Software as a Service

1. Introduction

Software as a Service is becoming a big part of the internet community and a normal part of the average person’s life. What is Software as a Service? It is when an online software is rented or “borrowed” by a user. The access of the software is done through the web browser. The web browser is the network in which the SaaS provider reaches the SaaS recipient. Some examples of Software as a Service are: Cisco, Google Enterprise, and Netflix.

2. History of SaaS

Dumb Terminal

Software as a Service has been around for a long time. In fact, its history begins in the 1960s. The computer had just been invented not too long before. These computers were large and expensive and very few companies had computers. Software as a Service became a product of this issue. In order for the companies to share information with their employees, they used SaaS in order to transfer data. They used a mainframe or computer connected to a network of “dumb” terminals. A dumb terminal is an output monitor that accepts what the CPU sends it and does not have a CPU of its own. This was done through the internet. Software as a Service was the most efficient way for companies to stay competitive. Since they could not afford hardware and software for every computer, SaaS was what allowed the companies to stay competitive and communicate effectively without losing money. Some key products that SaaS transferred were CRM, accounting, and payroll services. The service only transferred small files, and rarely large files. This played a role in saving money while continuing to keep efficiency with the money the companies had.

In the 1980s and 1990s, the cost of computers began to decrease due to cheaper and quicker mass production. By default, companies and enterprises could now afford to put computers on every desk instead of just having one mainframe and multiple dumb terminals. As a result, SaaS too the form of Local Area Network (LAN). Unfortunately, LAN was difficult to use, as very few employees understood how it worked. This caused efficiency to decrease and costed enterprises millions of dollars.

By the early 1990s, SaaS rose to popularity again because the industry bundled what is known as “bloatware” into software. Bloatware is software that came with extra programs that were not necessary. Bloatware took up an unnecessary amount of space and would take up hard drive space and memory very easily. Thanks to this, companies virtualized their documents in an attempt to save memory space on the computers. This saved them a great deal of money from having to spend on extra hard drives.

When the internet became more mainstream (after the “Dot Com Boom”) SaaS became known Application Service Provider (ASP). Vendors provided service through subscription licensing. However, ASP failed because of failure to achieve their goals, which were: low cost, easy development, painless upgrade, and full applications delivered over the internet. However, SaaS thrived because it was able to reach these goals. SaaS takes advantage of modern technology, such as virtualization and scalability.

SaaS grew in popularity in the 2000s when Salesforce was created. It was the first SaaS that was built from the ground up and achieved growth. Salesforce made extreme use of modern technology, such as CRM, API, and app exchange. Another form of SaaS that increased its popularity and success is Concur, known as the first SaaS company. It began to provide its product and services through the internet instead of through a physical location. It increased the popularity of SaaS because it was one of the companies that gained revenue and and break even cash flow.

Today, SaaS is known as the premier platform of cloud computing. It is available in many different forms. Netflix and HBO are examples of SaaS that provide television service. Through a licensing subscription, users can watch whatever tv shows or movies are provided to them. Google Cloud is also an example of SaaS, as it provides licensing subscription through document sharing, emailing, and telecommunication through the internet.

3. SaaS vs. Other Services

SaaS is a form of cloud computing, along with Platform as a Service (PaaS), Desktop as a Service (DaaS), Infrastructure as a Service (IaaS), Managed Software as a Service (MSaaS), and Information Technology Management as a Service (ITMaaS). Cloud computing is the delivery and hosting of service through the internet. This allows people from different locations, like employees in an enterprise or people in a specific group, to access the same network and resources without losing data or having to download to the software onto an infrastructure built in house.

While cloud computing has multiple benefits, the 3 main benefits are self-service provisioning, elasticity, and pay per use. Self-service provisioning is when users can compute and retrieve resources for workloads on demand. Elasticity is when a company can scale up or down based on increase in demand or needs, eliminating the need for local infrastructure in a company. Pay per use is allows users to only pay for the software that they use.

Cloud computing can be split into private, public, and hybrid services. Private services are internal. This provides a user friendly application that continues to maintain privacy and security. Public services are provided by a third-party and customers pay for CPU cycles, storage, and bandwidth. Hybrid clouds provide the services of a public cloud with the privacy and security of a private cloud. This way, a company can work on sensitive applications and works while also still being able to scale on demand.

IaaS PaaS SaaS

Cloud computing has now divided into 3 general categories of service: Platform as a Service, Infrastructure as a Service, and Software as a Service. PaaS is meant to be used for applications in addition to adding cloud components. It provides a framework for developers to create and customize their applications. This makes testing and using an application incredibly simple for a software developer or user. It can be delivered on its own through a hybrid or through IaaS. The cloud components included in PaaS are scalability, availability, etc. These components help determine the level of user friendliness and what they can and cannot access. IaaS is a virtual server of sorts. This is helps it support applications, middleware, and runtime through a virtual cloud. It can access remote data centers and has storage capacity that can be allocated as desired. SaaS delivers software applications over the internet. Any services that are strictly provided through the internet is a part of SaaS. Examples of these are Google Documents, HBO, Microsoft 365, and more. These applications are usually provided by a third-party vendor. Since everything is delivered through the web server, enterprises can streamline their support of the software more easily. This makes it more accessible and available for the users because they have easy access to support.

4. Virtualization


Virtualization is a broad concept but is generally an “abstraction” of computer resources. This hides the physical characteristics of an application or operating system essentially by virtualizing it. It benefits SaaS because it makes the migration of data easier. In addition to that, the design of the software or operating system being transferred will still keep the flexibility of its design.

5. The Market

The public cloud market is predicted to grow by 18% to $246.8 billion in 2017. As SaaS is the largest software service in the cloud industry its market will likely to have the closest relative growth rate to the predicted cloud market. North America is the primary market for SaaS, as it is predicted that more than half of the application service usage there will be SaaS. It has also been observed that the demand for SaaS in China is growing a substantial amount as well. Market Graph

6. Manufacturers


Now that SaaS has become more versatile, its manufacturing has sharply increased. This manufacturing appears in different forms. Automated budgeting and accounting is an example of a manufacturer in the market industry. One of its manufacturers is Financialforce in California. Manufactures are also creating SaaS that include inbound marketing, accounting and finance, e-commerce, analytics, and management. The list could go on because of how versatile the SaaS market is. The number of possibilities make SaaS a huge market, thus gaining popularity amongst modern enterprises as well. It is believed that the SaaS enterprise market will be worth $50.8 billion worth of revenue and that 27.8% of the enterprise market will be built as a SaaS. The CRM enterprise application market is predicted to be worth $31.8 billion. The SaaS ERP market may be worth 23.8 billion. The SaaS operations and manufacturing application market will be worth $5.8 billion. The supply chain management applications market is predicted to reach $690.9 million by 2018. The SaaS enterprise application market is projected to be $50.8 billion by 2018. In accordance, the largest biggest enterprise market for SaaS include ADP, Intuit, Oracle, and SAP.

7. The Future of SaaS

The SaaS industry has steadily grown throughout the years. From the 1960s to today, it has gone through many ups and downs, all improving its capabilities and increasing its popularity. Today, SaaS is the most popular form of online service and cloud computing. It is predicted that SaaS is taking a turn for the better, especially in the form of file sharing, media, and big data exchange. It is predicted that SaaS will grow to be worth $75.7 billion in 2020. Future of SaaS