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What is SaaS (Software as a Service) in Cloud Computing?

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21st Sep, 2023
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What is SaaS (Software as a Service) in Cloud Computing?

The Software as a Service (SaaS) industry looks promising, with a massive potential for growth. Its projected reach is $571.9 billion by the year 2027. Emerging as a dominant force in cloud computing, SaaS offers a transformative paradigm where applications are hosted and seamlessly delivered to users via the internet. The hallmark of SaaS lies in its subscription-based model, liberating organisations and consumers from the constraints of local software installations.

SaaS’s significance goes far beyond convenience. It is a beacon of flexibility and scalability, powering the global shift towards remote work. SaaS solution providers take the mantle of ensuring consistent maintenance and timely upgrades, relieving users of these concerns. These distinctive attributes have catapulted SaaS to popularity among enterprises worldwide, driving innovation and unlocking new levels of productivity.

Read this blog to learn more about SaaS in cloud computing

Software as a Service

SaaS is a cloud computing-based software delivery system. It allows customers to access software programs through the Internet. The software in this model is hosted on faraway servers and is meticulously handled and updated by the service provider. 

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SaaS, accessible via web browsers, mobile apps, and APIs, eliminates the need for customers to make large expenditures in infrastructure. Instead, they choose a simple monthly subscription, effectively renting the software per a company’s needs. The provider’s data centre manages all underlying components, including infrastructure, middleware, application software, and data, to ensure a consistent user experience.

Notable Features of SaaS

Some features of SaaS in cloud computing:

  • Multi-tenancy model: A single software instance caters to multiple customers or tenants in SaaS. This is one of the most important characteristics of SaaS in cloud computing. Tenants may customise application parts, and data storage is often segregated per tenant through different databases or schemas.
  • Automated provisioning: SaaS offers automated provisioning, enabling users to access applications instantly. User profiles can be created and provided access through web services, simplifying the process of onboarding and offboarding. 
  • Enhanced collaboration: One notable feature of SaaS is its ability to foster improved user collaboration. SaaS solutions incorporate integrated communication and cooperation tools like chat, video conferencing, and file sharing. Moreover, SaaS enables employees to work from anywhere and anytime, fostering collaboration efforts.
  • High availability: SaaS applications prioritise high availability, aiming to be accessible 24/7 worldwide. They often provide Service Level Agreements (SLAs) to ensure reliable customer access. Management and monitoring APIs help maintain application health and availability.
  • Elastic infrastructure: SaaS applications adapt to varying usage levels by employing elastic infrastructure. This means resources can expand or shrink as needed, ensuring optimal performance and cost-efficiency. Technologies like Docker and Kubernetes are commonly used for managing elasticity.
  • Data security: SaaS applications focus on data security to protect against unauthorised access and data corruption. They often employ encryption for data storage, with individual tenant data isolated from others.

SaaS and Its Importance

Software as a service in cloud computing optimises business processes by streamlining operations through cloud-based software. It enhances efficiency by automating tasks, reducing manual workloads, and centralising data. With real-time access and collaboration tools, SaaS fosters quicker decision-making and seamless communication. 

User-friendly SaaS features boost employee proficiency and increase overall productivity. SaaS aids in delivering excellent customer service, which retains and expands the customer base. Efficiency gains result in quicker task completion and improved business metrics, ultimately benefiting the company.

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SaaS and Its Operation 

SaaS operates via cloud delivery, where a software provider hosts the application and related data on its servers or contracts a cloud provider for hosting. This accessible application can be used from any device with an internet connection, primarily through web browsers. 

SaaS leverages a multi-tenant architecture, pooling resources and enabling seamless updates and maintenance by the provider. It offers quick tool and feature deployment flexibility while managing all hardware, platform, and software aspects, ensuring a hassle-free user experience.

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SaaS: Advantages and Disadvantages

SaaS, too, has its own set of advantages and disadvantages, as listed below:

Advantages of SaaS

  • Free trials: SaaS providers often offer free trial periods. This allows potential customers to test the software extensively. Thus, free trials reduce the risk for customers, making them more likely to explore and consider SaaS solutions.
  • Lower costs: SaaS operates in shared environments, where many users share the same infrastructure and software. Compared to traditional software models, where each organisation has to purchase its own gear and software licences, this shared method considerably lowers costs. The price of SaaS is especially advantageous to small and medium-sized organisations because it does away with the steep upfront expenditures of software licensing.
  • Scalability: SaaS platforms are designed to scale easily. As your business grows, you can quickly and seamlessly add more users or resources to accommodate your expanding needs. The scalability of SaaS allows businesses to adapt to changing demands without the need for extensive infrastructure investments or complicated setups.
  • Constant updates: SaaS providers keep their software up to date. These modifications can occur every week or every few months. This continuous improvement ensures the program is updated and secure and includes the most recent features.
  • Improved data security: Data security is pivotal for SaaS companies. Security specialists use strong security methods such as multi-factor authentication to protect consumer data. Data is frequently kept on secure cloud servers, allowing it to be accessed from various devices while maintaining high levels of security.
  • Round-the-clock support: SaaS solutions provide 24/7 customer support. SaaS providers also have a team of specialists who can offer guidance in troubleshooting, training, and various other aspects whenever needed.

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Disadvantages of SaaS

  • Difficulty with regulations compliance: Storing critical business data in a service provider’s data centre can make it challenging to comply with government data protection regulations. Companies must navigate these rules, ask pertinent questions of their service providers, and address any inconsistencies in compliance.
  • Cumbersome data mobility: Startups in the SaaS market may lack experience, making data transfer difficult in cases of service provider failure or when switching to a different provider. 
  • Reliance on the Internet: SaaS applications rely heavily on Internet connections to function effectively. Service interruptions or outages can disrupt business operations, leading to missed deadlines and reduced productivity. Slow internet connections exacerbate these issues, making it difficult for employees to accomplish tasks.
  • Troublesome software integration: Integrating external SaaS applications with existing in-house software can be challenging. Compatibility checks should be performed to ensure smooth integration, as in-house APIs and data structures may not align perfectly with external software solutions. 

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Software as a Service Examples

Here are the most popular platforms that have adopted the SaaS model to streamline their services: 

Zoom: Zoom gained immense popularity during the pandemic and is one of the prominent Software-as-a-Service examples. Whether for education, work, or personal use, Zoom has become integral to our routines. With its robust cloud infrastructure, Zoom facilitates virtual meetings, conferences, webinars, and events. 

Slack: Slack has emerged as a popular SaaS application for business communication. It features diverse functionalities and offers private messaging and group discussions. It is also equipped with robust file-sharing capabilities, all secured with end-to-end encryption.

HubSpot: HubSpot’s marketing software aids companies in building an inbound presence and attracting leads. HubSpot uniquely offers a fully integrated suite across all SaaS business model stages. 

Dropbox: Dropbox is a trusted and widely used file hosting service. Over time, it has become a user-friendly industry leader for individuals and businesses. Dropbox prioritises security with encryption, making it ideal for safeguarding sensitive data like tax returns and legal documents.

Canva: Canva is a user-friendly design tool that enables the quick creation of professional visuals like infographics. Its cloud-based platform ensures file security and supports collaboration for teams. It caters to businesses of all sizes, simplifying design tasks. It is one of the most prominent Software-as-a-Service examples.

SaaS vs. IaaS vs. PaaS: A Comparative Analysis

Here is a comparative table enumerating the differences between SaaS, IaaS, and PaaS:

Point of Difference




Abbreviation for

Software as a service

Infrastructure as a service

Platform as a service

Used by

End users mainly use it. 

Network architects use it. 

Mainly used by developers. 

Need for technical knowledge 

Does not need technical knowledge. 

Basic technical knowledge is needed. 

Requires advanced technical knowledge. 


Total abstraction

Abstracts only the underlying hardware resources

Abstracts the underlying hardware, software, and application services. 

Level of control

Total control and flexibility can be exercised

Minimum control and flexibility can be exercised

Moderate control can be exercised


Minimum cost is involved 

High costs are involved

Low costs are involved

Examples of SaaS in cloud computing

Slack, Microsoft Office, and Dropbox. 

Amazon Web Services, Microsoft Azure, and Google Cloud. 

Oracle Cloud, OpenShift, and AWS Elastic Beanstalk.

SaaS and Its Future Trends

SaaS has almost made its way into every industry possible. It has already secured its position among the top businesses worldwide. Here’s what the future of SaaS looks like:

Artificial Intelligence 

One of the most prominent SaaS trends will be the increasing adoption of artificial intelligence (AI). AI has already opened up transformative possibilities, particularly within the SaaS market. 

AI’s potential to streamline processes, automate tasks, enhance productivity, and expand human capabilities has opened up new avenues. SaaS companies are now actively paving the way for AI integration, marking a significant and ongoing trend poised to reshape various industry sectors. 

Evolution in integration

A notable trend in SaaS is the evolution of integration capabilities. Earlier, SaaS lacked integration solutions. This required users to turn to third-party options, which posed data migration challenges. However, modern SaaS vendors eventually offer robust integration features, attracting businesses seeking hybrid systems combining cloud and on-premises elements. 

Vertical SaaS

Vertical SaaS offers solutions tailored to the needs of industries. It is gaining prominence due to its cost-effectiveness and flexibility. This trend is expected to drive increased revenue and reduced customer acquisition expenses, making it an attractive choice for many businesses seeking specialised industry solutions.

Low-code platforms

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Low-code development is an emerging SaaS trend that simplifies application creation with minimal coding, enabling businesses to build custom solutions quickly. It streamlines software development, enhances agility, and reduces reliance on IT departments. This trend is going to dominate the SaaS landscape in the coming years.

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Software-as-a-Service is the foundation of cloud computing technology. It is flexible, easy to access, and can scale up, making it a game-changer for many organisations in the digital age. SaaS keeps evolving with cutting-edge solutions, making it vital for future success in cloud computing.

 If you are a tech enthusiast, consider a cloud computing course with tools like Microsoft Azure, DynamoDB, GCP, and Cloudtrail for a competitive edge in your career. Enrol today and stay relevant and in demand among all your potential employers. 


Pavan Vadapalli

Blog Author
Director of Engineering @ upGrad. Motivated to leverage technology to solve problems. Seasoned leader for startups and fast moving orgs. Working on solving problems of scale and long term technology strategy.

Frequently Asked Questions (FAQs)

1Is Amazon a SaaS?

Amazon provides Amazon Web Services incorporating all three infrastructures: SaaS, IaaS, and PaaS.

2What are SaaS types?

Customer Relationship Management (CRM) SaaS, Accounting SaaS, Project Management SaaS Applications, Enterprise Resource Planning (ERP) SaaS, and Communication SaaS Applications are examples of SaaS solutions.

3What is SaaS company example?

If you are wondering what are SaaS companies, here are some examples— DropBox, Google Workspace, and Salesforce are some of the most popular companies that operate on SaaS.

4How is MRR calculated for a SaaS business?

A SaaS firm's Monthly Recurring Revenue (MRR) is calculated by dividing the yearly subscription fee by 12 to get the monthly value. It is then multiplied by the number of users subscribed to the annual plan.

5What is SaaS marketing?

SaaS marketing involves strategies and efforts to create awareness and promote and sell Software-as-a-Service. It plays a pivotal role in driving growth for product-led businesses by introducing the product to the market and establishing its position in the industry.