SaaS is a software distribution model in which a cloud provider hosts programs and makes them available to end customers via the internet. An independent software vendor (ISV) may contract with a third-party cloud provider to host the application in this arrangement. In the case of larger corporations, such as Microsoft, the cloud provider may also be the software vendor.

SaaS is one of three major cloud computing categories, along with infrastructure as a service (IaaS) and platform as a service (PaaS). SaaS apps are used by a wide range of IT experts, commercial users, and consumer users. Products range from personal leisure to advanced IT tools, such as Netflix. SaaS products, unlike IaaS and PaaS, are commonly offered to both B2B and B2C users.

According to a recent McKinsey & Company report, technology industry analysts predict further growth in the software as a service market and expect to see the market for SaaS products near $200 billion by 2024.

In the world of software, there are two main types of companies: IT (Information Technology) companies and SaaS (Software as a Service) companies. While these two types of companies may seem similar at first glance, there are some key differences that set them apart.

Business Model

The primary difference between IT companies and SaaS companies is their business model. IT companies typically sell software licenses to customers, who install and run the software on their own hardware. In contrast, SaaS companies provide access to software over the Internet, with customers paying a subscription fee to use the software. This difference in business model has a number of implications for how the two types of companies operate.

Product Delivery

The way that IT companies and SaaS companies deliver their products is also different. IT companies may deliver their products on physical media (such as CDs or USB drives) or make them available for download. SaaS companies, on the other hand, provide software through a web-based interface accessible from any device with an internet connection. This difference in delivery method makes SaaS products more accessible and easier to use, since they don’t require any installation or setup on the customer’s end.

Revenue Model

Another key difference between IT companies and SaaS companies is their revenue model. IT companies generally generate revenue through one-time software license fees, support and maintenance contracts, and other services. SaaS companies, on the other hand, generate revenue through recurring subscription fees. This difference in revenue model can have a significant impact on the financial stability of the two types of companies, as SaaS companies benefit from predictable, recurring revenue streams.

Scalability

IT companies often face scalability challenges because the software they sell must be installed and maintained on the customer’s own hardware, which can be time-consuming and expensive. SaaS companies, on the other hand, can scale more easily because they deliver their software over the internet, and can add new customers without having to worry about hardware constraints. This difference in scalability makes SaaS companies more attractive to investors and can contribute to their overall growth and success.

Customer Relationships

The final key difference between IT companies and SaaS companies is their approach to customer relationships. IT companies may have a more transactional relationship with their customers, selling them a product and providing support as needed. SaaS companies, on the other hand, tend to have ongoing relationships with customers, as they provide ongoing access to software and services. This can create opportunities for deeper engagement, such as upselling and cross-selling additional products and services.

How Does Software as a Service Work?

SaaS works through the cloud delivery model. A software provider will either host the application and related data using its own servers, databases, networking, and computing resources, or it may be an ISV that contracts a cloud provider to host the application in the provider’s data center. The application will be accessible to any device with a network connection. SaaS applications are typically accessed via web browsers.

Read Also: Does SaaS Require Coding?

As a result, companies using SaaS applications are not tasked with the setup and maintenance of the software. Users simply pay a subscription fee to gain access to the software, which is a ready-made solution.

SaaS is closely related to the application service provider (ASP) and on-demand computing software delivery models where the provider hosts the customer’s software and delivers it to approved end users over the internet.

In the software-on-demand SaaS model, the provider gives customers network-based access to a single copy of an application that the provider created specifically for SaaS distribution. The application’s source code is the same for all customers, and when new features or functionalities are released, they are rolled out to all customers. Depending on the service-level agreement (SLA), the customer’s data for each model may be stored locally, in the cloud or both locally and in the cloud.

Organizations can integrate SaaS applications with other software using application programming interfaces (APIs). For example, a business can write its own software tools and use the SaaS provider’s APIs to integrate those tools with the SaaS offering.

What Are Examples of SaaS Companies?

There are countless number of SaaS companies in existence. Here are some of the top ones in alphabetical order:

• 1. Adobe

Adobe is a large SaaS company, offering a diverse set of software, tools, programs, and more. They have a suite of products that creatives, like video editors and graphic designers, may use in their day-to-day work.

• 2. ADP

ADP is a SaaS company that provides human resources services. Businesses from start-ups to enterprise level use ADP for payroll processing, employee records, compliance, taxes and benefits administration. ADP also assists businesses with outsourcing.

• 3. AgoraPulse

AgoraPulse is a social media management software that allows marketing and social media professionals to monitor online conversations, create content, conceptualize campaigns and create analytics reports to see how the company’s social media platforms are performing. With AgoraPulse, companies are able to serve their target audience with content that will support the organization’s marketing efforts and goals.

• 4. Asana

Asana is a tool that allows teams to work online together, managing projects and tasks as a group. Both remote and distributed teams can access Asana and experience a collaborative work environment. With Asana, users can input tasks, assign due dates and responsible parties, establish goals and understand more about how long it takes to complete a project for a client.

• 5. Blackboard

Blackboard is a tool for the education industry. It allows users to teach online, monitor educational progress, share knowledge and pair together in classes. Teachers can deliver their courses to students in different formats, while students are able to take advantage of face-to-face instruction because of Blackboard’s video abilities.

• 6. Box

Box is a cloud content management system that works across platforms, including desktop and mobile applications. Users of Box can store files and share them with other users and even edit documents within groups. Both enterprise-level businesses and individuals can use Box.

• 7. Cisco

Cisco provides hardware and telecom services to its business customers. They also sell cybersecurity services to businesses and other IT products and services, including office phones.

• 8. DocuSign

DocuSign is a platform that gives users the ability to securely sign agreements with another party. Accessible by different devices, DocuSign is suitable across many industries and businesses, from real estate to legal. After everyone has signed the agreement, DocuSign will email the executed contract to all parties.

• 9. Dropbox

Dropbox is a cloud storage service that you can use to store files and access them across different devices as needed. Dropbox links allow you to share files with others, whether personally or in collaboration at work. Dropbox has the ability to house PDF documents, photos and more.

• 10. Eventbrite

With Eventbrite users can host event details, invite others, take payments and issue entry tickets. Eventbrite’s platform hosts all types of events, from big to small, that cater to all interests.

• 11. GitHub

GitHub is a team collaboration tool. This software allows team members who may be working from different locations to connect and collaborate on projects. A feature of GitHub is its version control — the master document shows which team member changed which part of the document so others can monitor any updates.

• 12. Google

Google is a SaaS platform that offers many services to its users including document creation abilities, advertising, website analytics, spreadsheets, email, file storage and time management through its calendar application. For teams, Google also offers online meetings and collaboration chats.

• 13. GoToMeeting

GoToMeeting offers an online meeting space so all members of a team can be present for collaboration and project management. This SaaS company provides a secure connection for all users, no matter the device they use to connect.

• 14. Grammarly

Grammarly is a software for writers, copyeditors, project managers and other professionals who have to review or submit written pieces. This tool searches for issues within text, including spelling, grammar and readability, and gives suggestions to its users on how to improve a string of text.

• 15. Gusto

Gusto is a human resources platform that helps professionals with payroll, benefits and other human resources tasks like paid time off for employees and company-recognized holidays.

• 16. Hotjar

Hotjar is a SaaS company whose tool can measure the success of a website. By installing this tool, website owners or company stakeholders can understand more about their visitors’ behavior and receive feedback on what they offer to visitors on their website. To do this, Hotjar monitors how users navigate through the website, where they click, which pages they linger on and more.

• 17. HubSpot

HubSpot is a platform that provides a combination of marketing, sales and customer service support to businesses. With HubSpot’s tools, businesses may be able to convert their sales leads, increase their customer base and manage advertisements. Other features via the HubSpot platform include email marketing, social media, analytics, email tracking and meeting schedulers.

• 18. LastPass

This SaaS company specializes in password management. LastPass stores passwords for users so they can still access the same programs and tools without having to memorize any passwords. The software also gives the ability for users to assign teammates and share password access.

• 19. MailChimp

MailChimp is a marketing platform that mostly provides email marketing. MailChimp offers analytics and email templates and helps users create campaigns using best practices. Users can create automated marketing campaigns and regular newsletters to their email list as well as segment their customer list for more refined marketing efforts.

• 20. Microsoft

Microsoft is a large software company offering cloud services to its users. Microsoft offers tools such as online chat, video meetings and file management.

What Are The Advantages of SaaS?

SaaS eliminates the requirement for businesses to install and run software on their own PCs or data centers. This removes the costs of purchasing, deploying, and maintaining hardware, as well as software licensing, installation, and support. Other advantages of the SaaS model are:

• Flexible payments. Rather than purchasing software to install, or additional hardware to support it, customers subscribe to a SaaS offering. 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.
• Scalable usage. Cloud services like SaaS offer high Vertical scalability, which gives customers the option to access more or fewer services or features on demand.
• 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.
• Accessibility and persistence. Since SaaS vendors deliver applications over the internet, users can access them from any internet-enabled device and location.
• Customization. SaaS applications are often customizable and can be integrated with other business applications, especially across applications from a common software provider.

Conclusion

A SaaS product is an internet software that is accessible to all users. SaaS products are everywhere. Not many people realize this, but it’s a fact that most of the extremely popular internet platforms are SaaS – Dropbox, Google Apps, Zoom, Google Drive, you name it.