06/29/2022
SaaS, what does it mean?
Developing software-as-a-service solutions is more than just a trend in the IT market. In 2003, Marc Benioff, co-founder and co-CEO of Salesforce, stated that the advancement and development of the internet would bring a radical shift to the traditional business model of the software industry. That same year—almost two decades ago—the San Francisco, California-based cloud computing company posted over US$52 million in revenue.
Since then, technology has evolved into both a tool for the growth of entire organizations and a service. And the best part: to enjoy this wide range of benefits, all you need is an internet connection.
But what is SaaS? SaaS systems represent the evolution of software as organizations realize that their leaders and employees can carry out their activities more efficiently, expanding the use of solutions hosted in virtual environments. SaaS can be accessed from anywhere, so if a company needs its leaders to operate in different geographic areas, entering and managing data in the system becomes faster and more secure.
With the advance of this cloud computing technology, there is no longer a need to install heavy programs on portable devices that quickly become obsolete. This makes corporate work more productive, as it speeds up business while also providing freedom of action (for example, in purchasing and sales activities) and greater mobility for executives and their teams.
This is one of SaaS’s main advantages: it optimizes business assets, whether strategic, productive, or operational. Through SaaS, organizations are moving away from dependency on shelfware licenses—software purchased but never used.
The SaaS product development and distribution model allows for more open and transparent customization of solutions with clients. The idea of a “closed system” without the ability to adapt to specific client needs is a thing of the past. Furthermore, SaaS solutions go through strict optimization processes to ensure the best possible performance with the available technology.
All of this is aimed at creating applications that are extremely efficient and widely accessible for use. In other words, with cloud-based SaaS, companies can implement their business models using technology that is simple to operate.
“Software as a Service (SaaS) solutions are available for a wide range of markets and segments. Financial and retail sectors have already benefited from and recognize the advantages of SaaS. Before long, all other sectors will advance in incorporating this service into their business strategies and operations, including agribusiness,” says Marcio Flôres, Head of Corporate Venture Capital at INSI (INSI Ventures).
For these and other reasons, Software as a Service is among the most advanced technologies developed for the cloud.
How SaaS works
To understand the concept of SaaS, you must first understand the broader concept behind cloud computing. For many people, the idea of their information “floating” in clouds of data still feels abstract or hard to grasp. However, executives and leaders in digital business understand well what SaaS offers as a corporate solution for the future.
The cloud can be defined as a set of servers and data storage units physically hosted in data centers. The information in these virtual environments is made accessible to users—whether individuals or companies—through internet service providers.
One of the most important characteristics of cloud computing is its vast capacity for data storage and processing. When accessing a cloud service provider to use solutions such as Microsoft SaaS Services, processes are initiated that provision a specific number of virtual machines (VMs) and the number of terabytes of storage contracted.
Another relevant feature of the cloud is rapid scalability. For example, a streaming company using SaaS could allocate additional resources to handle a high demand for its services on a specific weekend. For SaaS companies, scalability is a major advancement in the software business model because the services provided can be customized to the immediate needs of corporate clients.
A complementary aspect of SaaS scalability relates to testing and prototyping. By testing multiple environments in the cloud before a major software release and deactivating them at the end of the QA (Quality Assurance) cycle, a company can reduce testing costs and improve the quality of the software developed. Moreover, this agility—creating multiple test environments—allows DevOps teams to accelerate many implementations.
In terms of acquisition costs, SaaS technology translates into reduced spending, as companies significantly lower the amount invested in setting up an initial operational infrastructure.
SaaS – Software as a Service: examples of technology use
A well-known example of SaaS applied in the corporate world is Facebook’s acquisition of Instagram in 2012 for US$1 billion. At the time, Instagram had a team of 13 employees and approximately 100 operational servers hosted on AWS. The startup spent a small monthly amount to maintain a limited number of technological devices. By using cloud solutions, Instagram significantly reduced costs associated with purchasing physical servers for data storage.
Moreover, cloud computing and the application of SaaS solutions allowed Instagram to consolidate more than 30 million users on a single digital platform, which remains today one of the largest online communities in the world and continues to have exponential growth potential for marketplace business.
Cloud model for SaaS
In 2011, the U.S. National Institute of Standards and Technology (NIST) stated that “cloud computing is a model for enabling ubiquitous, convenient, on-demand network access to a shared pool of configurable computing resources… that can be rapidly provisioned and released with minimal management effort or service provider interaction.”
The cloud offers three service models: IaaS, PaaS, and SaaS, and they all share the five main characteristics of cloud computing, regardless of acquisition costs:
-
On-demand self-service: most cloud services provide administrative dashboards where the end user can add or remove tasks without technical support intervention.
-
Broad network access, usually via the internet, but also with dedicated fiber links (“direct connection”).
-
Resource pooling through virtualization and partitioning techniques.
-
Rapid elasticity: the addition or removal of computing resources can be done dynamically or within seconds.
-
Measured service, with pay-as-you-go pricing models.
In simplified terms:
-
Software as a Service (SaaS) is an application designed for end users to perform specific tasks, delivered via the web.
-
Platform as a Service (PaaS) is a set of tools and services designed to make SaaS application coding and deployment faster and more efficient.
-
Infrastructure as a Service (IaaS) is the underlying hardware and software for computing and storage—servers, SANs, networks, operating systems, etc.
It’s worth noting that IaaS, PaaS, and SaaS have different levels of abstraction and vary in what can be controlled or managed via systems. These models fall under the “as a Service” category, offering customized, usable services to each client—whether they are an application user, a software developer, or an IT systems administrator.
Expanding digital presence
Another definition of SaaS is that it is a “capability” offered to the customer to use a technology provider’s applications that run on a cloud infrastructure. The applications remain accessible from multiple user devices through a predetermined interface, such as a web browser (or, for example, a web-based email client), as well as through a program or software interface.
In SaaS, we find the following characteristics, which also apply to the cloud:
-
Network-based access.
-
Resource pooling, with little end-user control over the infrastructure.
-
On-demand and self-service model.
SaaS is particularly suitable when the “standard” version of an application meets the needs of organizations acting as “tenants.” It is also a good implementation choice when there are extensive mobility requirements or many interactions with third-party partners in development processes.
In such cases, by deploying SaaS, an organization can avoid building and maintaining complex content distribution networks. In other words, this action tends to leverage the SaaS provider’s network.
SaaS in Brazil is expanding and is already considered a key technology for transforming the local business environment.
Software as a Service: models for reducing operational costs
Using cloud services leads companies to rethink their costs by introducing resource allocation policies based on the application and demand for cloud technology. Scalability and high modularity are the main factors that help when choosing between a variety of SaaS pricing and subscription models.
SaaS is both a solution and a business model, defined according to the previously established software architecture and always aligned with the core characteristics of a business strategy. Another description defines SaaS as a configurable, scalable, and virtual application capable of reducing costs through a multi-tenancy model.
In this sense, SaaS billing logic differs from that of the traditional software industry. SaaS is closer to the idea of a subscription, with payment based on usage or the benefits received. The growing diversity of SaaS models directly impacts the development of the required product (including its architecture and design). While traditional software pricing is often determined at the final stage of creation, SaaS pricing must be considered at the start of the project.
For example, consider a usage-based SaaS pricing model funded by advertisements on a major search engine. In this case, integrating ads into the software’s front end must be planned early enough to allow for monetization. Other common examples include embedding software usage metrics, which can directly influence investment amounts depending on the solution’s architecture.
As an immediate benefit, organizations gain greater transparency regarding their technology investments.
SaaS: a tool for digital maturity
For IT specialists, achieving SaaS maturity as a corporate solution can happen gradually. To reach the ideal SaaS software prototype, you depend on the level of features in the designed architecture (and its development), as well as the structure and business aspects addressed simultaneously.
SaaS solutions with mature architecture are those that are scalable, customizable, and multi-tenant. Different components may be at different maturity levels, allowing for increased scope and complexity over time.
To help companies in Brazil implement SaaS and achieve full digital transformation, INSI has teams of multidisciplinary professionals with deep expertise.
“At INSI, we use technology to ensure companies execute their business strategies knowing that all their processes and operations are integrated. For example, our implemented solutions allow companies to integrate their legacy systems (part of their core business) with the most innovative cloud-based technologies,” says Eliane Serrano, Head of Management Platforms at INSI.
Contact our team of specialists! We create SaaS solutions together for your growth!