The Essential Guide to Software as a Service (SaaS) Development

These days, software applications are everywhere. From mobile phones and tablets, to laptops and desktops; it’s easier than ever to access and use software. But, why? It can in large part be attributed to SaaS – a software model that has exploded in popularity over the past decade. If you want to find out more about SaaS and how to develop a SaaS-based software application of your own, read this guide now.

What is SaaS? A definition

What exactly is SaaS? We appreciate that without a solid definition, it can seem a rather nebulous and vague term. 

So, here’s one of the commonly agreed upon definitions of SaaS: 

“A cloud computing service model where the provider offers use of application software to a client and manages all needed physical and software resources”¹.

Another definition of software as a service has been agreed upon by the National Institute of Standards (NIST). This institute defines SaaS as: 

‘The capability provided to the consumer is to use the provider’s applications running on a cloud infrastructure. The applications are accessible from various client devices through either a thin client interface, such as a web browser (e.g. web-based email), or a program interface. The consumer does not manage or control the underlying cloud infrastructure including network, servers, operating systems, storage, or even individual application capabilities, with the possible exception of limited user-specific application configuration settings’².

If you’ve read our guide to software development then you’ll know that application software is one of the two main types of software (the other being operating systems). 

Application software can take myriad forms, but their underlying job is to perform specific tasks on behalf of a user. Prominent examples of application software include word processors (such as Microsoft Word) and graphic design software (e.g. Adobe Photoshop). 

Traditionally, in order for an individual or business to use a piece of application software, they would first need to actually buy a physical piece of software. This would involve purchasing a physical CD-ROM disk or a set of 3.5-inch floppy disks (or if we look even further back 5.5-inch floppy disks or magnetic-tape data storage that took the form of cassettes or cartridges) from a computer shop. 

Having purchased the application software in physical form, the individual/business would then need to install it locally on their own hardware (e.g. a desktop computer or laptop). As we’ll see later in this article, this has a number of drawbacks which led to the widespread adoption of SaaS applications. 

In contrast to this, SaaS allows users to access an application over the Internet – without the need to purchase and install the application locally on their own hardware. 

This is the crucial distinction between SaaS applications and older, physical forms of application software. 

To help you understand this further, and grasp the true meaning of SaaS, please consult the table below: 

Feature	Traditional Application Software	SaaS Application Software
Deployment	Installed locally on your computer or server	Accessed over the Internet via a browser
Accessibility	Limited to individual computers or a local network	Accessible from anywhere (and any device) with an Internet connection
Cost Model	One-time up front licencing fee	Subscription-based (can be monthly or yearly)
Maintenance & Updates	Have to be handled by each individual user (or in-house IT team)	Handled by the SaaS software provider
Scalability	Can require the purchase of additional licences, hardware and time spent installing the new software	SaaS apps can be easily scaled
Customisation	Traditional application software can be highly customisable to individual/business preferences	Customisation may be more limited depending on the SaaS software provider
Data Storage	Traditional software apps typically require data to be stored locally on the user’s hardware	Data is stored on the app provider’s cloud servers
Security	User is responsible for downloading and installing security updates/patches	SaaS app provider is responsible for security
IT Resources	Can require significant IT resources for installation, updates etc	SaaS software often requires minimal IT resources
Internet Dependency	Can function offline	Requires as stable Internet connection (but, certain SaaS apps now have offline functionality)
Ownership	Once a licence fee has been paid, the user can own the software in perpetuity	Users typically subscribe to SaaS apps rather than owning them. The provider retains ownership

Today, SaaS is now arguably the dominant form of software with Fortune Business Insights suggesting that the SaaS market was ‘valued at USD 266.23 billion in 2024. The market is projected to grow from USD 315.68 billion in 2025 to USD 1,131.52 billion by 2032, exhibiting a CAGR (Compound Annual Growth Rate) of 20.0% during the forecast period’³. 

In short, SaaS is big business. If you’re thinking of developing a software application for your own business (or to retail to other businesses or individuals) then you should consider offering it in the form of software as a service (SaaS). 

The other names for SaaS

Although this isn’t a particularly common phenomenon, you may see SaaS referred to under different names. 

Some of these alternative names for software as a service (SaaS) include: 

• Web-based software. 
• On-demand software. 
• Hosted software. 
• Cloud-based software. 

In general, though, you’ll find that the most commonly used nomenclature for this type of software is SaaS.

A brief history of SaaS development

Where did SaaS come from? And, what technology breakthrough occurred that allowed SaaS to become the dominant form of software distribution and usage? 

To answer these questions (and more), it’s time for us to don our history hats and look back into the past. 

It’s a story which has its roots in the 1960s and which is inextricably linked to the rise of cloud computing. 

1960s – 1970s

The 1960s to 1970s was a period in which mainframe computing dominated. Businesses and institutions would house large centralised mainframe computers that would act as the ‘central hub’ for data processing. 

Think of it as being like a single powerful computer that everyone in a business would share. 

If an individual had a computing task that they needed to complete, they would use a terminal to access an application on the mainframe computer. This was known as Remote Job Entry (RJE) and allowed individuals to submit tasks remotely via a terminal (as opposed to having to be physically present at the mainframe computer to input data). 

This allowed individuals spread across multiple locations to harness the computing power of a company’s mainframe computer. 

Companies like IBM were integral to the rise of mainframe computing and the introduction of time-sharing systems that allowed multiple users to access computing resources concurrently. 

On a more theoretical basis, mainframe computers (as well as today’s cloud computing solutions) can trace their intellectual roots back to the psychologist J.C.R. Licklider – who envisioned a global computer network that would facilitate the sharing of ideas and knowledge regardless of peoples’ individual location. He called this vision the ‘Intergalactic Computer Network’ and outlined it in a ground-breaking 1960 paper, Man-Computer Symbiosis⁴.

Mainframe computers are still in use by many businesses today. Consider bank clerks. When you go into a bank branch (which are admittedly few and far between these days), the clerk will use a terminal to process transactions, manage accounts and handle customer enquiries via the bank’s mainframe computer. The actual computing is being done (potentially hundreds of) miles away. 

This was arguably a nascent form of cloud computing (albeit wired rather than via the cloud). Why? Because it shared many of the same characteristics as today’s cloud computing solutions: 

• Providing remote access to centralised computing resources. 
• Shared access – with multiple individuals or offices able to share a single, central computing resource. 
• Service-focused. Although not as advanced as today’s cloud services, remote-job-entry computing allowed users to submit processing jobs without having to worry about the underlying infrastructure that made that processing possible. 

1980s

As the cost of computers began to fall through the 1980s – and as personal computers became more accessible and ubiquitous – many organisations decided to create their own version of RJE and time-sharing by creating local area networks (LAN). 

However, in this instance (and in contrast to today’s SaaS and cloud computing solutions), it was the organisation that was responsible for maintaining the underlying infrastructure and network. 

1990s

If cloud computing (and by extension SaaS) has its roots in the mid-twentieth century, it’s the 1990s when the field really began to show its true potential. 

The early 1990s first saw the emergence of the forerunner of the SaaS model – the application service provider (ASP). Whilst sharing many similarities with the SaaS model (e.g. providing users with remote access to software applications), the ASP model had some fundamental challenges. 

Most notably, ASP applications could be tricky to integrate with existing in-house systems. Further, many ASP applications required the installation of dedicated instances of the software – thus negating many of the potential benefits of a remote-access model. Finally, ASP applications could take considerable time to fully implement – again, negating many of the potential benefits of remote-access software. 

With the limitations of the ASP model becoming painfully clear within the first few years of the 1990s the search was on for a model that could deliver much greater efficiencies. As it turns out, that model was SaaS, where a single instance of the application could serve multiple users thanks to its multi-tenant architecture. 

A handful of companies in particular would pioneer this new SaaS model…

1993 saw the founding of Concur; one of the first tech firms to offer cloud-based application solutions (Concur’s speciality was in providing cloud-based expense management systems). 

Whilst it’s not possible to point to Concur as being definitively the first SaaS providers, it must surely rank amongst the earliest of SaaS companies. 

During this early-to-mid 1990s period, a slew of other companies were emerging that were offering SaaS style products via cloud computing infrastructure. One of the most notable was ‘General Magic’. 

In addition to pioneering many technologies that we now take for granted (e.g. touchscreen interfaces, mobile communication, and e-commerce tech), General Magic is perhaps best remembered for its creation of the Telescript programming language. Telescript was designed to allow software agents to travel across networks and perform tasks – paving the way for distributed computing and application services that reside in ‘the cloud’. 

In fact, General Magic was arguably the first company to use the phrase ‘cloud’ when it described its ‘Telescript cloud’ which was a cluster of servers that would facilitate the work of the Telescript ‘agents’. Indeed, early documentation referred to this type of set up as ‘running in the cloud’⁵. 

In short, General Magic very much anticipated the future of cloud computing. Marc Porat (one of the founders of General Magic) saw that ‘the future of computing lay not in desktop personal computers, but much smaller portable devices combining computing power, communications systems, and data located on network-accessible servers’⁶. 

General Magic, then, can be considered the company that kickstarted the cloud computing (and by extension SaaS) revolution. 

What came next? 

Whilst Amazon (which would go on to become a cloud computing giant) was founded in 1994, it was 1999 when the next big cloud computing and SaaS development arrived – the founding of Salesforce. 

As Salesforce unveiled itself to the world, it was quickly recognised as being one of the first examples of a SaaS application – with it providing its web-based CRM solution.

Today, Salesforce remains one of the world’s largest providers of enterprise-level SaaS applications. These include; Service Cloud, Marketing Cloud, and Commerce Cloud. 

2000s

If there was a time period when cloud computing and SaaS really became an established force in the tech world, it was the 2000s. 

It was this decade when the foundations were laid for today’s cloud computing ecosystem. It was also the decade when many of the leading cloud computing providers were established and many of the most widely adopted SaaS applications were launched. 

Below, we’ve highlighted the key developments that occurred in the 2000s regarding cloud computing and SaaS: 

• 2002: Amazon Web Services (AWS) was established. Today, AWS holds the honour of being the world’s biggest cloud computing provider by market share. Amazon would go on to launch its S3 (Simple Storage Service) and EC2 (Elastic Compute Cloud) services in 2006.
• 2004: Gmail, which became one of the most widely adopted SaaS products of all time, was launched (at the time of writing, Gmail has approximately 1.2 billion users worldwide). 
• 2008: Google Cloud Platform is launched as a direct competitor to Amazon Web Services. The platform initially began as the ‘Google App Engine’, a platform-as-a-service (PaaS) offering.
• 2008: NASA (yes, NASA!) creates the first open-source software for deploying private and hybrid clouds. The project would go on to be named OpenStack and was launched to the general public in 2010.

2010s

The 2010s would go on to see the cloud computing market and the rise of SaaS solutions accelerate. In particular, we saw some important standardisations and definitional terms being agreed upon, with the NIST defining the five core characteristics of cloud computing and the three core cloud service models. 

• 2010: Microsoft joined the cloud computing party with the launch of Microsoft Azure. 
• 2011: the IBM SmartCloud framework was introduced in 2011. Its biggest impact was in its contribution to the development of enterprise cloud strategies. 
• 2011: this year also saw the National Institute of Standards and Technology (NIST) define the five essential characteristics of cloud computing (these being; on-demand self-service, broad network access, resource pooling, rapid elasticity, and measured service). This resulted in the NIST defining three core cloud service models; Infrastructure-as-a-Service (IaaS), Platform-as-a-Service (PaaS), and Software-as-a-Service (SaaS).
• 2021: Oracle launches its own cloud computing services under the name Oracle Cloud.  

2020s

The 2020s (so far) have been a decade of consolidation for cloud computing, as SaaS becomes the dominant form of application software delivery. 

Significant developments during this period include: 

• 2023: the International Organisation for Standardisation (ISO) defined a broader range of cloud service models (beyond those originally defined by the NIST). These models include; Network as a Service (NaaS), Communications as a Service (CaaS), Computer as a Service (CaaS), and Data Storage as a Service (DSaaS). The ISO concretised the term ‘multi-cloud’ which refers to instances where companies use services from multiple cloud providers simultaneously. 
• 2024: this year saw a huge ramp up in spend on cloud computing and SaaS applications primarily driven by the emergence of generative AI.

Looking ahead, the major tech players are planning huge volumes of capital expenditure in order to build out more cloud computing infrastructure (e.g. hyperscale data centres). 

To provide some context, consider that Alphabet (Google’s parent company) is planning to spend $75 billion on capital expenditures this year. Other tech majors are planning similar expenditure with Microsoft expecting to spend $80 billion and Meta Platforms projected to spend $65 billion⁷.

Today, SaaS solutions are more comprehensive than ever and are a far cry from the siloed solutions of old where only a single part of a business would use a SaaS solution. Now, it’s possible to access SaaS applications that are multifunctional and that utilise embedded technologies such as AI, machine learning, the blockchain, augmented reality and – perhaps most importantly – offer value across multiple departments within a business/organisation. 

Examples of SaaS applications

Perhaps the best way to understand how widespread the SaaS software model has become is to look at some real-world examples. Thus, below you’ll find some of the most high-profile SaaS applications grouped according to their functionality. 

Communication

The world of communication apps is awash with examples of SaaS. Prominent examples include: 

• Slack.
• Zoom.
• Microsoft Teams. 

Office productivity

Gone are the days when you would have to purchase a physical copy of Microsoft Office in order to equip your computer with productivity tools. Today, office apps are dominated by the SaaS model. Prominent examples include: 

• Google Workspace.
• Microsoft 365.
• Notion.

Design

One of the first software realms to embrace the SaaS model was design and animation. Today, major SaaS-based creativity apps include: 

• Adobe Creative Cloud. 
• Figma. 
• Canva.

Entertainment

Even your favourite entertainment apps are now likely to be based on the SaaS application model. SaaS-based entertainment apps include: 

• Spotify.
• Substack.
• Netflix.

E-commerce

As you’d expect, the world of e-commerce is awash with SaaS-based applications. Amongst the leading examples are: 

• Shopify. 
• BigCommerce.
• Wix eCommerce.

Project management

Even the world of project management hasn’t escaped SaaS. Amongst the top project management apps that are based on a SaaS model are: 

• Trello.
• Basecamp.
• Asana.
• Jira. 

Marketing automation

The marketing automation space has been quick to embrace the SaaS model for deploying applications. Leading examples of marketing automation SaaS apps include: 

• Klaviyo.
• Mailchimp.
• HubSpot. 
• ActiveCampaign.

See how widespread SaaS has become? Even if you’re not a developer or hardcore computing enthusiast you almost certainly use a SaaS application at least a few times each day. 

How do SaaS applications work?

As we’ve seen, SaaS applications have a long and storied history – a history which perhaps explains why SaaS is now the dominant form of software deployment. 

But, how exactly does software as a service work? What would it look like if you were to develop your own SaaS solution? Let’s investigate…

Cloud hosting

As cloud computing and SaaS solutions are inextricably linked, we’ll start with the place where the application software is hosted – the cloud. 

What is the cloud exactly? 

The cloud in this instance refers to a set of servers located in a data centre. These servers are used to host the SaaS application software. 

Depending on the application in question, the owner of the app will either own and manage these cloud servers themselves, or they will use a hosting provider (e.g. AWS, Microsoft Azure, Google Cloud Platform). 

Depending on how many users the SaaS application has, more or fewer servers will be required; it’s for this reason that it’s typically more cost-effective for the owner of a SaaS solution to choose a hosting provider (as opposed to having to buy and manage cloud server infrastructure in-house).

Marketing

This may sound like a rather intangible point (after all, marketing is a service rather than infrastructure), but once a SaaS application has been developed and deployed on cloud servers, potential users need to learn of its existence. 

That’s why it’s critical to ensure your new SaaS application is effectively marketed. 

You need your application to be discoverable via the Internet. That’s why many SaaS owners decide to invest in digital marketing services such as PPC advertising, search engine optimisation (SEO), affiliate marketing, content marketing, and social media advertising. 

The more potential users you can access, the quicker the revenue will start rolling in. 

Internet access

Once your SaaS software application has been developed, deployed and marketed, your potential users will be able to access it via the Internet. 

It’s this point which is the fundamental one when it comes to SaaS. 

Unlike traditional application software, all a potential customer needs to access your app is a device that’s capable of connecting to the Internet.

As you can imagine, this significantly increases the total market to which you can promote your app. Users don’t need to worry about hardware specifications (e.g. whether their device is capable of running the app), how to install the software, or update it. This is all taken care of by the owner of the SaaS app on their behalf. 

To summarise this point; there are far fewer barriers to entry for SaaS apps than traditional types of software application. An Internet connection is all that’s really needed.

Subscription model

Of course, unless you’re some sort of generous philanthropist (or you’re willing to adopt some sort of ‘freemium’ model), you’re going to want to establish a subscription model for your app.

The exact subscription model you choose will depend on myriad factors, from the actual value proposition of your app, what similar competitors are charging and how your app is perceived by potential customers. 

Common examples of SaaS pricing models are as follows: 

• Tiered pricing – this offers users different features at different price points. This can incorporate the ‘freemium’ model, where a user can use a limited set of the app’s features for free, but if they want to use more advanced features they need to pay for a subscription (or a higher level of subscription). A great example of this pricing strategy is Canva, which offers free features and additional features that require a paid subscription.
  
• Usage-based pricing – as the name suggests, this pricing model involves charging the user based on usage of the app. Examples include Shopify, where the subscription price increases or decreases depending on the amount of revenue pushed through the store. Another example is ahrefs which charges based on the features that are used and how often.
  
• Per-user pricing – if you’re offering a SaaS application that is likely to be used by teams of people (e.g. marketing departments within large businesses), then you may want to consider offering per-user pricing. This allows the users to effectively ‘pay per seat’ and scale up and down their subscriptions as required.
  
• Flat-rate pricing – this is a simple subscription model to administer as you’re just offering one single price for access to the app’s entire suite of features. 

In addition to choosing an appropriate subscription model, the owners of SaaS apps must also consider customer acquisition costs, customer lifetime value (e.g. retention) and overall churn rate. All these factors can have a significant impact upon your app’s cashflow and revenue. 

Tenancy

One of the most important considerations when developing a SaaS application is the tenancy architecture that will be used. 

Wondering what type of tenancy architecture will be best suited for your app? You’ll likely find that the best solution is a multi-tenant architecture. 

This is a type of software architecture in which a single instance of your application software will run on a server and serve multiple tenants (tenants being the users of your SaaS app). This is a cost-effective and efficient solution as it means you can have multiple customers (or tenants) using your SaaS app, but you require only a single common server infrastructure and platform. 

(It’s important to note that whilst multiple customers will be using your app running off a single infrastructure, their data remains segregated and private). 

This sits in contrast to single-tenant architecture where each customer has their own instance of the software, and each instance operates on a discrete server. This – as you’ve probably already guessed – is not particularly scalable and is the reason why it hasn’t been widely adopted for SaaS applications. 

A note on SaaS application and control planes

Aside from the tenant architecture, it’s also important to give some thought to your SaaS app’s application and control planes. 

Your typical SaaS application will have a control plane that effectively does the ‘admin’ type tasks. These can include; tenant onboarding, billing, and metrics. The control plane is also the level at which the SaaS owner (or admin) can configure, manage, and operate the app.

The control plane is also usually the level at which tiering is configured. By this we mean the ability for the app to restrict certain features only to users that have paid for them.

The application plane is the level at which tenants interact (the bit they see and use). In other words, the application plane is where the core functionality of the application is executed. 

Note: the way in which each plane is configured (and the degree to which each plane is separated) can vary enormously from SaaS app to SaaS app. 

Management

Just like any other piece of software, SaaS apps require ongoing management and maintenance – be this to repair bugs or to implement new features. 

So, this is an important part of running your own SaaS application. 

Common tasks that should form part of your ongoing SaaS management include: 

• Routine maintenance – regular health checks should be carried out to ensure your SaaS application maintains maximal uptime and does not contain bugs etc that may impair the user experience. Other routine maintenance tasks should include data backups, the deployment of software updates and patches, and server maintenance.
  
• Quality assurance – any changes that are made to your SaaS app should be subjected to a thorough QA process. This ensures your application offers an optimal experience to the end user.
  
• Analysis of analytics – you should factor in regular reviews of your app’s analytics. This can help identify issues that may be impacting user retention as well as identify areas where you can potentially add new features.
  
• Feature development – following from the point above, you should factor in ongoing feature development to your SaaS app. Your competitors won’t be standing still and are likely to be introducing new features on an ongoing basis – so you should be, too!
  
• User experience – also connected to the above two points, user experience (UX) testing should be an ongoing workstream for your SaaS app. You should always be looking for ways to make your app more enjoyable to use
  
• Security testing – given the consequences of data breaches (including sizeable fines and legal sanctions), it’s imperative that you undertake regular security checks and upgrades to keep your SaaS app secure.
  
• Customer support – the ongoing management of your app should include the provision of customer support. This can make a huge difference in terms of customer retention. If you’re going to be managing a high-value SaaS app for enterprise customers, then it may be expedient to employ success managers and account managers who can provide tailored support to your biggest customers. 

As you can see, the ongoing maintenance of a SaaS application can be a considerable amount of work – which is why you should consider working with a development vendor that can provide you with application support and maintenance services. 

What are the different types of cloud computing models? 

You may recall that earlier in this article we referenced the fact that industry and standards bodies such as the NIST and ISO have defined a number of distinct types of cloud computing models.

Below, we’ve dived into the details of each one. 

Infrastructure as a service (IaaS)

Infrastructure as a service (IaaS) is cloud computing at its most basic. IaaS allows individuals or businesses to rent the essential computing infrastructure they need to run their IT operations. 

Your typical IaaS service will offer; virtual servers (offering computing power and memory), storage (for the storage of business-critical data), and networking components (e.g. virtual networks, routers etc). 

IaaS has several advantages for users. For example, with the ability to rent your IT infrastructure, you have fewer capital expenditures. Likewise, you can easily scale up or down your infrastructure requirements without having to buy or sell hardware. 

Platform as a service (PaaS)

Considered to be the next ‘step up’ from IaaS, platform as a service (PaaS) is a form of cloud computing where the user is not only able to rent the computing infrastructure (servers, storages and network components), but also the platform e.g. the operating system and middleware. 

PaaS is particularly beneficial for the developers of applications. With the infrastructure and operating system taken care of by a third-party provider, the developers are free to focus on their application development. 

If you were to think of this in culinary terms, PaaS provides you with all the ingredients you need to build an app, so you can focus on the important task of actually developing it!

Software as a service (SaaS)

As we saw at the outset of this article, software as a service is effectively the ‘pinnacle’ of cloud computing in that it takes care of everything on behalf of the user. It provides a finished, ready-to-use app which is underpinned by a solid infrastructure (you can also see why IaaS and SaaS are inextricably linked). 

What are the key characteristics and features of SaaS?

Now, it’s time to examine those characteristics and features that help SaaS stand out from all those other forms of software. 

Accessibility

If there’s one feature that endears SaaS to developers, owners and users alike it’s how accessible it is. 

Given that SaaS applications simply need an Internet connection for access, there’s practically zero barriers to entry. So long as a potential user has a device that’s capable of connecting to the Internet (such as a laptop, tablet, smartphone, or desktop computer) then they can sign up and start using your software as a service. 

If you’re thinking of launching a new piece of software, there’s no better way of accessing the widest possible market of users than with SaaS. 

Consider that the UK has a very high rate of Internet penetration. According to the latest data sources, upwards of 97.8% of the population has Internet access⁸ – they could all be potential customers of your app…

Customisation

Increasingly, SaaS applications can be customised to be integrated with other applications. This can result in big gains in productivity – as well as making each individual app more useful. 

Consider some practical examples; Shopify the SaaS e-commerce platform can easily integrate with QuickBooks, a type of SaaS accounting software. Likewise, Hubspot, a marketing automation SaaS application can integrate with Salesforce, a customer relationship management SaaS application. 

This level of customisation and integration is only increasing over time, creating an ecosystem of highly useful SaaS apps. 

Collaboration

SaaS applications are typified by a tendency to promote collaboration. Not only can SaaS apps be accessed across multiple devices, but they typically make it easy for teams to work together on projects. 

To provide tangible examples, consider Trello, Jira, or Basecamp – SaaS project management applications that allow large numbers of users to collaborate simultaneously. 

Scalable

Another defining feature of SaaS applications is their scalability. Need more members of your team to use a SaaS app? Then all you need to do is purchase more subscriptions. 

Need to reduce the number of people with access to an app? Then you can just cancel the requisite number of subscriptions. 

This particular characteristic of SaaS stands in stark contrast to traditional forms of software application. For example, if you were running an office two decades ago, you’d have had to purchase software licences for the number of staff that needed them. If you then subsequently had to let some staff members go, you’d still be stuck with the same number of licences – in short, a waste of money. 

Flexible payments

In the world of traditional software applications you’d have to stump up a considerable amount of money in one go (this could be multiple hundreds of pounds in many cases). 

SaaS solutions are far more financially accessible for your (potential) customers. This is especially true if you offer a variety of different subscription options (e.g. monthly and yearly options).

Security

Due to their centralised nature, SaaS solutions are more secure than traditional forms of software. 

As the owner of the software, you can roll out security patches and updates safe in the knowledge that every aspect of the solution will receive those updates and become more secure. 

The same can’t be said for traditional applications where the onus is typically on the user to download and install security updates. 

The best SaaS solutions will typically incorporate the following security best practices: 

• A multi-layered security protocol such as multifactor authentication. 
• Strict access controls with a zero-trust approach. Data will be encrypted both in transit and at rest. 
• Will adhere to data governance policies in the territories in which the app is available.

What are the benefits of software as a service (SaaS) for owners?

If you haven’t gathered so far, here at GoodCore, we’re enormous fans of SaaS solutions.

Not only do the key characteristics (as described above) of SaaS make it an enormously appealing proposition to customers, it also has myriad benefits for the actual owners of the SaaS app.

Perhaps you’re thinking of launching a new piece of software or application. Should you choose SaaS as the model? Our answer is yes; here’s why…

Cheaper hosting

Offering your software on a SaaS model offers significant cost reductions compared to launching a piece of software in more traditional ways. 

Offering your software on a SaaS basis means you can outsource the hosting of that software to a cloud provider such as AWS, Microsoft Azure, or Google Cloud Platform.

Sure, you’ll still incur monthly hosting fees, but these will almost always be significantly cheaper than having to purchase and maintain that hosting structure yourself. 

Cheap development costs

As a general rule, SaaS applications tend to be cheaper to develop compared to more traditional types of software. 

Firstly, this is because you don’t have to develop multiple versions of your application to accommodate different operating systems or hardware configurations (e.g. certain CPU architectures). You just need to develop an application that can run on the most commonly used browsers (which tend to utilise similar browser source codes anyway e.g. Chromium which is used by Google Chrome, Microsoft Edge, Brave, Opera, and Samsung Internet). 

Secondly, SaaS applications tend to be cheaper to develop as they don’t require devs to spend time creating local installation packages as is the case for traditional desktop applications. 

Thirdly, SaaS applications can be very cost-effective to develop as they can utilise fast development methodologies such as Agile. They can also make use of virtualisation (e.g. the use of virtual development and test environments) eliminating the need for time-consuming hardware and software set-ups. 

Finally, developing SaaS apps can be particularly cost-effective if you choose to outsource your development to a dedicated development vendor. 

Cheaper distribution costs

Distributing your new SaaS application is as simple as letting people know about it. 

Compare this to traditional software distribution that would typically involve shipping a physical product to retail locations, and you can see how this aspect of SaaS can significantly reduce your overheads (as well as the amount of capital you need to launch your product). 

Data insights

Another significant benefit for the owners of SaaS solutions is access to deep and rich volumes of data. 

By setting up an analytics dashboard for your SaaS application you can derive insights that can help you to retain existing customers, acquire new ones and generally grab market share from competitors. 

Not all forms of software allow you to do this, so this is yet another area where SaaS edges ahead of other software models. 

Quicker time to market

We’d argue that this is the biggest benefit of the SaaS software model. Thanks to its fast development cycle, and the ease of marketing, deployment and distribution, SaaS solutions offer you the quickest possible way to get your solution to market. 

And, you’ve guessed it, a quicker time to market means the sooner revenues start rolling in.

What are the disadvantages of software as a service (SaaS)?

If you’ve read this far then you’ll know we’ve been singing the praises of the SaaS model. But, in the spirit of transparency, we do want to let you know about some of the inherent drawbacks that can be associated with SaaS. 

Lack of control over infrastructure

There are myriad benefits to choosing a SaaS model and having a third-party take care of the underlying infrastructure on your behalf. 

However, if you don’t choose a reliable hosting and infrastructure provider, you could find yourself (and your app) vulnerable to unexpected downtime. This is one of the only drawbacks of not managing your own hardware and infrastructure. 

But, we’d argue that the prospect of downtime isn’t something to be overly concerned about. Major cloud computing providers like Microsoft Azure guarantee uptime rates of over 99%⁹.  

Vendor lock in

Another commonly raised concern regarding the SaaS application model is ‘vendor lock in’. 

This is a scenario in which it becomes impossible to move your application away from its existing underlying infrastructure to another provider (e.g. moving your hosting from AWS to Google Cloud Platform, for example). 

Again, though, the reality is that this is not as big an issue as people make out. 

Yes, switching cloud providers can be challenging – it requires careful planning for one thing – but the majority of cloud providers provide migration support and tools to make the transition easier. 

Security challenges

Many SaaS applications will be dealing with users’ private data; whether it’s business-critical documents, personal data, or financial records, it’s imperative that your app adheres to the relevant data protection legislation. Depending on the territories in which you are offering your app, you may need to adhere to:

• General Data Protection Regulation (GDPR). 
• California Consumer Privacy Act (CCPA). 
• The Personal Information Protection and Electronic Documents Act (PIPEDA) (Canada).

There are many apocryphal tales swirling around the web about how cloud infrastructure seemingly leaks data. This is categorically untrue. 

Major cloud infrastructure providers provide data security by design. Take Google, which offers ‘strong access controls, encryption for data at rest and in transit, and data loss prevention (DLP) to secure your cloud data wherever it’s located or managed’¹⁰. 

Cost management

Another potential issue that is typically raised around SaaS applications is managing the costs associated with the underlying cloud infrastructure. 

However, this is largely an issue of the past from the earliest days of cloud computing and SaaS. These days, providers like Google Cloud Platform offer cost optimisations frameworks, pay-as-you-go hosting with no lock-in and various cost management tools. 

In short, it’s easier than ever to keep an eye on the hosting costs associated with running your software as a service. 

What is the future of SaaS?

It doesn’t appear as though the SaaS software model is going away anytime soon. In fact, with the massive proliferation of Internet access, it arguably represents the pinnacle of software development – with far more benefits than downsides. 

In that case, if SaaS isn’t going away, how is it going to evolve? 

Mobile-first SaaS

This is a development which is already very much underway, but with the global shift towards mobile devices SaaS developers are now very much optimising for this device format. 

Expect this trend to very much continue, with over 60% of website traffic coming from mobile devices and 92.3% of Internet users accessing the web using a mobile device at some point during the day¹¹. 

In other words, if your SaaS application isn’t optimised to provide an excellent mobile experience you’re going to struggle to attract and retain users. 

SaaS and artificial intelligence (AI)

AI is being incorporated into everything these days, and SaaS applications are no exception. 

Expect to see AI incorporated into both the front end and back end of SaaS applications. Backend applications will include predictive analytics (to help owners better gauge expected user demand etc), alerts and signals regarding potential issues e.g. downtime and even the writing of code to speed up the introduction of new features. 

From a front-end, consumer-facing perspective, SaaS applications will utilise AI in everything from highly-interactive (and articulate!) chatbots, advanced data analysis (particularly useful on things like marketing automation SaaS platforms), and the automation of repetitive tasks. 

Just like everything facet of society, the future of SaaS is going to be AI-powered!

Platformisation

Instead of just gaining access to a SaaS based solution (e.g. a CRM system or marketing automation platform), SaaS providers are moving beyond just providing a solution and actually creating SaaS platforms that allow users to develop and deploy their own applications on top of the SaaS platform. 

I appreciate that what I’ve just written above is a little abstract, so let’s have a look at a concrete example of SaaS platformisation – Salesforce. 

Salesforce is itself a SaaS-based CRM system. However, the company decided to platformise it. They achieved this by creating the AppExchange – an online marketplace where third-parties are able to build and sell apps that integrate with the core Salesforce CRM product. This has, in effect, turned Salesforce into a platformised SaaS application.

Integrations 

This is very much a trend that is already underway – however, we expect to see it accelerate in the immediate years ahead. 

If you think of it from your own perspective, if you are developing a SaaS application, and it’s able to seamlessly integrate with a user’s other applications – they are more likely to stick with your app. 

In this theoretical example, imagine that you are developing a health-based SaaS application. If it can be seamlessly integrated with a user’s Strava or Pacer app, it makes all those apps collectively more useful. You can hopefully see why SaaS integrations can be so beneficial for owners and users alike.

GoodCore: the number one choice for SaaS development

If you’re looking for an expert team that can develop a market-leading SaaS application on your behalf, then look no further than GoodCore. 

Speak to our team now for a free consultation about your requirements, or alternatively, learn more about our SaaS development services. 

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