Wondering exactly what Software-as-a-Service is and whether it is appropriate for your business or organization? Because it differs from the software model that we’ve become accustomed to since the 1980s when affordable computing power could sit on your desk, it could be that transitioning to software in the cloud may be worrisome to business people.

First of all, let’s address what SaaS isn’t. SaaS and the cloud are not synonymous, although the two are often morphed together. Cloud computing is a “space” for virtual computers/servers, data storage, email and messaging tools, and networks. If you no longer store your photos, word documents, and other personal items on your laptop’s hard drive, but instead store them with some vendor via the Internet, you are using the cloud. Do you use yahoo mail or gmail? All of your emails are stored not on your PC, but in the cloud. The data centers owned and operated by Yahoo and Google, for example, handle your storage. The software that you use is not yours, but is Yahoo’s email system. This is the cloud.

We could probably trace the basic concept of “the cloud” to the mainframes of the 1960’s and 1970s. In the days before low-cost desktop PCs, computing power was enormously expensive and required considerable real-estate. “An IBM computer often cost as much as $9 million and required an air-conditioned quarter-acre of space and a staff of 60 people to keep it fully loaded with instructions. * “In 1980, hard drive space cost almost $200,000 for a gigabyte.” **. Because of the immense capital expense, large organizations rented time on these computers, as a service then known as time-sharing. [ Note: You can buy a terabyte external hard drive for less than $50.00 US$ today at box store or online.]

SaaS, while not cloud computing, is a close relative in that it involves “renting” the use of software from a vendor. Salesforce was a pioneer in this model and their success certainly legitimized this business model. SaaS is fundamentally a subscription service that involves software that runs “off premise” on the software vendor’s servers in their data center(s). You do not own the software–you pay a fee for the right to use it and access it via a web browser using a broadband connection.

In summary, don’t be confused. SaaS operates in the cloud. The cloud is just the platform that makes the concept of renting software a workable model. The key thing that matters to a user is not where it operates, but that users can utilize the software from wherever they like. They subscribe to the use of the software instead of having to buy and support it on their own hardware. It is a model that creates great flexibility for the user, and has become the dominant model for software use.

One way to look at SaaS is that you are a renter, not an owner. SaaS is like renting an apartment. You get all the advantages of a place to live, but none of the maintenance costs, tax payments, upkeep, and all the other nuisances of owning property. Those responsibilities are handled by the property owner and the resultant costs are shared by all and folded into the monthly rent that everyone pays.

* IBM Archives, quoted in https://www.process.st/history-of-saas/
** https://www.process.st/history-of-saas/