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What is SaaS?
Types of SaaS
How Does a SaaS Model Work?
Benefits of SaaS
How Much Does SaaS Cost?

What is SaaS?

SaaS is an industry concept that brings modern business software into the cloud, but many ask, “What does SaaS stand for?” SaaS stands for Software as a Service, and it’s becoming an integral part of how SMBs do business. SaaS is powered by software that’s at least partly in the cloud, and that leads to a lot of convenience for companies that don’t have the IT support or the physical space for extensive server architecture in their office.

From an IT standpoint, SaaS is manageable for any size business because there doesn’t need to be an in-house IT department; the provider of the SaaS application will manage the hardware and software for you. Instead of paying a license fee for the software, which usually accounts for more than 15% of the purchase price in support and maintenance fees, SaaS applications typically require a monthly subscription, which includes upgrades and server maintenance.

SaaS applications utilize a structure that has the deeper and standard functionality of a program hosted on a remote, cloud-based server. Users require the internet to access the software, but this also means that no prerequisite hardware will bind the user from software access. As a result, desktops, smartphones, laptops, and tablets can all access the software with no software installation.

With limited exceptions, most SaaS platforms can be quickly and easily accessed via a web browser and an active internet connection. Each page provides the same functionality as using on-premise solutions, and additional functions can be added with ease within the user's admin settings.

An example of a SaaS application is a Customer Relationship Management (CRM) system that grabs data from other SaaS-enabled software. This data can be accumulated via live chat software, UCaaS solutions, and many other programs that gather data from leads that sales and marketing efforts bring in.

Types of SaaS

There’s an inherent versatility in using SaaS architecture. A solution like this is easy to adopt and scale across an organization. Maintenance is also greatly simplified thanks to the cloud-based nature of the solution, but there are multiple SaaS solutions to consider.

Which solution best applies to an organization will greatly depend on the structure of the organization. For example, a business might need SaaS if they are looking for an accounting software solution like Quickbooks by Intuit. Quickbook’s latest version is entirely housed on the cloud so that businesses can access the accounting solution from any device. On the other hand, this might not be useful for a business that specializes in app development or one that just needs cloud-based storage.

 SaaS vs PaaS vs IaaS

In addition to the standard Software as a Service solutions that make up SaaS, there are also Platform as a Service and Infrastructure as a Service solutions to consider as well. All three of the options are entirely based in the cloud, which provides numerous benefits for SMBs and enterprise clients.

SaaS - For flexibility, SaaS is a great option for the majority of organizations since it allows those organizations to have fully scalable software without licensing fees.  Licensing fees for the best software amounts to a significant expense, but with SaaS, the cost is subsumed over the course of a subscription, which is much more manageable over time.

Examples of SaaS: Business management software, software used to track time of employees, online project management solutions, or solutions used to track inventory.

PaaS - PaaS allows for application development in a virtualized environment. As a result, developers that are on-staff can share their work with their team. This type of solution also allows organizations to customize the experience of the PaaS software, which means that capabilities can be securely expanded in-house. PaaS offerings, like Microsoft Azure, are more tech and IT-oriented, but if a small business has a team that can do the development work, this is a useful platform that moves with the developer. It allows globally-disparate teams to securely work on developing the same products via the cloud.

Examples of PaaS: Web development software or cloud-based mobile development software.

IaaS - IaaS has a very straightforward structure. These cloud-based solutions encompass hosting, storage, or networking remotely managed by the provider's servers. Effectively, IaaS services offer a full-service experience for organizations that need multiple solutions in a single subscription-based structure.

With IaaS, companies pay for what they need, so it’s very scalable. If a company needs a certain level of storage and server space, they can pay for the precise amount without having to manage and purchase the servers themselves. It’s customizable and serves as an excellent self-service option when companies want to monitor hardware for their cloud-based systems. 

Examples of IaaS: Cloud storage, web hosting, and computing cloud providers.

How Does a SaaS Model Work?

With SaaS upgrades and tweaks are folded into the monthly subscription fee. The best SaaS products continuously update so that customers can keep up with market changes and stay abreast of their competitors.

When purchasing a subscription for a SaaS service like Microsoft Office 365, any organization will be signing up based on current offerings with the more features available later on. With a SaaS product such as this, programs like Word and Excel can quickly gain new functionality, which increases their value for a company down the road.

Compare this to standard static software licensing, and it becomes clear that SaaS isn’t nearly as held back by licensing fees and versioning, which can increase expense. The best SaaS providers will even add functionality based on customer feedback.

SaaS management software also is a great way to increase productivity and collaboration. For example, SaaS timekeeping software is designed to track performance and productivity among employees, which then makes coaching more effective. These tools also automate the gathering of employee information so that managers can review the key metrics and make an attempt to adjust performance.

There are even tools on the market that can manage the minute functions of payroll, such as tax-filing services, billable hours, and reporting, so that managers in human resources will have more time to address other aspects of managing employees. SaaS software can also be used by employees to apply for time off without the need to consult directly with an HR rep. 

Examples of SaaS

SaaS is versatile enough to be applicable in a variety of industries. In eCommerce, SaaS is becoming increasingly prevalent because providers enable the acceptance of various payment methods, the shipping, and manage the customer relationship management at the point of sale.

For example, when a customer makes an online purchase, a SaaS platform like Squarspace eCommerce will determine if the customer is using PayPal or another credit card for purchases. The software can also accurately determine state-based sales tax on an item.

This makes the business processes more easily maintained as compared to traditional methods, which had the software and any associated hardware that managed these aspects of commerce on-premise. 

For startups, website builders are popular SaaS solutions. These builders provide cloud-based web hosting. They also deliver easy-to-use software that can be used to completely customize the visitor experience on a company’s page. Some even provide software to create logos and images. This is a useful tool for companies that are too small to afford web developers and site maintenance.

SaaS software that manages projects and clients are also useful for businesses that operate a  virtual office. Salespeople that primarily work from portable devices like laptops and smartphones can use these solutions to keep up with appointments, track customer data, and track campaign metrics without the need for a desktop in a physical office.

Benefits of SaaS

One of the most essential benefits of SaaS is how it helps companies save on their CAPEX spends; subscription models allow fees to fall under operating expenses. With traditional software licensing, companies not only pay for the cost of the software, but licensing charges as well. In addition to this, subscription fees spent on SaaS software are also tax-exempt, which can help organizations save. 

With SaaS, the IT department can manage other technology concerns because patches and updates are performed at the provider level. Regular updates ensure  any potential security holes are shored up quickly, and new functionality can be added seamlessly. Even with a PaaS solution, development time is reduced because a software team won’t have to micromanage the platform while working. 

Why do companies use SaaS

SaaS allows businesses to automate their processes better and reduce the cost of running a business. SaaS providers are dedicated to providing excellent service, so managers don’t have to think about implementing hardware updates or purchasing on-premise server hardware. The software is configured, installed, and accessible via a web browser, so implementation across the entire organization’s computers isn’t required.

There are some excellent bookkeeping and accounting SaaS options on the market. These solutions will invoice, manage purchase orders, and cash flow via the cloud. They will even integrate with CRM tools. These make keeping up with financial management processes easier, and since they are platform-agnostic, accessing tools to pay bills and manage bank accounts and expenses can be done from computers or mobile devices.

In addition to online accounting and bookkeeping, there are also several solutions for time tracking of employees and freelancers. These SaaS solutions can alert management about how employees are spending their time, how they are performing and can align with payroll. Since this is SaaS, all of this data is accessible from provisioned hardware. Providers also make the dashboards for this SaaS user-friendly and easy to manage.

Keeping up with enterprise resources is critical, and ERP solutions are also available using cloud-based SaaS. Organizations that are undergoing digital transformation initiatives are utilizing SaaS ERP for vendor management, inventory management, identifying vendor performance, and for document management. Some ERP solutions even will interface with eCommerce platforms, which can help streamline the relationship between the platform and the inventory.

There are even SaaS-based solutions that make billing and invoicing more streamlined for organizations. Subscription billing software makes the creation of these invoices and bills nearly fully automated, and the software can help customers select the payment gateway, currency, and set up recurring payments without much need for managers to get involved in the process.

IT organizations and departments also can easily utilize SaaS in day-to-day operations. One of the most common SaaS solution for this is help desk software. This software will create a ticket for IT professionals and will start a process for correcting technical issues. SaaS software of this type can keep up with ticket status, and can be accessed via a browser for an all-in-on issue resolution system.

How Much Does SaaS Cost?

The chief benefit of implementing SaaS in modern business is how it cuts down on costs. With SaaS, there’s less need for hardware, which means that there’s a reduced need for IT professionals to manage the hardware management of servers and any associated devices. This also frees up physical space in an office since the hardware is hosted remotely so that users can use the space more productively.

SaaS reduces the need for consistent computer upgrades. With many software solutions running directly off of the internet and in a browser, computers won’t need to “keep up” to run the software efficiently. This also allows for employees to experience a more mobile style of work; there’s no need to feel chained to office-based Windows and Mac desktops when the software can be run on both Google’s Android OS and iOS.

SaaS also replaces the need for companies to continually upgrade their business software to keep abreast of service upgrades and to close security flaws. These processes are completely managed via the provider, which means a more dynamic experience compatible with all of your other tools.

On-premise servers are also integral to non-SaaS models of software and IT management, and when these go down, business operations are hampered. With SaaS, if a server goes down, there are often other servers positioned around the globe that can pick up the slack and allow business to continue unabated. This continuity via redundancy allows businesses to avoid the loss of capital that comes with outages. Thanks to this redundancy, SaaS providers claim 99.999% uptimes.

SaaS subscription costs can easily be folded into operating expenses. Most SaaS providers have flat-rate pricing but will also offer add-on features that can be used to improve the characteristics of a SaaS solution. Often, these can be a valuable enterprise resource since they add functionality for specific business processes. SaaS providers may charge anywhere from $100 to $500 per month, per user, and online payments are maid monthly or annually. 

A solution such as this can also save businesses money by cutting down processes. With the right SaaS software, expense tracking, email marketing, payment processing, purchase orders, bank reconciliation, and inventory management can all be managed by cloud computing. As a result, there’s less of a need for specialists to cover these aspects of business. A single employee can manage multiple processes without the need to be in-office and with a high ease of use.