SaaS Applications

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SaaS Applications

by Karen Spring

Docid: 00021300

Publication Date: 1905

Report Type: TUTORIAL


Software-as-a-Service (SaaS) is a model for the delivery of software in which an individual or enterprise subscribes to the right to
use a particular application to be provided over the Internet. SaaS eliminates the need for users to buy and host the application on their own infrastructure.
Organizations find this helpful as it typically reduces costs and alleviates the need for staff to manage the application.

Report Contents:

Executive Summary

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Software-as-a-Service, or SaaS, is a software application
delivery model in which an individual or enterprise subscribes to the right to
use a particular application to be provided over the
Internet. These are often called Web-based software, hosted software, or
on-demand software. 

SaaS eliminates the need for users (either individuals or
enterprises) to download, install, and host the application on their own infrastructure. At the
enterprise level, the growth of SaaS has been fueled by the availability of
customer relationship management (CRM) and other
software. By deploying CRM as a service, for example – instead of
purchasing or developing an on-premise application – enterprise clients can substantially lower their total
cost of ownership (TCO). 

One prominent example of software
as a service is Google Apps, a Web-based set of
software productivity tools that includes Google Docs for
generating documents, spreadsheets, and presentations. Google Docs was
designed to compete against Microsoft Office, providing an alternative to
installing and maintaining applications like Microsoft Word, Excel,
and PowerPoint on a personal PC or server.

One of the first truly successful CRM applications with SaaS
availability is Its success, especially in the small and
mid-sized business markets led to other CRM vendors following suit and releasing
their own on-demand applications.


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Software-as-a-Service, or SaaS, is a software licensing model in which an individual or enterprise
receives access to software through a subscription with the software being
located on external servers. With SaaS, customers can use an application free from any
obligation to install and maintain it. Software-as-a-Service is analogous to renting a car rather than buying it, and, in the process,
avoiding any responsibility relative to "changing the oil."

contend that SaaS is the latest incarnation of other service-oriented
architecture (SOA) frameworks – such as "network computing," "application
service provisioning" (by application service providers), and, more recently,
"utility computing," "on-demand computing," "grid computing," and "cloud
computing." In fact, the SaaS paradigm can be traced
back to the mainframe era, where central servers (mainframes)
delivered applications (on a time-sharing basis) to users sitting at "dumb" terminals. The
mainframe analogy is significant since many enterprise users see SaaS as an
opportunity to swap out traditional PCs in favor of longer-life,
lower-maintenance "thin client" terminals. Indeed, the initial
investment in SaaS may be justified on that basis.

SaaS products may be vertical or horizontal:

  • So-called vertical products answer the needs of specific
    sectors, such as financial or healthcare.

  • Horizontal products focus on a particular function, such as
    marketing or human resources, but are industry agnostic.1

The SaaS Portfolio

At the enterprise level, the most popular software as a service
applications include:

  • Customer relationship management (CRM)
  • Enterprise resource planning (ERP)
  • Content communications and collaboration 
  • Supply chain management (SCM)
  • Human resources management (HRM)
  • Mobile applications

Those customers deciding to adopt the SaaS brand generally credit lower total cost of ownership (TCO)
as their make-or-break buying factor, citing features such as ease of deployment, speed of deployment, and
pay-as-you-go pricing, an obvious incentive for recession-conscious companies.


Some Web-enabled security vendors have appropriated the SaaS
acronym, labeling their online offerings "security-as-a-service".
Ironically, however, one of the principal impediments to the growth of Software-
is concern over security, specifically:

  • Data security, owing to the volume of user data stored on
    Internet-accessible servers.
  • Application security, owing to the threat of viruses, worms, and
    other malware.
  • User security, owing to identity theft and other user
    authentication challenges.

Key SaaS Benefits

According to IBM, SaaS users experience the following:

  • Quicker period of time to reap benefits because unlike traditional models,
    SaaS is already installed, configured, and ready for use. 
  • Lower costs typically due to a shared or multi-tenant environment. 
  • Higher scalability since SaaS solutions are based in cloud environments.
  • Better opportunities for upgrades since providers push out updates and they
    are generally available to customers.
  • Ease of use since the software comes equipped with best practices.2

In terms of pricing, SaaS is provided on a per-user basis, with costs
"scaled" according to the customers’ actual use.

Table 1 offers an overview of conventional application delivery versus SaaS.

Table 1. Conventional Application Delivery Versus Software as a Service


Conventional Delivery

SaaS Delivery

Software Delivery


Installed application.

On-demand delivered over the Web.

Requires in-house maintenance and application "experts".

Managed by service provider.

Release Cycle

Monolithic with patches, bug fixes, and multiple versions.

Completely transparent with continuously released upgrades.



Client-server/legacy or limited browser access.

Service-oriented architecture (SOA) with every functionality delivered over the

Non-standard application programming interfaces (APIs) and protocols.



Pay in advance with high capital expenditure and high total cost of ownership (TCO),
regardless of whether the software is ultimately used or not.

Usage based on monthly or annual subscription fee with little infrastructure
investment and low TCO.

Source: Global Logic

Current View

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SaaS Advantages and Disadvantages

While, today, most enterprises have integrated Software-as-a-Service as part
of their official cloud offerings, the technology does have advantages
and disadvantages as outlined in Table 2.

Table 2. Software as a
Service Advantages and Disadvantages



application support (from the service provider). 

Initial costs
associated with transitioning to a new application delivery model.

Accelerated application

Data security (owing to the volume of user data stored on Internet-accessible

Lower computer costs
(with the service provider absorbing all application hosting expenses).

Application security
(owing to the threat of viruses, worms, and other malware).

Regular – and reliable
– data backups.

User security (owing to
identity theft and other user authentication challenges).

Improved patch
management (to fix bugs and plug security holes).

Potentially poor
support (particularly for a small business customer).

More and better
functional enhancements.

The SaaS one-to-many
model does not always allow the level of customization available with installed
software. This may be an issue relative to SaaS integration and

Transaction logging (to
satisfy compliance audits).

Local IT staffers may
resent – and resist – SaaS (for fear of losing their jobs).

Greater availability
(with less downtime).

Potential reversion
problems if a customer decides to switchback to on-premise

Enhanced mobility (as users
with access to a Web browser and high-speed Internet connection access applications virtually anywhere,
anytime, from any device).

On-premise applications provide enterprises with
better control than hosted offerings, which are outsourced to a third

No need to recruit –
and retain – expensive application experts.



Subscription options that allow for increase in

SaaS as a Cloud Model

The success of software as a service inspired cloud
providers to develop new "as a service" offerings, including:

  • Infrastructure-as-a-Service (IaaS) in which processing power,
    storage, network capabilities, and other infrastructure resources are
    provided to enterprise clients on an as-needed basis; think Amazon Web
  • Platform-as-a-Service (PaaS) in which
    computing platforms that support the development and delivery of Web and
    other applications are furnished to enterprise clients; Google Apps is an


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AI Is Here

Artificial intelligence (AI) has become the technology du jour of sorts and
executives cannot discuss any aspect of their business – security, apps, etc. –
without AI taking center stage. SaaS is no different. AI enables companies to
offer more personalized service (i.e. in the form of user interfaces that
deliver tailored experiences) and improved automation (i.e. computers can
respond to questions instead of a person).3

More Competition

The leaders in SaaS are Microsoft, Google, and Salesforce. While these
vendors continue to command much of the market, smaller companies are jumping in
and grabbing their own pieces of the pie. The smaller vendors – Mailchimp, for
example – are delivering more focused applications and will continue to do so.4
It is expected that the SaaS market will become more saturated in the coming

SaaS Concerns

Even as SaaS has evolved, some concerns remain:

  • Where’s the Data? – Organizations might be anxious about where
    their data is stored and while SaaS providers have data centers, they don’t
    always share details on where those facilities are located.5
  • Paying Upfront – Many SaaS providers insist on customers paying
    upfront and committing to their services for long term periods. This type of
    investment may sound suspicious as companies aren’t sure if they will need
    the service longer than for say, a few years, as their needs may change.6
  • Security – Since organizations are offsetting their SaaS services
    to another provider, they may not be less inclined to ask about security. Is
    the cloud provider taking the right steps to ensure that data is protected?
    It is important to point out that both the cloud vendor and the user share
    responsibility in keeping data safe.7
  • Integration Issues – If some of a business’ applications are run in
    the cloud while other applications are not, yet the two types of
    applications share data, there can be integration problems. However, there
    are tools available that can promote integration for applications that
    aren’t built into Saas that can help with this issue.8


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Enterprise clients contemplating the use of SaaS applications should
consider the following:

  1. As with any outsourcing arrangement, security is a major challenge. Ask
    potential partners to describe their security infrastructure, and solicit
    assurances that security and privacy are among their top priorities.
    Analyze the SaaS provider’s data protection mechanisms, data location configuration and database organization/transaction processing technologies, and assess whether they will meet the confidentiality, compliance, integrity and availability needs of the organization that will be using the subscribed SaaS application.9
  2. Encryption offers the best protection against data loss. Require that strong encryption using a robust algorithm with keys of required strength be used for Web sessions whenever the subscribed SaaS application requires the confidentiality of application interaction and data transfers. Also require that the same diligence be applied to stored data. Understand how cryptographic keys are managed and who has access to them. Ensure that cryptographic keys are adequately
  3. Many SaaS applications are sold on the pledge
    of easy integration with existing on premise programs. Identity any
    integration issues before adopting a SaaS product.11
  4. Chosen SaaS vendors should have a strong understanding of their clients’
    industries so that they can anticipate potential challenges before they
    arise. Asking if the selected vendor has staff members with expertise in
    specific markets is highly recommended.12
  5. Understand how the SaaS applications will be supported. By whom? And with what level of service?
  6. SaaS applications are delivered over the Internet. If an enterprise’s
    Internet service is disrupted for an extended period, application users may
  7. Undoing a SaaS deal and reverting to on-premise
    application delivery may be difficult. SaaS buyers should develop a
    contingency plan in the event that their SaaS provider fails to deliver
    contracted services at agreed-upon service levels.



Clement Vouillon. "Seven Trends That Will Shape the SaaS Industry in 2016." January 7, 2016.
Marcos Sylos. "Top Five Advantages of Software as a
Service (SaaS)." September 18, 2013. 
3 Ismael Wrixen. "The Evolution of SaaS: 4 Trends to Watch in
2019." SaaS Mag. November 2018. 
Ariel Diaz. "SaaS Growth Trends in 2018." Cloud Software
Association. November 27, 2018. 
"10 SaaS Security Risks and Concerns Every User Has."
Finances Online. January 30, 2018. 
Paul Rubens. "Software as a Service (SaaS)." Datamation.
March 22, 2017. 
Lee Badger, Tim Grace, Robert Patt-Corner, and Jeff Voas. SP
800-146: "Cloud Computing Synopsis and Recommendations." US National
Institute of Standards and Technology. May 2012: 5-5.
Ibid. p. 5-9.
Yap. "Executive’s Guide to Best Practices in SaaS and the Cloud: Five SaaS
Adoption Speed Bumps to Avoid." CBS Interactive Inc. 2013:23-24.
Kaya Ismail. "Choosing a SaaS Product: 7 Non-Software Related
Considerations." CMS Wire. September 24, 2018. 

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About the Author

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Karen M. Spring is a staff editor for Faulkner Information
Services, tracking high-tech industries, including network security, ERP, CRM,
network management, Internet security, and software tools. She writes regularly
on high-tech topics for publications in the k-12 and higher education industry.
Previously, Ms. Spring was a marketing specialist for two computer distributors,
working closely with such clients as 3Com, IBM, Okidata, Unisys, and Acer.

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