What is Software-as-a-Service?

what is software as a service

Estimated reading time: 5 minutes

If there is a task that your small business needs to complete, such as storing documents, sharing files, managing projects, or checking inventory, there is a pretty good chance that an app or cloud-based service can help. We are talking about the Software-as-a-Service (SaaS) technology model, which is transforming the way small businesses operate.

Have you asked yourself the question, “what is Software-as-a-Service?” If so, keep reading this Balboa Capital blog article. It provides you with a complete overview of SaaS, including how it works and how it can help benefit your company.

Software-as-a-Service, defined.

Software-as-a-Service (SaaS) is a model for providing access to applications over the Internet, usually for a monthly or annual subscription fee. Unlike a traditional onsite setup where the software is stored locally, SaaS is hosted securely in the cloud. The subscription fee covers software licenses (based on the number of seats your business needs), training, and ongoing support if indicated.

SaaS has become popular because it presents business owners with an easy way to use software and related applications without installing them on their computers. In addition, it also allows businesses to avoid the costs of installing and maintaining their server infrastructure. SaaS applications and tools exist for just about every business-related task and category, and many providers offer them in bundled packages.

Having myriad applications from one SaaS provider in a single package eliminates the need to contract with multiple providers and log into different systems every day. In addition, bundled software is designed to work together seamlessly, which increases business productivity and efficiency.

Software-as-a-Service example.

Let us use a small ice cream manufacturer as an example. The company owners felt they were spending too much money each year to maintain their hardware and software. This included hiring information technology (IT) specialists to update software and troubleshoot and correct issues such as server downtimes. In addition, the company was using over a dozen different systems for various business tasks, which required a lot of time from the company’s employees.

The owners wanted to reduce these costs while improving their business processes, boosting sales, and generating a positive return on their digital marketing investment. So, they decided to switch to a SaaS setup with a bundle that included applications for accounting, inventory, shipping, sales, email marketing, and customer relationship management (CRM). Switching from an on-premise to SaaS architecture took two weeks from start to finish. The ice cream manufacturer’s SaaS applications can be scaled up or down as needed, which reduces the need for expensive IT help.

Advantages of SaaS.

As mentioned earlier, the main advantage of Software-as-a-Service is that there are no upfront costs for hardware, installation, or training; only periodic payments for subscriptions are required for continued use of the service. Following are some more advantages of SaaS for small businesses.


SaaS can often be more cost effective than traditional software licensing. First, traditional software licensing can be restrictive because licenses are usually priced per user. This means you will need to evaluate the cost of buying it for each of your employees. With some SaaS providers, you can pay a monthly or annual fee for everyone in your business to use it. Other providers charge per seat, so keep this in mind if you have many employees. Next, you can reduce your IT expenses. For example, there is no need for onsite server maintenance, backups, or software upgrades and testing, which can be costly and time-consuming.


With SaaS, updates are automatically delivered, which means you will always have the latest version of the software. Updates are an essential part of software maintenance. You can update your Software-as-a-Service without any interruption to service. This helps your business avoid bugs and security issues while allowing you and your employees to take advantage of all the latest features and enhancements.


Scalability is one of the most powerful features of SaaS. The capacity of SaaS applications can be scaled up or down as needed. So, if your business hires more employees, acquires more customers, or experiences a dramatic increase in sales, the performance of your software and applications will not degrade. You simply pay as you go.


SaaS applications are cloud-based, which means you and your employees can work from anywhere without worrying about losing access to files or programs. The SaaS vendor provides application software to you and your employees over the Internet. The application software runs in the cloud on an infrastructure provided by the SaaS vendor; it is accessible from various devices such as computers, tablets, and smartphones. So, you and your employees can get what you need, when you need it, without having to do any installation or maintenance work.

How to choose a SaaS platform and provider.

Now that we have covered the basics of SaaS, let us discuss some things to consider before making the switch. First, determine what areas of your business need improvement and how SaaS might help. For example, maybe you have outdated hardware and software hindering productivity. Or, perhaps you want to streamline your workflow and ease the collaboration between departments. Whatever the reasons for moving your business to a SaaS setup, vendors offer solutions.

When researching the various vendors, price is undoubtedly a concern. But remember the saying, “you get what you pay for.” That does not mean that you should opt for the most expensive vendor. It just means that you should take the time to evaluate your options and pick a Software-as-a-Service vendor with robust and scalable applications that will integrate well with your business’s other software and other systems. It is worth noting that cloud software financing is a viable option if you want to preserve your capital and have a predictable monthly payment over a specific term.

Next, you want to choose a vendor that provides solid customer support after you become a customer, as you and your employees will most likely have questions or need assistance. Lastly, your mission-critical business information is stored safely in the cloud with SaaS. So, make sure the vendor will let you export the data if you want to switch to another vendor.


The SaaS model is fast becoming one of the most popular forms of cloud computing. SaaS presents small businesses with many benefits. It offers low upfront costs, ease of use, and scalability. In addition, it can help boost efficiency and productivity in just about every business department.

The opinions voiced in this material are for general information only and are not intended to provide specific advice or recommendations for any individual.