What Is Software As A Service (SaaS)? (Examples And FAQs)

Indeed Editorial Team

Updated 12 December 2022

The Indeed Editorial Team comprises a diverse and talented team of writers, researchers and subject matter experts equipped with Indeed's data and insights to deliver useful tips to help guide your career journey.

Software as a service (SaaS) is an application-based service often delivered through the internet with a subscription-based pricing model. Businesses benefit from SaaS in numerous ways, such as scalability and agility. Understanding SaaS and its potential can help businesses adopt suitable SaaS products to improve their operational efficiency while making them more agile. In this article, we discuss "What is software as a service?", examples of common SaaS products, understand the benefits of implementing SaaS and explore some frequently asked questions.

What Is Software As A Service (SaaS)?

If you are exploring "What is software as a service?", it can be helpful to know that SaaS is one of the major cloud-based service models of providing software applications to users. SaaS apps often offer subscription-based prices instead of a one-time purchase. A user may access a SaaS application through a web browser or an app.

While businesses use cloud computing in several scenarios, they benefit immensely because of its uniquely designed traits to help enterprises grow. A cloud computing service model has several important features such as:

  • On-demand availability

  • Easy maintenance

  • Economical

  • Resource-efficient

  • Ease of access

  • Security

  • Scalability

Examples Of Common SaaS Products

Here are six common examples of SaaS and how they can play an important role in an organisation:

HubSpot

HubSpot helps businesses with inbound marketing, sales and customer service. They also offer a free customer relationship management (CRM) software named 'HubSpot CRM' with task management, meeting scheduling, live chat and document sharing features. HubSpot's marketing automation software enables you to develop custom workflows, publish content, easily connect contact profiles, follow up with customers and resolve their issues, all of which contribute to a successful marketing campaign.

Related: Guide: How To Become A Freelance Software Developer

Canva

Canva is an online design tool for businesses to create quality social media content faster. It is a convenient SaaS application with a drag-and-drop interface. Canva has a variety of templates to assist a new user in getting started quickly. One can select a template, modify it, share it and download it. You may design graphs, blog post photos, presentations, book covers, social media posts, advertisements, posters, flyers and invitation cards, among other sorts of media.

Slack

Slack is a software as a service product that enables team communication and collaboration for businesses of any size. Slack works well with a wide variety of different productivity tools. Teams can use Slack for almost anything, from casual chat discussions to collaborative work on team projects. Such tools are indispensable for a company with remote or distributed employees.

Intercom

Intercom is a SaaS platform for customer support and communication that enables organisations to analyse and personalise their interactions with their consumers. Intercom helps businesses send customised and targeted messages to its customers based on their activity. It identifies areas where consumers require assistance and allows for comments. Additionally, businesses can initiate a conversation with their customers via in-app messaging based on their activity. The comments a business receives from their consumers when chatting live can help improve the user experience.

Zoom

Zoom is a SaaS-based video conferencing tool. It provides an easy and scalable platform to hold online meetings, webinars and virtual events. Zoom also provides 360-degree communication and collaboration solutions for chat, cloud phone and modern workspace for hybrid teams.

Grammarly

Grammarly highlights errors and suggests alternatives to what you have written. It checks for spelling, grammar errors, passive voice, readability and plagiarism. Businesses of any size can find Grammarly useful. It also offers advanced features such as a style guide and brand tone, which can help organisations to maintain a consistent tone in their content.

Benefits Of Implementing SaaS

As businesses move towards digital transformation with the implementation of SaaS products, they experience various benefits:

Measured service is cost-effective

Prior to SaaS, developing internal applications was a tedious process. Companies had entire rooms dedicated to the hardware required to run company software. It is expensive to develop software or to purchase licenses that may not take usage into account. Businesses waste considerable funds on unused resources.

Measured service means businesses only pay for what they use. Businesses sometimes refer to this as pay-for-play. An important trait of SaaS is that it is pay-for-play. SaaS companies monitor services and a company or individual receives a bill at the end of the billing cycle that reflects actual usage. This helps businesses save resources and funds.

Elasticity makes it scalable

Among the characteristics of cloud computing is elasticity. The SaaS model is elastic by design, which means that it can grow and shrink with the business. This is great for digital businesses who want to pay for what they require now but also have the ability to access more services as their business grows.

Small businesses can start with SaaS products and continue to use those products even after experiencing substantial growth. This is because of on-demand provisioning and user accessibility of software as a service.

Related: 11 Advantages Of Cloud Computing (With Definition And Types)

SaaS is easy to access and use

SaaS is very accessible and easy to use. Typically, a new user can onboard by logging into the account and paying a user fee with a credit card or applicable linked digital bank account. That means almost anyone with internet access and a bank or credit account can access and pay for SaaS services.

Usability is another major advantage of SaaS products. These products rarely require considerable management resources, which makes them less complicated than software products that require custom development or products that require internal maintenance and monitoring. SaaS products help users easily get started with comprehensive guides and video tutorials.

Less management makes it resource-efficient

Another benefit of SaaS is that it is resource-efficient. Since its management is not difficult, it reduces the need for IT departments to hire staff dedicated to monitoring and maintaining particular essential software items. As a result, employees are also able to learn software faster and avoid errors in overly complex programs. Overall, companies that use SaaS benefit from more efficiency.

Greater business agility

A combination of these benefits leads to greater business agility. The flexibility of agile businesses allows them to take important business decisions based on cash flow and resources. By using technology, they are able to gain insights, allowing fast decision-making that can change the course of their business. Cloud-based software products allow businesses to be more agile due to the low cost of resources.

Related: Top Business Analyst Tools For Improving Efficiency

Frequently Asked Questions About SaaS

Here are some frequently asked questions related to SaaS:

What is the difference between SaaS, IaaS and PaaS?

SaaS, IaaS, and PaaS are all cloud-based services, but they provide services of different types and work at different levels. The key differences are as follows:

  • Infrastructure-as-a-service (SaaS): SaaS allows users to use software services over the internet. A user can simply connect using the web browser or application and the majority of the computation happens in the cloud instead of the user's device.

  • Infrastructure-as-a-service (IaaS): IaaS offers cloud computing resources such as servers, storage, memory, networking and other services on demand. It allows businesses to purchase resources as required.

  • Platform-as-a-service (PaaS): PaaS provides a complete development and deployment environment in the cloud. It allows developers to focus exclusively on software development without having to worry about storage and infrastructure.

Related: 15 Software Developer Skills And How To Develop Them

What are some common SaaS metrics?

SaaS metrics are useful to evaluate the performance of a SaaS business. Some commonly used metrics are:

  • Churn rate: The churn rate, also known as the rate of attrition, tells the rate at which customers unsubscribe from the service.

  • Customer acquisition cost (CAC): The customer acquisition cost estimates the total cost of getting a new customer. It often includes advertising and marketing expenditures and the costs associated with the marketers divided by the number of customers acquired.

  • Monthly recurring revenue (MRR): MRR is the predicted total revenue for a given month from all active subscriptions. It considers recurring payments resulting from discounts, coupons and recurring add-ons but does not include one-time fees.

How do SaaS-based differ from cloud-based?

If a service exists in the cloud, it may be both SaaS and cloud-based. While the SaaS-based application is almost certain to be cloud-based but cloud-based services may not always be SaaS. For example, two major service types, IaaS and PaaS, are cloud-based but are not SaaS.

Please note that none of the companies, institutions or organisations mentioned in this article are affiliated with Indeed.

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