What Is Software as a Service (SaaS)? Definition, Examples, Types, and Trends
Software as a service (SaaS) solutions are centrally hosted software services licensed through a subscription model and delivered remotely.
Software as a service, widely known as SaaS, is defined as a method of delivering applications over the internet. The ‘as a service’ aspect of SaaS means that companies do not have to worry about installing, renewing, or maintaining software on-premise. Instead, they can simply access whatever service they need and pay for only what they use. This article explains software as a service and shares the top 10 SaaS trends to watch out for in 2021.
Table of Contents
What Is Software as a Service (SaaS)?
Software as a service, widely known as SaaS, is a method of delivering applications over the internet. The ‘as a service’ aspect of SaaS means that companies do not have to worry about installing, renewing, or maintaining software on-premises. Instead, they can simply access whatever service they need and pay for only what they use.
Software-as-a-service applications are disseminated over the internet, freeing client companies from the need for complicated and often expensive hardware and software management. Other terms for SaaS include on-demand software, web-based software, and hosted software. SaaS applications operate from the servers of a remote vendor. This vendor manages most aspects of the application, including access, availability, security, and performance. Clients can usually access the service that they have subscribed to through a web browser.
SaaS vs. PaaS vs. IaaS
For client companies, one of the most prominent advantages of SaaS is not having to worry about hosting and maintaining any database or server. The need to employ dedicated personnel for handling the coding and other software aspects of an application also disappears with the adoption of SaaS. Another advantage of SaaS is ‘affordability of innovation’.
With SaaS, even smaller companies can adopt cutting-edge technologies for their operations without having to worry about overhead costs. Clients also do not need to choose between functionality and flexibility. Today, most cloud-based software offer the exact same, if not better, experience as on-premise solutions.
Even when it comes to data ownership, there is minimal cause for concern. Most SaaS vendors acknowledge that all uploaded, stored, and processed data belongs to the end user. Legalities of data ownership will always be outlined in the contract.
It is also common for SaaS vendors to allow clients to export their data and create local backups when requested. Always make sure that qualified stakeholders analyze the contract before a final commitment is made. Most SaaS vendors allow for customized agreements, especially in the case of bigger clients. From a cybersecurity standpoint, data is safer when stored with a SaaS vendor as compared to on-premise. This is because the vendor allocates a much bigger budget for security measures.
Apart from this, employees, vendors, or other stakeholders cannot leak or otherwise compromise data when stored remotely, either unintentionally or otherwise. A 2019 report on Top Security and Risk Management Trends by Gartner predicted that by 2021, more than 9 out of every ten instances of cloud security failure would be the result of a fault by the customer.
Also Read: What Is Cloud Computing? Definition, Benefits, Types and Trends
Types of SaaS With Examples
The SaaS market is rapidly expanding, and today, there are several different types of SaaS solutions available. The main difference between these types is the industry or vertical that the SaaS product caters to, such as communication, finance, or customer relationship management.
As the market continues to expand and the adoption of SaaS solutions increases, new types of SaaS products are bound to appear. Currently, cloud-based software solutions are being adopted to replace numerous human tasks, leading to the development of the term ‘anything as a service (XaaS).
With remote work becoming the norm, the popularity of SaaS solutions has skyrocketed. This is especially true because these services can be used from anywhere in the world without the need for purchasing and setting up specialized infrastructure.
Types of SaaS Solutions
Let’s go over the types of SaaS solutions.
1. Customer relationship management (CRM)
Today, no business can survive without understanding the value of customer data. This valuable data is leveraged to understand the psyche of customers to promote products, increase sales, and optimize marketing efforts. Customer relationship management solutions enable effective management techniques, store customer data efficiently and safely, and help bolster customer relationships.
CRM solutions help users forecast market trends (e.g., sales). Apart from this, these solutions automate repetitive operations, including sending emails, collecting feedback, and providing rudimentary customer services for common issues. Today, SaaS CRMs are loaded with many advanced functions. For instance, Freshworks offers over 10 products for integration to fulfill a variety of business needs. Other leading CRM vendors include Bitrix24, Salesforce, and Zoho CRM.
2. Payment and billing
Money is the lifeblood of any organization, and managing payments and billing efficiently and transparently is of utmost importance. SaaS-based payment and billing services have been witnessing high demand in recent times. This is because they allow organizations of all sizes to accept payments quickly and easily.
With these solutions, handling hundreds, thousands, or even millions of transactions every day is no longer a difficult task. SaaS-based payment and billing solutions store all sensitive customer data, such as card details, securely and without any risk of data leakage.
Besides this, leading billing solutions come with a payment reporting feature, enabling businesses to flag suspicious transactions instantly. Popular SaaS-based payment and billing solutions include PayPal, Stripe, and WePay.
3. Enterprise resource planning (ERP)
Companies use enterprise resource planning solutions to manage numerous business processes, including compliance, risk management, accounting, and budgeting. With ERP, enterprises can combine and track all included processes through a single interface and generate useful, comprehensive reports as required.
NetSuite is a popular ERP SaaS that caters to over 22,000 client companies globally. It includes many useful retail and ecommerce solutions. Its useful ‘Professional Services Automation’ function allows for efficient planning and execution of projects. Other leading SaaS ERP solutions include Microsoft Dynamics ERP, Oracle JD Edwards, and SAP Business ByDesign.
Also Read: What Is Cloud Computing Security? Definition, Risks, and Security Best Practices
4. Project management
Project management SaaS solutions are popular for enhancing cooperation by tracking efforts and progress. Especially in 2021, where collaboration has become nearly completely remote, these solutions are gaining immense popularity. One reason for this is that these solutions are much easier, faster, and more effective when compared to contemporary project management tools such as emails and spreadsheets.
Leading SaaS-based project management solutions come with various functions and tools, including task tracking, adjustable page permissions, real-time notifications, and even blog posting. The most popular project management SaaS solutions include Jira, Confluence by Atlassian, and Workzone.
5. Bookkeeping and accountancy
SaaS has revolutionized the bookkeeping and accountancy software space. Accountancy SaaS solutions simplify the management of financial operations and costs through automation. These solutions are especially useful for larger organizations that process thousands of accounting transactions regularly.
SaaS-based accounting software comes with a variety of customizable features based on the needs of end users. At its core, this type of SaaS solution is useful for generating bills and invoices, reporting on spending, scheduling and prioritizing financial tasks, disbursing remuneration, and ensuring compliance. Leading accountancy SaaS solutions include QuickBooks and Xero.
6. Retail and ecommerce
Especially post-pandemic, ecommerce is the shopping medium of choice for a majority of the digitalized world. As new businesses come into existence, they must create a robust online presence to ensure easy access to a larger customer base. Retail and ecommerce SaaS solutions allow businesses to start selling their products and services instantaneously. This helps new and upcoming entrepreneurs save money on their online presence, such as website development, user experience, and UI design.
Cutting-edge SaaS-based retail and ecommerce solutions also enable entrepreneurs to customize every aspect of their online storefronts. This includes appearance, theme, and color combination; payment platform integrations; discounts and promotions; and even blogs and other marketing collaterals. With these solutions, users can also create financial reports, monitor customer behavior, and ensure seamless regulatory compliance.
Popular SaaS-based ecommerce platforms include Shopify, BigCommerce, and Magento.
Also Read: What Is Container Security? Definition, Components, Best Practices, and Software
7. Communication
Communication is one of the most prominent applications of SaaS. Since COVID-19 made work-from-home arrangements commonplace, collaboration has become a key challenge for organizations. However, SaaS-based communication tools can be deployed easily and instantaneously. This allows organizations to adopt them even though all employees are operating remotely.
The main advantage of these platforms is cross-platform working, instant messaging, and file sharing from any device with an internet connection. Leading SaaS-based communication solutions include Slack, Skype for Business, and Brosix.
8. Human resource management (HRM)
SaaS-based HRM solutions allow companies to manage human resources with minimal effort and cost. SaaS HRM comes with a host of features that help streamline recruiting, scheduling of interviews, tracking and analysis of performance, monitoring of productivity, attendance, and employee appraisals. These solutions help organizations store, access, and process all candidate and employee information in one place.
Cutting-edge HRM solutions provide templates for employee reviews, provide a robust feedback loop at all levels, and ensure effective cooperation, communication, and collaboration within the enterprise. HRM allows managers to set goals and share achievements as well as constructive feedback. Some solutions can even be integrated with communication platforms for on-the-go operations. Last but not least, SaaS HRM solutions provide analytics based on age, gender, skill set, and many other metrics.
Leading SaaS-based HRM solutions include Lattice, SAP SuccessFactors, and BambooHR.
9. Content management systems (CMS)
Content management solutions allow businesses to publish and edit various types of content such as articles, blogs, and press releases with ease and efficiency. SaaS-based CMS solutions help organizations bolster their online presence through well-written and augmented content. Leading CMS software solutions allow users to work with text, pictures, and videos and even provide templates for easy content publishing. A few prominent CMS solutions include WordPress, Drupal, and Magnolia.
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Top 10 SaaS Trends to Watch in 2021
It is safe to say that this is the year for SaaS. Remote working has become a mainstay for thousands of companies all across the globe. As work requirements evolve, the need for new software on end-user systems keeps emerging. With SaaS, fulfilling such requirements becomes easy—remotely, at low cost, and without the need for additional deployment procedures or human resource expertise.
Here are the top ten SaaS trends to keep an eye on in 2021.
1. Mobile optimization
Today, smartphones are more popular than ever before. According to Gartner, 5G smartphones are forecast to account for 35% of total smartphone sales in 2021. This means faster communication and round-the-clock productivity are set to become the norm.
SaaS on mobile is a trend that is expected to be a part of the natural progression in today’s remote work environment. Company executives across verticals are increasingly executing important business operations from their smartphones and tablets. Therefore, dynamic smartphone dashboards and related tools are the need of the hour. Expected outcomes of this trend include:
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- Personalized SaaS smartphone applications
- AI- and ML-augmented SaaS mobile apps
- Ultra-responsive mobile functionality, including one-swipe actions, task optimization, and intuitive filters
- Increased accessibility for differently-abled end users
- Immersive SaaS experiences through augmented and virtual reality
2. Artificial intelligence (AI)
Artificial intelligence is the future of technology. On the SaaS front, AI is bolstering personalization, ease of use, and cybersecurity. In 2020 and 2021, the popularity of voice-controlled technology has surged. AI-based technologies such as natural language processing (NLP) understand and adapt to human speech patterns. This can lead to useful features such as voice control, which are especially beneficial for customers using SaaS applications.
SaaS solutions that are augmented with AI boast faster and easy-to-use internal processes. Businesses can leverage such SaaS products to answer questions more quickly, generate forecasts faster, and enhance overall responsiveness.
On the cybersecurity front, AI-enabled automation and pattern recognition can be combined to identify and thwart potential threats quickly. With AI, SaaS will be much more secure than ever before.
Also Read: What Is Cloud Encryption? Definition, Importance, Methods and Best Practices
3. Machine learning
SaaS vendors leverage machine learning to automate processes, enhance responsiveness, and enable the creation of detailed reports. ML-augmented SaaS applications allow for the creation of useful services such as smart chatbots, automatic onboarding, and autonomous operations. With ML, SaaS-based offerings become self-improving. These solutions can then facilitate clients with a level of intelligence and efficiency that can revolutionize operations.
4. Application programming interface (API) connectivity
Application programming interfaces are a fundamental aspect of software development in 2021. With the explosive increase of SaaS adoption within nearly every market space, many organizations felt the need to integrate SaaS into contemporary business systems. API connectivity is especially useful for organizations that cannot or do not want to migrate their data to the cloud.
Today, not all SaaS vendors provide end-to-end API integration. Instead, this gap in supply and demand is being fulfilled by third-party vendors. However, as SaaS providers see an increasing demand for API connectivity, more of them could provide in-house integration rather than redirecting clients to third parties. This will also help reduce go-to-market time and facilitate vendors to develop more robust SaaS capabilities than third parties.
5. Vertical SaaS
While horizontal SaaS caters to clients across industries and verticals, vertical SaaS brings customizability to clients within specific supply chains and sectors. Examples of upcoming vertical SaaS trends include retail analytics, healthcare analytics, and modern logistics analytics. Companies leverage vertical SaaS to specialize in their domain and enhance cost-effectiveness.
With vertical SaaS, companies enjoy higher levels of flexibility, more frequent upselling opportunities, and minimal customer acquisition costs. Vertical SaaS also enhances customer intelligence by enabling enterprises to gain industry-specific client data and intelligence to obtain client-focused insights.
Finally, vertical SaaS can be integrated with predefined KPIs, metrics, and analytics. Companies can utilize this feature to evaluate and address both short-term and long-term performances and processes.
Also Read: Top 10 Cloud Data Protection Companies in 2021
6. Data analytics
SaaS solutions are data-driven. As digital dissemination becomes the norm across industries, SaaS vendors across sectors are leveraging data analytics to streamline their services. Robust data analytics also helps both SaaS vendors and client companies to gain deep insights into user behavior.
Integrated analytics allows SaaS users to treat data as a single point of truth, uncover hidden insights through tools such as performance dashboards, and access vital business information. Cutting-edge data models will be accessible on the go and from any device that has an internet connection.
7. Micro-SaaS
Many new players, both established companies and startups, are expected to enter the SaaS market in 2021. This could lead to saturation and intense competition. As such, SaaS vendors will have to develop new ways of offering value, innovating, and attracting customers. Micro-SaaS innovations can help vendors achieve this.
Micro-SaaS teams are typically small. These teams build products that are normally complementary add-ons to an existing SaaS platform. Micro-SaaS aims to improve an existing SaaS product or add a missing but useful feature.
8. Low-code and no-code SaaS
As the popularity of SaaS skyrockets, expert developers will no longer be needed to craft customized SaaS solutions from scratch. Instead, no-code and low-code SaaS platforms are expected to help personnel with less technical experience create a SaaS platform that suits the enterprise’s needs.
Out-of-the-box or turnkey-style SaaS will still require expert personnel to maintain and manage. However, these software developers and engineers will have more time to focus on driving innovation and giving the organization a competitive edge instead of directing their efforts toward routine SaaS setting up. Low-code and no-code SaaS can boost productivity and introduce even technologically conservative organizations to SaaS swiftly and effectively.
Also Read: Top 10 Hybrid Cloud Solution Companies in 2021
9. White labeling
In white labeling, a vendor creates a SaaS platform that is completely developed, undergoes rigorous testing, and is ready for use. This platform is then sold to another party. The buyer can then customize and resell this ‘while labeled’ SaaS solution under its own brand.
White-labeled SaaS solutions can be either end-to-end or a part of embedded business intelligence products. In the latter, an enterprise can integrate the white-labeled SaaS solution within its own application.
White labeling could be valuable for smaller companies that want to gain a larger market share swiftly. White-labeled SaaS removes the need for financial and logistical considerations and allows startups to focus on their core strategy, value proposition, and branding.
10. PaaS migration
As SaaS continues to evolve, developers and vendors are shifting their focus toward innovation to enhance customer acquisition and retention. Some experts believe this could be achieved by SaaS vendors adopting a platform as a service (PaaS) model. This could enable providers to create customized applications as add-ons for their original offerings. For instance, both Salesforce and Box provide PaaS-centric services.
Migrating to a PaaS model can bolster SaaS agility through enhanced functionality, features, and customizability. Scalability is another advantage of PaaS, as vendors will see a boost in the flexibility, robustness, and accessibility of their SaaS solutions. Finally, all aspects of PaaS are under the umbrella of a single vendor. This makes regular, automatic, and all-encompassing updates easy to disseminate and enhances the vendor’s security posture.
Also Read: Top 10 Cloud Security Challenges 2021 Needs to Address
Takeaway
As the cloud continues to see a rapid increase in popularity across industries, more and more organizations are finding it faster, easier, safer, and more economical to adopt software as a service (SaaS) solutions as a part of their daily operations. Developers and other professionals have also taken a preference to cloud applications in comparison to on-premise solutions. In 2021, almost all core enterprise functions from enterprise resource planning to personnel management are offered by SaaS providers. This makes it a viable choice for management teams across verticals.
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