Software as a service (SaaS [1]) is a software licensing and delivery model in which software is licensed on a subscription basis and is centrally hosted.[2][3] SaaS is also known as "on-demand software" and Web-based/Web-hosted software.[4]
SaaS is considered to be part of cloud computing, along with infrastructure as a service (IaaS), platform as a service (PaaS), desktop as a service (DaaS), managed software as a service (MSaaS), mobile backend as a service (MBaaS), datacenter as a service (DCaaS), integration platform as a service (iPaaS), and information technology management as a service (ITMaaS).
SaaS apps are typically accessed by users using a thin client, e.g. via a web browser. SaaS became a common delivery model for many business applications, including office software, messaging software, payroll processing software, DBMS software, management software, CAD software, development software, gamification, virtualization,[5] accounting, collaboration, customer relationship management (CRM), management information systems (MIS), enterprise resource planning (ERP), invoicing, field service management, human resource management (HRM), talent acquisition, learning management systems, content management (CM), geographic information systems (GIS), and service desk management.[6]
For example, with software as a service (SaaS) products, you can deploy software hosted on AWS infrastructure and grant buyers access to the software in your AWS environment. You can be responsible for managing customer access, account creation, resource provisioning, and account management in your software.[7]
SaaS has been incorporated into the strategy of nearly all enterprise software companies.[8][9]Gartner forecasted that software as a service (SaaS) remains the largest market segment on public cloud services and is forecast to reach $122.6 billion in 20.
However, the rate of churn is also higher, and this is big problem for SaaS company[10].History[edit]
Centralized hosting of business applications dates back to the 1960s. Starting in that decade, IBM and other mainframe computer providers conducted a service bureau business, often referred to as time-sharing or utility computing. Such services included offering computing power and database storage to banks and other large organizations from their worldwide data centers.[11]
The expansion of the Internet during the 1990s brought about a new class of centralized computing, called application service providers (ASP). ASPs provided businesses with the service of hosting and managing specialized business applications, to reduce costs through central administration and the provider's specialization in a particular business application. Two of the largest ASPs were USI, which was headquartered in the Washington, DC area, and Futurelink Corporation, headquartered in Irvine, California.[12]
Software as a service essentially extends the idea of the ASP model. The term software as a service (SaaS), however, is commonly used in more specific settings:While most initial ASP's focused on managing and hosting third-party independent software vendors' software, as of 2012 SaaS vendors typically develop and manage their own software.[13]Whereas many initial ASPs offered more traditional client–server applications, which require installation of software on users' personal computers, later implementations can be Web applications which only require a web browser to use.[14]Whereas the software architecture used by most initial ASPs mandated maintaining a separate instance of the application for each business, as of 2012 SaaS services can utilize a multi-tenant architecture, in which the application serves multiple businesses and users, and partitions its data accordingly.[citation needed]
The acronym first appeared in the goods and services description of a USPTO trademark, filed on September 23, 1985.[15] DbaaS (database as a service) has emerged as a sub-variety of SaaS[16] and is a type of cloud database.
Microsoft referred to SaaS as "software plus services" for a few years.[17]Distribution and pricing[edit]
The cloud (or SaaS) model has no physical need for indirect distribution because it is not distributed physically and is deployed almost instantaneously, thereby negating the need for traditional partners and middlemen. Unlike traditional software, which is conventionally sold as a perpetual license with an up-front cost (and an optional ongoing support fee), SaaS providers generally price applications using a subscription fee, most commonly a monthly fee or an annual fee.[18] Consequently, the initial setup cost for SaaS is typically lower than the equivalent enterprise software. SaaS vendors typically price their applications based on some usage parameters, such as the number of users using the application. However, because in a SaaS environment customers' data reside with the SaaS vendor, opportunities also exist to charge per transaction, event, or other units of value, such as the number of processors required.[19]
The relatively low cost for user provisioning (i.e., setting up a new customer) in a multi-tenant environment enables some SaaS vendors to offer applications using the freemium model.[19] In this model, a free service is made available with limited functionality or scope, and fees are charged for enhanced functionality or larger scope.[19]
A key driver of SaaS growth is SaaS vendors' ability to provide a price that is competitive with on-premises software. This is consistent with the traditional rationale for outsourcing IT systems, which involves applying economies of scale to application operation, i.e., an outside service provider may be able to offer better, cheaper, more reliable applications.[20]Architecture[edit]
Most SaaS providers offer a multi-tenant architecture. With this model, a single version of the application, with a single configuration (hardware, network, operating system), is used for all customers ("tenants"). To support scalability, the application can be installed on multiple machines (called horizontal scaling). In some cases, a second version of the application is set up to offer a select group of customers access to pre-release versions of the applications (e.g., a beta version) for testing purposes. This is contrasted with traditional software, where multiple physical copies of the software — each potentially of a different version, with a potentially different configuration, and often customized — are installed across various customer sites.[21]
Although an exception rather than the norm, some SaaS providers do not use multitenancy or use other mechanisms—such as virtualization—to cost-effectively manage a large number of customers in place of multitenancy.[22] Whether multitenancy is a necessary component for software as a service is debatable.[23]Vertical vs horizontal SaaS[edit]
Horizontal SaaS and vertical SaaS are different models of cloud computing services.[24] Horizontal SaaS targeting a broad variety of customers, generally without regard to their industry. Some popular examples of horizontal SaaS vendors are Salesforce and HubSpot. Vertical SaaS, on the other hand, refers to niche market targeting a narrower variety of customers to meet their specific requirements.Characteristics[edit]
Although not all software-as-a-service applications share all the following traits, the characteristics below are common among many of them:Configuration and customization[edit]
SaaS applications similarly support what is traditionally known as application configuration. In other words, like traditional enterprise software, a single customer can alter the set of configuration options (a.k.a. parameters) that affect its functionality and look-and-feel. Each customer may have its own settings (or: parameter values) for the configuration options. The application can be customized to the degree it was designed for based on a set of predefined configuration options.
For example, to support customers' common need to change an application's look-and-feel so that the application appears to be having the customer's brand (or—if so desired—co-branded), many SaaS applications let customers provide (through a self-service interface or by working with application provider staff) a custom logo and sometimes a set of custom colors. The customer cannot, however, change the page layout unless such an option was designed for.[citation needed]Accelerated feature delivery[edit]