What is SaaS? Explanation, Benefits, and Examples
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At the beginning of 2021, we can definitely state that SaaS is literally everywhere. From large organizations like Google, Microsoft, or Adobe Systems, to small apps that offer data cleanup or financial calculations, almost every type of software we use daily is SaaS.
So, what is SaaS and why is the SaaS business market growing so rapidly?
SaaS is Software as a Service. The emphasis is on "service" — is not a one-and-done transaction, it’s an ongoing experience that gives the clients continual value. User experience is how the value is delivered in SaaS applications. When you look at UX design this way, it becomes clear why UX is one of the most important elements of SaaS.
When SaaS emerged on the market, they quickly started replacing old-school software on a disk. This is because they offered a much better experience by providing both a better value and more convenient user interfaces. The software companies that are still building desktop-oriented applications, typically offer a poor user experience, especially on mobile devices. In 2021, when best-in-class user experiences can be downloaded in the App Store for free, people don’t just want the software they use at work to have great UX, they’ve come to expect and demand it.
It's not that SaaS, in comparison to desktop-oriented applications, offers better UX by definition. For example, most SaaS companies in the space of sales and marketing usually start small and grow very complex as they add up new features and additional products.
When we were working on designing TextMagic, a SaaS product in the sales and marketing space, complexity was the main problem we wanted to avoid. To reduce the complexity we combined marketing campaigns, CRM, and help desk functionality on one platform (check out our case study).
This way with the help of design we made the product simple and pleasant to use and as we already know a great user experience is a key to SaaS success.
With so many SaaS applications that surround us, this business model has become the most popular and profitable for software entrepreneurs.
In this article, we are going to figure out what software as a service is, why this business model has become so popular, and how it manages to provide a better user experience in comparison with stand-alone desktop software. As well, we will go through some popular examples of SaaS products to explain to you everything about this type of product.
Basic information about SaaS
SaaS (Software as a Service) is a method of software delivery with the help of which people can access the data over the internet. Cloud applications run on the server of the SaaS provider, and users can access them with their browser from any place and any device.
The user does not buy an application, but rents it - customers pay for a subscription on the regular basis as long as they need it.
The SaaS vendor takes care of the application's performance, provides technical support, and independently installs updates. Thus, the customer doesn't have to worry about technical issues and can focus more on their business goals.
How does it work?
Installing the traditional, desktop-oriented software requires a physical disk and a tedious installation process. Software as a service is hosted in the cloud and in most cases does not require installation.
Instead, a person visits the software's website and register for an account using only their email address, create a password, and here we go! After registration, they can log in and have access to all the tools and features the software offers anytime and anywhere only via the Internet.
Benefits of SaaS
Software as a service model is beneficial both for those who develop the software and those who use it.
The software as a service is beneficial due to the fact that it:
- generates recurring revenue for businesses (provides relatively stable income because of a subscription-based model)
- is affordable for users
- is cost-effective for businesses (no need to spend on hardware maintenance)
- gives a possibility to scale easily (when the business grows and the requirements increase the client can quickly and easily upgrade the subscription. And vice versa, they can downgrade the plan when needed.
- makes it easier to attract new customers (again because of the low initial cost and the possibility to have a trial period)
- let users receive updates and new features without buying a new product
- provides great user experience (SaaS applications offer simple and hassle-free experiences across all devices).
To better understand what the software as a service is, let's take a look at some popular SaaS companies and their products. We are sure you've used at least one of them.
Examples of popular SaaS products that you've definitely heard about
Even if you don't know much about the software as a service industry, it doesn't mean you've never used SaaS products before. There is no need to be an expert in SaaS to understand how tightly it is connected with people’s everyday routine. Just check these examples of well-known cloud-based software to get a better understanding of this business model.
Dropbox is a leader in cloud storage services. It allows us to store the information, share data, and in general collaborate easily.
Dropbox gained its popularity because of the ease of use and availability across different platforms and devices. Its UX is equally coherent on desktops and smartphones, Windows or IOS.
Google workspace (former G Suit) offers a range of tools to optimize the working process. It includes custom business email (Gmail), cloud storage (Drive), word processing (Docs), spreadsheets (Sheets), survey builder (Forms), and much more.
Delivering this software using the SaaS model allows few people to work with the same document simultaneously, see all changes, comment on everything, and not be afraid of forgetting to save the changes. Organizing video meetings with the use of Google Drive has made the working process easier as well. Of course, it is worth mentioning Gmail here. Its clean UI and intuitive navigation have made Gmail the main way of sharing mail in most modern companies.
Even large corporations move to SaaS. One such example is Office 365 by Microsoft. Well-known services like Word, Excel, PowerPoint, etc. without which any enterprise couldn't imagine its work ten years ago are now available on a SaaS subscription basis and can be accessed from everywhere via the Internet. You don't need to buy a license and spend time installing a number of applications on your desktop.
Shopify is an e-commerce software as a service platform that allows users to start their business online and offer tools for marketing and SEO optimization. And again this cloud-based software has gained popularity because of the clear UI and intuitive user experience.
Slack is a cloud solution for business communication. This messenger allows you to create channels on different topics, have direct private conversations, share files, and comment on them.
Slack's design is one of the main reasons it became so successful. From the onboarding process to presenting updates, everything in this app is extremely easy-to-understand. This messenger provides the best possible user experience and customers value it.
With the beginning of the COVID-19 pandemic in 2019, there is hardly any person that has never heard about Zoom. This service for video communication gives an opportunity to conduct video meetings, conferences, hold webinars, and chat only having a browser and an Internet connection.
Many people wonder, how Zoom managed to become so popular in such a short period. Previously Skype was the number one software for video communication, but because of its clunky and hard to use UX, it is no more a competitor for cloud-based Zoom with an intuitive and user-friendly design.
Read more about popular SaaS companies and their products in Best SaaS Companies and Secrets of Their Success.
All of the above companies that choose the SaaS model to deliver their software have become popular among customers as they provide the best user experience on the market and their products are known for their simplicity and ease of use. But why SaaS products manage to provide a better experience to their customers than on-premises software?
SaaS vs stand-alone desktop software
The main objective of providing service with a SaaS business model is to make the interaction with the product more efficient, user experience better and as a result the customer happier. Usually, the client is not interested if the data is stored locally or on the cloud, all they want is to receive an outstanding user experience and get their problem solved.
But why are SaaS applications better at delivering a great customer experience than standalone desktop software?
While on-premise software is installed locally (on the company's computer) the SaaS is hosted on the vendor’s server and enterprises don't have to worry about maintenance and managing everything themselves. This fact allows organizations that use SaaS to decrease spendings on software updates, support, and implementation and lets them focus more on and improving their services and UX.
Size and functionality
In the past, most software products used to be large, complex, expensive and offered a wide range of functions in one app. When software includes so many features in one product, it becomes extremely difficult to keep the design clean and clear. As the result the customer experience becomes poor.
In their turn, SaaS products are usually simpler as they solve some specific user problems (they are more focused on a particular niche). It allows them to have a better design with intuitive and user-friendly interfaces.
Unlike the on-premises software SaaS doesn't have a "final version" - the product is constantly evolving and tested, companies regularly add new features and improve the design of their apps. SaaS business model makes it possible for users not to constantly pay for new versions, download separate products, or new additions on the desktop. With cloud-based applications, customers get all the updates on the go, unlike with the stand-alone desktop software.
More than 90 percent of the overall Internet users access the web with their mobile devices at least once in a while. That's why it's natural that in our mobile-driven world an application should give real-time access to platforms and data from different devices regardless of the location.
Unlike traditional desktop-oriented software that is available on computers only, SaaS technology allows connecting from any gadget that has an internet connection. It promotes providing a coherent user experience both on desktops, smartphones, or tablets, different operating systems, and browsers.
So, because of cost-effectiveness, narrow focus, and constant development SaaS companies can pay more attention to the customer-centered design of their applications.
What waits for SaaS in the future?
Software as a service has merged into our lives and has no intention to leave the market. Companies and ordinary people use SaaS applications daily as they offer continual value and user-friendly interfaces. Its accessibility, affordability, and ease of use explain the rising popularity of SaaS. Anyone who has a computer and a browser can try it out and see the difference a SaaS has made.
SaaS is constantly developing and today it has become the most profitable business model that offers its customers an outstanding user experience.
With the development of new technologies, the SaaS will evolve as well. Some people say that mobile-optimization will be the number one priority of cloud-based software applications, others think that SaaS will focus on developing software for artificial intelligence.
No matter, what future is waiting for software as a service model, as more companies are moving to the cloud the list of unique SaaS solutions continues to rise. Businesses continue to search for specialists able to analyze and design practical and effective cloud-based software that meet both the needs of the market and their business needs.
Great design is more important than ever in SaaS success. But what makes a good SaaS product? Find out in our next blog post!