When it comes to cloud servers and the different types of cloud deployment, it can be tough to know which is which, how they work and which is right for your business. You may have come across a term called Software as a Service, or “SaaS”, a common cloud computing software choice that’s used by many businesses across the globe.

But what is SaaS, and how does it work? In today’s guide, we’ll cover just that, plus how SaaS differs from PaaS and IaaS, private SaaS, and all the pros and cons of a SaaS solution to consider before subscribing to one. Still with us on the acronyms?

What is SaaS?

Software as a Service (SaaS) is a cloud-based licencing software in which the cloud providers develop and maintain an application, and provide it to customers on a subscription of “pay-as-you-go” model. Public cloud providers manage all hardware and traditional software, including middleware, application software, and security. This means customers don’t have to worry about coding their own software or creating an infrastructure to do so, as this is already done by the provider.

What is the history of SaaS?

In the 1960s, computers were either unknown or inaccessible to smaller businesses due to their high cost to purchase. This led to a technology known as a “hosted service” or “time-sharing” (now known as SaaS) - which consisted of several “dumb” terminals connected to a PC. This allowed users to perform the most basic of tasks, all while keeping data on the mainframe.

As computer costs began to drop in the 1980s, many companies developed their own time-sharing versions known as local area networks (LANs). However, the business themselves (not the technology provider) were responsible for provisioning and managing the hardware and network. As you can imagine, this was very time-consuming.

Eventually in the 1990s, service-oriented companies developed Application Service Providers (ASP) in CRM (customer relationship management) and several accounting functions. Back then, they relied on modems and phone lines to transmit data but ultimately allowed for a simple text-based interface for regular (and more timely) data transfer.

Finally, we get to what we know as SaaS today. SaaS is an evolution of the ASP model, where suppliers manage their own software, and the software is instantly distributed over the Internet via the cloud, meaning no installation is required. As you can see, SaaS has evolved quite significantly into applications that manage entire business processes, chatbots, AI assistants, instant messaging and much more.

How does SaaS work?

A SaaS works by providing user-specific services on a cloud-based platform without needing to provision your own infrastructure. This in turn eliminates the need for staff to do so, as well as reducing costs. It goes without saying that since SaaS is cloud-based, it requires a good internet connection speed, and decent network hardware to sustain a connection.

The SaaS platform of a client’s choosing can be subscribed to on a monthly or pay-as-you-go basis as mentioned previously. You may have come across some of these platforms already, such as Outlook, Gmail, Google Docs and the like.

Despite being predominantly a public cloud-based subscription model, clients may choose a private route to house a SaaS within their own data centre. This allows for greater flexibility and control, particularly if a business has its own dev team to maintain it. If customers go for the former approach, then it’s worth knowing that SaaS applications use a multi-tenant architecture to segregate customer data. Plus, the following is managed by the SaaS provider:

  • Hardware components (network, storage and data centre servers)
  • Platforms (virtualisation, operating systems, and middleware)
  • Software requirements (runtime, data, and the app itself)
  • Software upgrades
  • Bug fixes
  • General cloud maintenance

Finally, a SaaS cloud platform may also have multiple integration functions which allow you to connect to other clouds or software via an API. This ultimately helps the smooth running of your business, but care must be taken to ensure your chosen SaaS platforms allow for these integrations without having to fully change other functions within the business.

The SaaS model in a nutshell

We mentioned previously that SaaS runs on a subscription basis. Essentially, it ties each account you sign up with to its own subscription, which allows access to the SaaS over a period of time. This can be contractual for a set period of time, or on a rolling basis.

The fee will be agreed upon by both parties, and the provider will send a service level agreement (SLA), which outlines the terms and conditions. It’s possible that depending on the SaaS you sign up for, you may have to pay additional fees for add-ons, extra management or usage, or additional customisations (such as custom code) beyond your contractual terms, so bear this in mind before going ahead with a SaaS platform.

SaaS, IaaS, and PaaS – what’s the difference?

What differentiates a SaaS from other cloud-based models like IaaS and PaaS? In its most basic form, IaaS provides access to resources such as virtual machines and virtual storage within a cloud environment to build custom infrastructure, PaaS provides an environment for application development and deployment, and SaaS provides software as a service to end users. Let's dive into the first two cloud models below in further detail to define the differences between them and SaaS.


An IaaS, (Infrastructure as a Service), is a cloud computing solution that provides users with CPU, storage and networking on demand to manage their own infrastructure. It can also be thought of as the foundation for a PaaS and then a SaaS further down the line. It’s typically favoured by businesses who want to provision their own infrastructure to then build other solutions, as it allows for far greater flexibility and control without needing to invest in their own hardware.


Platform as a Service (PaaS) is a type of cloud computing used for the development and deployment of cloud-based applications. Like SaaS, it has all the infrastructure included (and managed) by your cloud provider. However, PaaS is differentiated from SaaS in the sense that it’s an environment in which you develop apps and software, whereas SaaS is the software.

SaaS vs Private Cloud

A private cloud and SaaS are entirely different things. A private cloud is a form of cloud computing where you can gain access to a variety of services and resources such as servers, storage, networks and more. Unlike SaaS, these are typically hosted internally within a business, in a data centre somewhere else in the world, but there are some cases where they can be hosted by a third-party hosting provider. In fact, there are cases where a private SaaS can be hosted internally too.

Private SaaS

So does a private SaaS exist? Yes! Private SaaS lets users run their app within their own network, while still managing it and securing it from their side. Let’s dive into a little more detail.

Private SaaS providers give each customer their own private cloud. Unlike a public SaaS, the software runs on dedicated infrastructure, meaning nothing is shared with other customers, and it allows you to modify code to suit your business needs. It can be thought of as bridging the gap between a typical SaaS solution and something more bespoke, without having to invest in an IaaS or PaaS separately.

Advantages of SaaS

There are many advantages to having a SaaS solution for your business. Here are the benefits of a typical SaaS solution that may sway your decision to subscribe to one.

1. Accessibility

SaaS allows you to access its software from anywhere in the world, provided you have an internet connection. It’s thanks to SaaS that many are able to work remotely wherever they are, which has facilitated high productivity levels, better connections with employees, reduced need for office space and much more.

2. Cost-saving

SaaS are typically cheap to start with and get up and running. While you can invest in add-ons later down the line to tailor your solution somewhat, if you’re just starting out, then a SaaS can be a cost-effective solution for your daily operations. Plus, the costs are usually predictable, as the monthly cost will usually be fixed, though this depends on the provider you go with.

3. Ease of use

Relating back to our accessibility point, a SaaS is very easy for most, if not all users to pick up and use quite quickly. This can reduce the time needed to train new staff, as most SaaS providers will come with a dedicated account manager to help new clients on board. This also means you can get up and running within a matter of hours, as opposed to having a PaaS cloud which would need development time in order to build a solution for your business.

4. Scalability

You can scale up your SaaS by speaking with your provider. It may be that your business is growing and you need more resources, or a particular add-on to be able to perform functions more efficiently.

5. Try before you buy

SaaS products have best practices and examples already built in, making them easy to use, but you may want to try the platform first before signing up. Users can run proofs of concept and pre-test software features or new release features. You could even be opted in for beta testing, giving you the opportunity to see the potential for a new piece of tech coded into the SaaS to see if it’s worth investing in once it’s rolled out.

Disadvantages of SaaS

Like any cloud solution, a SaaS may have some disadvantages you need to consider before investing, even if you opt for a private SaaS. Here are a few to consider.

1. Security concerns

Public cloud services come with a host of security concerns that raise eyebrows, and SaaS is no exception. Misconfiguration from the supplier’s end can open you up to vulnerabilities, not to mention you have no control over which data centre your data is stored in. Plus, in the event the provider is attacked by a hacker, disaster recovery can take place, which can cause downtime. This brings us to our next point.

2. Downtime

As SaaS is typically run over the internet, you can experience downtime if you have no connection or the cloud provider is having issues on their end. This can negatively impact your business, particularly if you rely on the SaaS model for daily business operations.

3. Could be expensive

Typically, a SaaS specialises in a particular function, such as CRM, messaging, accounting and the like. This might mean you’ll have to invest in multiple SaaS platforms to meet every need of your business. If, however, you invested in a private or hybrid cloud solution, you could mitigate some costs by having a tailored approach with just a few outgoings to keep these cloud solutions running.

4. Performance issues

If you aren’t hosting your services on a local network, then you have no control over the speed of your SaaS. This is especially true if you don’t do your research on the SaaS’s uptime, or pick one with a data centre that’s far away from your business operations.

5. Software integration issues

Some software just isn’t compatible with a SaaS provider. This doesn’t necessarily mean in function, but it could mean increased latency too, meaning a slow-performing system as a result. Plus, if you have a mix of functions, clouds and other software, it can be difficult to manage all of them all efficiently, and it could mean more money down the drain too.

Can I customise SaaS software?

In short, yes. This is done through API integrations that allow you to run specific software, manage databases and much more. These are typically provided by the SaaS provider, so you’ll need to check it can integrate with your other systems in-house. Your SaaS provider will usually be able to provide resources and assistance with integrating APIs, but there may be some cases where you’ll need a deeper understanding of how to do this yourself. The latter presents its own challenges, particularly in the face of security if the API isn’t integrated properly.

What is considered a SaaS product?

If the software is hosted and provided by a vendor for users to subscribe to, then this classes as a SaaS product. Plus, SaaS products needn’t be downloaded, but can instead be used online through a web browser. However, there are some cases where users may prefer to have a dedicated platform to run their SaaS, so some providers will have an app download option to use separately from their browsers. These are typically in the form of messaging apps like Slack and Microsoft Teams, though many other functions are adopting this too.

We hope this has answered everything you need to know about SaaS cloud systems. If you’re considering a cloud server, contact us about our cloud hosting solutions which come with full root access, a pay-as-you-use model and scalability so you only pay for what you use.