Tech Tidbits: What is Software-as-a-Service (SaaS)?

Software as a Service (SaaS) offers cloud-based solutions that eliminate the need for costly hardware setups and complex maintenance needs. It has received widespread adoption without showing any signs of stopping. It has become the driving force for many digital transformation projects in recent years, and for good reason.

This guide will explain in detail how this modern solution works and benefits businesses regardless of size without the technical jargon.

Software as a Service (SaaS) has recently witnessed widespread adoption. Without showing signs of stopping, SaaS has become the driving force for many digital transformation projects, and for good reason.

This guide will explain in detail how this modern solution works and benefits businesses regardless of size without the technical jargon.

Read more: Fundamentals of Cloud | Public v Private, SaaS v Hosted, Multitenancy

Contents

• What is software-as-a-service?
• Why SaaS?
• How does SaaS work?
• How does SaaS manage security and risks?
• Real-world examples of how SaaS benefits businesses

What is software-as-a-service? 

Software as a Service (SaaS) is a software distribution model. It allows users to instantly access their software of choice, essential tools, applications, etc., anywhere, anytime, via any device (i.e., laptops, smartphones, and tablets) as long as they are connected to the internet. 

Signing into your email, checking incoming messages, drafting responses, deleting junk, etc. is a simple example of a SaaS application. What you do not see behind the scenes is your email (SaaS) provider managing all technical aspects (maintaining and updating the email platform), so you have one less thing to worry about. 

Read more: Cloud-Washed vs. Cloud-Native: What Are They & How to Spot Them? 

The evolution of business software 

Business software has shifted dramatically from complex, costly on-premise systems to agile, cloud-based solutions. Traditional software demanded hefty hardware investments and constant maintenance. Cloud solutions eliminate these burdens. 

Today's SaaS ecosystem takes up a significant market presence, with venture capital investments reaching USD 274 billion in 2024¹. Experts project the SaaS market to reach $1,228.87 billion by 2032, with a compound annual growth rate (CAGR) of 18.4% from 2024 to 2032².

The vertical SaaS solution market is particularly promising. It is expected to reach USD 157.4 billion by 2025, with a CAGR of 23.9%3. The definite plus of leveraging SaaS is the ability to take advantage of the latest technology, namely AI and machine learning. These two techs are becoming key components of SaaS offerings, with 87% of SaaS companies enjoying better growth thanks to AI driving personalisation initiatives³.

This signifies that the cloud is here to stay. 

Read more: 5 Signs that Say It’s Time For Digital Transformation

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Types of SaaS applications 

Essentially, SaaS applications fall into two categories: 

• Core business tools: 
  • Customer Relationship Management (CRM) 
  • Enterprise Resource Planning (ERP) 
  • Financial Management Systems 
  • Project Management Solutions 
  • etc. 

• Business support systems: 
  • HR Management Platforms 
  • Team Communication Tools 
  • Content Management Systems 
  • Payment Solutions 
  • etc.

Horizontal SaaS applications (e.g., email marketing platforms) are more versatile. They cater to a wider range of customers across various industries. Vertical SaaS, on the other hand, targets specific sectors with specialised tools, such as hospitality management systems or retail analytics platforms. 

Read more: Hotels in a Cloud-first, Mobile-first World

SaaS is more popular than you might think. Approximately 99% of firms and 78% of small businesses use at least one SaaS solution to streamline daily tasks4, enable data-smart decisions, or adapt quickly to changing business needs.

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Why SaaS? 

SaaS software has become increasingly popular due to the following compelling reasons: 

• Eliminate the need for hardware investment, thus lowering upfront costs

• The subscription-based pricing model brings more predictable operating expenses and manageable budgets

• SaaS providers handle maintenance, updates, and infrastructure management, while organisations can leverage the latest technologies when needed

• Users can access SaaS applications from anywhere via any device and browser

• The model is typically easier and faster to deploy compared to the on-premise solutions

• Businesses can easily scale up or down upon demands and only pay for what they use

• Many SaaS software provide workflows for automation, thus further streamlining business processes and productivity

• SaaS often provides a centralised database, allowing users to access a single version of the truth and improve collaboration

Read more: Infor SaaS: The Trusted Cloud Infrastructure for Your Business Solutions

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How does SaaS work?

Key components that make SaaS work:

• Cloud computing: Provides the infrastructure and platform for hosting and delivering SaaS applications.

• Internet connectivity: Enables users to access the software from any location.

• Web browsers and mobile apps: Provide the interface for users to interact with the software.

• Data security and privacy: Ensures sensitive information stays confidential at all times.

• Subscription model: This aligns well with the nature of cloud computing—flexible, scalable, and cost-effective. Popular subscription models include:
  • Tiered pricing: Feature-based packages match business growth stages
  • Per-user model: Simple user-based billing for better cost control
  • Usage-based: Pay for actual consumption, optimising resource spend
  • Freemium: Risk-free entry with premium options for changing needs

For SaaS providers

SaaS providers invest heavily in robust, scalable infrastructure, including servers, storage, networking, and security, to ensure consistent, reliable software availability and performance.

They typically host applications and data on their own servers and databases or utilise readily available third-party cloud service providers, such as AWS, Infor, VNG, etc. Leveraging third parties does come with a great benefit: it allows SaaS providers access to the latest tech and innovations faster. These third-party vendors also already have in place vigorous security practices, which can add extra value to software providers and their customers.

Instead of deploying different software versions for different operating systems, SaaS providers develop and maintain just one version. Any updates and new features are distributed centrally to the cloud environment, making them instantly available to all users without the need for downloading and installing on each client’s workstation.

SaaS providers offer ongoing customer support and training, typically over the internet via dedicated resource hubs, support helpdesks, etc., to ensure users at all levels can effectively utilise the software in their daily operations. 

A unique feature of SaaS is its subscription pricing model—clients pay a fixed recurring fee every month, quarter, or year instead of one-time license fees. The subscription-based pricing models enable SaaS providers to generate a more stable revenue stream as well as achieve economies of scale by serving multiple customers on shared infrastructure.

For end-users

To picture how SaaS works for end-users, imagine renting an apartment in a large building complex:

• The building owner (SaaS provider) is responsible for the maintenance, updates, and upgrades of the building (servers and infrastructure).

• You, the tenants, pay rent (subscription fee) on a fixed date while enjoying all available amenities (features, services, integrations, etc.) and do not have to worry about fixing the elevator or leaky water pipes.

Read more: 5 Not-To-Overlook Factors When Choosing Saas Accounting Software Providers

How does SaaS manage security and risks?

Contrary to a common misconception, data is safely secure in the cloud.

A joint study from Stanford University Professor Jeff Hancock and security firm Tessian reveals a sobering truth: 88% of data breaches stem from human error5. An earlier study by IBM reveals an even more startling figure—95 per cent. Human action can potentially destroy systems and the business' reputation.

SaaS providers invest heavily in maintaining their valuable assets, which are the cloud infrastructure, applications, and data so that their customers can rest assured and rest well at night.

Read more: A Simple Guide to Cloud Security: Best Practices, Challenges & More

A robust mechanism requires not one single security protocol but a multi-layered approach. Essentially, this involves strict security measures and practices to be implemented at various levels:

1. Data:

• Data is encrypted both in transit and at rest to prevent unauthorised access.

• Data is frequently backed up in case of data loss or system failures.

• Install physical security at the data centre, including access control, surveillance, and environmental controls to safeguard servers and infrastructure.

1. Application:

• Developers follow secure coding practices to prevent vulnerabilities in the application code.

• Conduct regular testing, such as penetration testing and vulnerability scanning, to spot potential flaws.

• Utilise strong authentication mechanisms (e.g., multi-factor authentication) to verify user identities and monitor access.

Read more: What You Need to Know about Data Fabric and Do You Need One?

1. Infrastructure:

• Develop firewalls and alert systems to safeguard the network and servers from unauthorised access and malicious attacks.

• Conduct regular audits to ensure security effectiveness and identify potential loopholes.

1. Compliance and certifications:

• SaaS providers must comply with the latest standards and regulations, e.g., ISO 27001, SOC 2, or GDPR.

• Must inform users how their data is collected, used, and secured through detailed privacy policies.

1. Risk management:

• Conduct regular risk assessments.

• Develop detailed incident response plans to handle security incidents and minimise their impact.

• Develop a business continuity plan to ensure the undisrupted operations of the client's business.

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Real-world examples of how SaaS benefits businesses

Streamlined financial management processes with Infor SunSystems Cloud

Infor SunSystems Cloud has gained a strong reputation for being the solution of choice for businesses in various sectors, such as hospitality, financial services, oil and gas, education, non-profit, and more.

Benefits

Infor SunSystems Cloud is known for its unified, flexible chart of accounts. What benefits this brings is providing users enhanced visibility into their finances, eliminating the need for reconciliation.

Moreover, SunSystems Cloud’s powerful reporting tools allow users to build reports that suit their specific organisation and industry needs or utilise the pre-built ones to save time.

The solution also boasts multi-currency and multi-language capabilities, supporting more than 5 reporting currencies per transaction and 30 languages.

Case in point: Infor SunSystems Cloud for Hospitality

As the hospitality sector rebounds post-pandemic, Accor IMEA is moving its accounting systems to the cloud with SunSystems Cloud. This transition is crucial for Accor to enhance operational resilience, standardise IT infrastructure, and boost efficiency, oversight, and cybersecurity across all properties globally.

Moreover, shifting away from on-premises to SaaS also showcases its economic value; Accor can now switch from a CAPEX-heavy model to a more efficient OPEX model.

Case in point: Infor SunSystems Cloud for F&B

Autogrill VFS F&B, a leading food and beverage provider in Vietnam, faced challenges with its legacy accounting system, which hindered their finance team's ability to integrate and streamline processes. 

To address these limitations and future-proof their operations, Autogrill VFS F&B made the strategic decision to upgrade to Infor SunSystems Cloud to upkeep productivity and ensure long-term sustainable growth.

Centralised Sales, Marketing, and Customer Service activities with HubSpot

HubSpot is a customer relationship management (CRM) platform accessible through any common web browser. The platform provides a variety of tools for marketing, sales, and customer service purposes, helping businesses attract, convert, close, and grow better.

Benefits

HubSpot is an all-in-one platform, providing users with practically everything they need, from drafting emails to building landing pages and publishing blog articles or social media posts through an intuitive, user-friendly interface.

The platform embraces the Inbound Marketing methodologies, which emphasise attracting customers through engaging, valuable, and tailored content. HubSpot continuously introduces new features to accommodate clients’ needs. The platform can also easily scale and integrate with third-party vendors upon demand.

Case in point: HubSpot for Adventure Travel

Exodus is part of Travelopia, the world’s leading collection of experiential travel brands, which specialises in adventure travelling and welcomes thousands of travellers every year. 

Exodus faced a detrimental issue: the manual lead nurturing process. The team used to rely on emails, spreadsheets, and documents to manage the entire customer cycle. Without a modern CRM solution, they had to manually export a CSV file from the booking system, clean, and segment the data before drafting email offers.

Today, prospects can search the Exodus website, subscribe to newsletters, call their Sales team, chat online, etc. within a few clicks of a button, and all information is securely stored in a centralised cloud database.

Targeted email campaigns can be created and sent within 5 minutes instead of 4 hours previously. This has saved the Exodus team tremendous time and effort while allowing them to gain a better view of their customers.

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Conclusion 

While traditional software once ruled business operations, the gear has shifted in favour of cloud-based solutions, specifically SaaS. Security remains one of the top priorities of both businesses and SaaS providers. Data protection measures, compliance frameworks, and disaster recovery plans will continue to be strengthened to ensure business continuity.

Before adopting and migrating to one, businesses need a well-drafted strategic plan detailing their specific needs, security requirements, and growth goals. This ensures the implementation goes smoothly and organisations get the most from the new SaaS solutions.

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As a leader in software implementation who has a library of cloud business management solutions under its wings, TRG International can assist you on your cloud journey. Don’t know where to start? Check out our whitepaper on cloud migration below and learn more!