Software as a Service (SaaS) Explained
Software as a Service (SaaS) is software hosted by a provider and accessed over the internet, typically paid for on a recurring subscription basis, rather than installed locally and owned outright.
SaaS is now the dominant way most off-the-shelf business software is delivered, replacing the older model of buying and installing software outright. Understanding what SaaS actually means helps clarify how it relates to, and differs from, custom software.
The term is often used loosely to describe any cloud based tool, but its precise meaning matters when deciding whether a SaaS product, a custom system, or some combination genuinely fits a specific business need.
The core SaaS model
SaaS providers build one product and serve many customers from shared infrastructure, with customers paying an ongoing subscription rather than a one time licence fee, and the provider handling all hosting, maintenance, and updates.
What you gain with SaaS
SaaS gives fast access to a working product without needing to build anything, continuous updates without manual installation, and a cost structure that scales with usage rather than requiring large upfront investment.
What you trade away with SaaS
SaaS products are built for a broad market, so fit to your specific requirements is inherently limited, and you are dependent on the provider's roadmap, pricing decisions, and continued existence.
SaaS and custom software are not mutually exclusive
Many businesses run a genuinely useful mix, SaaS tools for generic functions, integrated with custom software for the specific, distinctive parts of the business, rather than treating the choice as all or nothing.
Practical takeaways
- SaaS means software hosted by a provider, accessed online, paid for on subscription.
- It offers speed and low upfront cost, at the expense of fit and control.
- SaaS and custom software often work well together, not as an either-or choice.
- The right mix depends on how generic versus distinctive your specific requirements are.
Common questions
Is SaaS the same as cloud software?
SaaS is a specific kind of cloud software, delivered as a ready-made product on subscription; cloud software more broadly includes custom systems hosted on cloud infrastructure as well.
Can custom software be delivered in a SaaS-like way?
Yes, a custom system can be built and hosted so it behaves like a SaaS product for your own business or clients, without being a product sold to the broader market.
What happens if a SaaS provider shuts down or changes pricing significantly?
This is one of the genuine risks of SaaS dependency, worth weighing for any function that becomes truly critical to your business, since you have limited control over the provider's decisions.
Want this applied to your business specifically?
We'll show you exactly where a custom system would help most.