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What Is Software as a Service Definition

Software as a service (SaaS) is a delivery and licensing model in which software is accessed on the web via a subscription rather than installed on local computers.

With SaaS, companies need not manage applications or invest in hardware to run their applications. Instead, a provider hosts and manages the infrastructure to support software, which enables updates and patches to be applied automatically and universally and reduces the burden on a company's IT team.

According to a 2018 IDG study, 89 percent of companies use SaaS-based applications.

Why is the SaaS model important?

The SaaS model can reduce costs for IT infrastructure that would previously have hosted the applications. It can also minimize some of the time spent on management tasks, because a SaaS provider is responsible for upgrades and management.

The SaaS model often makes sense as various technology trends require faster, more agile, and on-demand architectures as well as more rapid software updates. Technologies that have fueled demand for SaaS include cloud computing and edge computing, 5G and Wi-Fi 6, Internet of Things-connected devices, collaboration technologies, mobility, and immersive experiences enabled by artificial reality (AR) and virtual reality (VR). These technologies can be data-hungry and compute-intensive, and require low-latency, high-performance infrastructure on which to perform.

Many business applications are now available in the SaaS model, such as email, sales management, customer relationship management, financial management, human resource management, billing, and collaboration applications.


What are the benefits of the SaaS model?

There are numerous benefits for companies and users, including the following:

  • Costs. With a subscription model, up-front costs are lower. Companies rent the software they need via subscription and they aren't paying for infrastructure to host these applications.
  • Software updates. Because SaaS software is hosted on a centralized server, it can be upgraded to multiple computers automatically and, often, more rapidly than traditional software. SaaS updates can also give users access to the newest features.
  • Speed. Because SaaS models do not require hardware, they can be deployed rapidly. Users can get access to applications far faster, which can increase productivity and employee satisfaction.
  • Hardware. When the software is run on a provider's server, individual PCs do not need to be upgraded for hardware requirements. Additionally, because SaaS applications reside in the cloud, companies do not need to purchase extensive hardware--compute, networking, storage--to support those applications.
  • Accessibility. Gaining access to a SaaS application requires simply a browser and a web connection: Users can log in from anywhere. In addition, the data is stored in the cloud and not tied to any individual user's PC, which makes it easier to access. The SaaS model enables geographically dispersed members to access the data and work collaboratively, while enabling version control.
  • Customer experience. Because users can access applications from anywhere, on any device, the SaaS-model can enhance customer experience. SaaS enables user access and, in some cases, better integration with other apps in the cloud. Also, the SaaS model gives users the opportunity to interact with provider companies and give meaningful feedback about features, service quality, and more.
  • IaaS (infrastructure as a service) and platform as a service (PaaS). With the advent of public cloud services, companies can access industrial-strength storage, compute power, and other infrastructure on which to build their applications. Models like IaaS and PaaS provide the opportunity to build applications core to a company's business without requiring up-front capital costs to build the infrastructure.
  • Data and application integration. Companies using mission-critical applications that span multiple vendors typically have complex application and data integration needs. Managing all the hardware to run these applications adds layers of complexity to the process. SaaS can eliminate some complexity associated with app and data integration while also providing faster access to data.

What are some of the challenges of the SaaS model?

It is important to weigh the benefits of the SaaS model with an understanding of some downsides, including the following:

  • Lack of control of apps and infrastructure. Hosting apps on a provider's infrastructure requires that enterprises relinquish to the provider some control over management and security.
  • Security and data concerns. While many cloud providers secure their environments with greater rigor and governance than enterprises do, the SaaS model does create some vulnerability for data hosted on a provider's infrastructure. The security and privacy of data is paramount.
  • Performance. SaaS-based applications can run slower than in-house-installed apps. It is important for IT to manage and prioritize SaaS-based traffic to manage these latency issues.
  • Connectivity. SaaS-based apps require Internet service. If a connection fails, users may lose access to the application or to critical data. If a provider suffers an outage, that can also affect application performance and data integrity. Enterprises should review how service-level agreements address provider outages.

For more Cisco news:

Subscription-based models offer serious enterprise benefits

The two-way street of subscription models

Dealing with SaaS security risks

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