Atlanta, Jan, 16, 2024 – The SaaS (Software as a Service) concept has evolved over time and is the result of combined progress in computing and connectivity. Although it is difficult to attribute the original idea of SaaS to a single company or individual, there are several important milestones and forerunners in its development.

Evolution of SaaS

  • Centralized computing (1960s and 1970s): In these decades, companies used dumb terminals to access applications and data stored on mainframe This model is a precursor of SaaS, as applications and data were centralized and accessed remotely.
  • Application Service Providers (ASPs) in the late 1990s: Before the term SaaS became popular, ASPs emerged, offering hosted applications over the Internet. These providers managed and maintained the software on their own servers, and clients accessed it over the web. While this model has similarities to modern SaaS, these were often traditional applications hosted in a remote environment, rather than applications designed specifically for cloud delivery.
  • Web 2.0 (early 2000s): With the rise of feature-packed, interactive web applications, many companies began offering cloud applications that rivaled traditional desktop applications in functionality and performance.

Although some emblematic companies contributed to popularizing the SaaS model, there are many firms and individuals that have fostered the evolution and adoption of the model. Over time, the combination of improvements in Internet infrastructure, evolving business models, and the need for more flexible and scalable solutions has boosted SaaS and laid the foundations for its dominance in many areas of enterprise software.

Two sides of the same model

The term SaaS can be approached from two main perspectives: IT and business. Both perspectives have differences and similarities. Let’s explore each.

SaaS IT perspective

From an IT point of view, SaaS refers to a way of delivering applications over the Internet. IT profiles interested in this service ask specific questions, for example, how will the architecture be set up?

The following are some of the technical features of SaaS:

  • Browser-based access: SaaS applications are typically accessed via a web browser, which means that the software does not need to be installed and run on individual devices.
  • Centralized management: SaaS providers take care of the administration, maintenance and updating of the software. This includes tasks such as the implementation of security updates, performance improvements and the incorporation of new functionalities.
  • Multitenancy: A single instance of the software and its underlying infrastructure serves multiple clients, but each “tenant” or client has a tailored and secure view of its own data.
  • Elasticity: SaaS infrastructure can be easily deployed at scale to serve a large number of users.
  • API integration: SaaS solutions often offer application programming interfaces (APIs) to integrate with other applications and systems.

SaaS business perspective

From a business perspective, SaaS is considered a software delivery and monetization model. Unlike IT profiles, business stakeholders who are interested in this service want to be clear about prices, as they get subtracted from their profit and budget. They also need clarification on business continuity if SaaS is implemented.

These are some of the characteristics of this approach:

  • Subscription model: Instead of purchasing software licenses, clients typically pay a recurring fee for using the software.
  • Reduced upfront costs: By not requiring investments in hardware or expensive software licenses, companies can use high-quality business applications with a lower upfront investment.
  • Global access: SaaS solutions are available from anywhere through an Internet connection.
  • Automatic updates: Clients always have access to the latest software versions without incurring additional costs.
  • Predictable costs: Companies can easily forecast their software expenses since they are often based on subscription models with fixed prices.

Commonalities between the IT and business perspectives

Although both perspectives may differ in their approach, they share certain characteristics:

  • Cloud hosting: In both cases, SaaS is delivered over the Internet and hosted in the cloud.
  • Client focus: Both technically and from a business standpoint, SaaS brings value to clients by offering easy-to-use, scalable, and affordable solutions.
  • Flexibility and adaptability: In both contexts, SaaS is conceived as a flexible solution that can adapt to the changing needs of companies and users.

By understanding these two perspectives, companies can make better decisions about the adoption, implementation, and use of these solutions in their environment.

Who does SaaS compete with?

SaaS models compete with various traditional and emerging approaches and models in the delivery and use of software:

  • Traditional on-premises software: This is probably the most direct competitor to SaaS. In this model, companies buy software licenses and install them on their own servers. They have full control over the software, but also assume full responsibility for installation, maintenance, upgrades, and security.
  • Infrastructure as a Service (IaaS): While SaaS delivers comprehensive applications to end users, IaaS provides a virtualized infrastructure in the cloud. Companies that choose IaaS over SaaS want to have greater control over their applications and data, but also take on more responsibility in terms of management and maintenance.
  • Platform as a Service (PaaS): PaaS is a cloud-based development and deployment environment that allows developers to build applications without worrying about the underlying infrastructure. Some companies choose PaaS over SaaS when they need to build customized applications, but do not want to manage the infrastructure.
  • Open-source software: Many open-source software solutions compete with SaaS offerings. Open-source software may be free or have costs associated with it, but it generally offers companies more flexibility in terms of customization. As with traditional on-premises software, companies are usually responsible for maintaining and updating it.
  • Hybrid solutions: Some companies opt for hybrid solutions, combining SaaS components with on-premises solutions. This allows them to take advantage of the best of both worlds but can also make management and integration more complex.
  • Native mobile apps: For certain applications, especially those targeted at consumers, native mobile apps (developed specifically for mobile operating systems such as iOS or Android) can compete with web-based SaaS applications.

It is important to mention that the choice between SaaS and other models is not an “either/or” decision for many companies. Depending on their needs, culture and resources, a combination of different models may be the best option. In many cases, SaaS wins out for its convenience, scalability, and predictable pricing model, while other models are chosen for their control, flexibility, or industry-specific considerations.

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