenever you want to use the application.
  • Security: SaaS offers encrypted storage that limits access to sensitive information. You can also integrate the SaaS application with external Key Management Frameworks to ensure extra protection.
  • Collaboration: SaaS applications facilitate multiple users to collaborate. It allows users to comment, assign and share tasks on the application to work together.

Challenges of SaaS Technologies

SaaS can pose specific challenges to an organization in the long run if mishandled. Here are some critical challenges for the SaaS Cloud Computing model:

Inconsistency in internet connection: A high-speed internet connection is important for running SaaS architecture. The fluctuating architecture is not working well.

Less Control: A SaaS application is entirely managed by a third-party vendor. In other words, even if you have opted for a customized pricing model plan, you do not have complete control over the pricing, which is left solely in the hands of the vendor.

High-Security Risks: In SaaS Cloud Computing, your confidential and sensitive data is handled by the vendor, so there is a significant threat to your privacy.

Integration Issues: Some, time Wrong integration can cause a lot of trouble for your business. For example, if there are billing issues, wrong invoices can be generated.

Therefore, it is imperative to sync data between SaaS and other applications. However, Integration on SaaS Model is expensive and might require specialized IT professionals.

Selection of SaaS vendor: There are thousands of SaaS applications for an IT team. You can always go with recommendations. However, reviews are biased, so they can’t give you insurance that you have selected the right service provider.

Hybrid Infrastructure: The combination of on-premises or existing software with cloud-based software services is known as a hybrid infrastructure.

Pricing for SaaS

Here are some essential pricing models of SaaS:

  • Free or ad-based: It is free for users, with the SaaS provider generating revenue through upselling their advertising space. It is also possible to upgrade to a paid model without intrusive advertising in this pricing model.
  • Flat rate: In this pricing model, customers are granted access to the software’s full features for a fixed monthly or annual fee.
  • Per user: In this pricing model, the price is determined by how many people will use the service for each subscription. There is a fixed price for all the users.
  • Per-user tiers: These pricing tiers are based on a range of active users that can exist on a single subscription.
  • Storage tiers: Customers may have free service access in this pricing structure. However, you will need to pay for storage space if they want to continue using the product once it passes the free limit.
  • Pay-as-you-go: This SaaS pricing model work on the number of customers. The more customers use the SaaS service, the more they are charged, and vice versa.
  • Per active user: It acts on the aspects of the “pay-as-you-go” method. However, the only significant difference between these two plans is that you are only billed per user actively using the service beyond a specified threshold limit.
  • Feature-based tiers: These pricing tiers are determined by the number of features the subscriber seeks. This pricing model offers reduced software versions with limited features for a lower price.
  • Freemium: The pricing service will generally be free in this tier. However, functional restrictions will be designed to increase the paid SaaS cloud service sales to existing customers.

Advantages of SaaS

Here are the main pros/benefits of the SaaS cloud Computing model:

  • Reduced deployment time helps in rapid prototyping
  • Many software providers are using a SaaS model. However, it may still get a large amount of revenue from the traditional model.
  • SaaS solutions have a monthly subscription that involves upgrades, maintenance, and 24*7 client support, so there is no requirement for high up-front costs.
  • SaaS vendor helps you to manage the complexity of the underlying IT infrastructure in SaaS.
  • Companies do not need to maintain hardware or worry about which operating system version supports
  • SaaS solutions require a web browser and internet access, and you are ready to go live as you get immediate access through SaaS.
  • You can access SaaS solutions can be accessed from anywhere in the world that offers mobility to the users.
  • It helps business organizations to focus more on their sales and marketing efforts and ensure customer satisfaction.
  • The SaaS provider updates and patches the application on an ongoing basis.

Disadvantages of SaaS

Here are the main pros/benefits of the SaaS cloud Computing model:

  • Data is stored in the cloud so security may be an issue for some users. So, cloud computing is not more secure than the on-premises model.
  • In-house software applications give business owners a high degree of control.
  • As SaaS software is web-hosted, you can’t use these applications without an Internet connection.
  • SaaS applications run at slightly slower speeds than client/server applications.

Popular SaaS Providers

Popular SaaS Providers

Here are some leading SaaS providers:

  • Office 365 provides an integrated experience of apps and services like MS- Word, Excel, and PowerPoint. It is updated monthly with the latest features and security updates.
  • Google G Suite is Google’s owned cloud computing solution. This one suite of tools also provides solutions for email, word processing, spreadsheets, presentation shared calendars, cloud storage, and many other cloud computing applications.
  • Dropbox offers its cloud service for a client that runs on Windows, Mac, and Linux operating systems and mobile devices. It enables users to drag and drop files from their desktop into their browser to upload them to Dropbox.
  • Salesforce is a CRM solution that brings companies and customers together. It helps all departments have a shared view of your customer.

Future of SaaS

We will likely see a higher adoption rate and a more excellent acceleration of the feature as companies design and develop new technologies to meet market demand.

Few companies predict a rebirth of SaaS technology, focusing heavily on mobile devices. However, other companies are opting for artificial intelligence (AI), which will dominate the SaaS market in logistics, transport, and retail.

As technology continues to evolve, SaaS models also evolve. However, the fact is that out-of-the-box and ready-made tools will always have a business place.


  • SaaS stands for Software as a Service
  • A software provider will host the application and related data using its database, servers, computing resources, and network.
  • The SaaS cloud computing model is designed to fit any organization’s unique requirements without changing its infrastructure.
  • In SaaS Cloud Computing, the vendor handles your confidential and sensitive data, so there is a significant threat to your privacy.
  • Various Pricing models for Sass are: 1) Free or ad-based 2) Flat rate 3) Per user 4) Per-user tiers 5) Storage tiers 6) Pay-as-you-go 7) Per active user 8) Feature-based tiers, and 9) Freemium.
  • Reduced deployment time helps in rapid prototyping.
  • In-house software applications give business owners a high degree of control.
  • Some leading SaaS providers are Office 365, Google G Suite, Dropbox, and Salesforce.
  • The future of SaaS Cloud Computing is good as we will see more adoption in the coming years.