What is a SaaS (Software as a Service) Company?

Let’s get deeper into what does SaaS company means. A SAAS (software as a service) company is an online business that gives us the opportunity to use the software online without downloading it to our computer. If you have the internet, then you can use any SAAS tool.

Software as a service companies are responsible for taking care of all the backend operations, including servers, databases, and software, ensuring that the applications are accessible to the users from any device.
Generally, a software-as-a-service company is offered to its users on a subscription basis, which is usually monthly or annually. People will continue to pay a subscription fee if they find the company’s solution useful. However, the price may be different depending on the features, usage, or number of users. This model continues to gain popularity, offering scalability and continuous customer engagement from its users.

A SaaS company offers a wide range of benefits to its users. The benefits of SaaS companies are as follows:

➡️Cost-effectiveness

One of the biggest benefits of software as a service over traditional software is its cost-effectiveness. It is not a eureka, companies always opt for cost-effective solutions for their businesses. This is especially the case for startups and mid-sized companies that are still in the process of enhancing their operations in the industry. Since a software-as-a-service company that has a subscription-based model, which is usually monthly or annual, many companies consider it a viable option. 

➡️Enhanced customer retention

Clearly, customers prefer services that are simple to use. Being able to use software without installing it is efficient, as it lets them access the program without having to log in each time. This creates a smooth, trouble-free experience, which in turn helps keep customers coming back. 

➡️Client Conversion

Due to its subscription-based model, web-based software companies can help businesses have better conversion rates. Many companies offer freemium services as a marketing strategy. For example, Grammarly offers free services to its users. However, it also has a Premium plan with a 7-day trial period, allowing its users to identify the differences between the free and premium plans, which ultimately leads to better conversion rates. 

➡️Scalability

SaaS companies offer scalability to their users. In such scenarios, when users want to increase the number of users, they can easily do so without purchasing hardware by simply expanding capacity with cloud technology. 

While software as a service offers a lot of benefits to its users, it comes with its own drawbacks. Below, we will explore the potential risks of cloud-based software companies.

‼️Reliance on third-party providers

In many cases, SaaS companies rely on external hosting providers. While collaborating with a third-party provider is useful, it comes with its inherent risks.

‼️Pricing

SaaS can be a cost-effective solution for large enterprises. However, it can be risky for startups since they may need to invest a lot during the very first stages of their operation.

‼️Customer retention

Gaining customers takes time, especially for startups. However, keeping customers interested and satisfied can be a lot more challenging. This is especially the case if the company has an aggressive marketing team pushing too hard to upsell users.

‼️Artificial intelligence (AI)

Microsoft CEO Satya Nadella stated that AI agents will disrupt and potentially collapse traditional SaaS business models. While it’s certainly a topic of debate, one thing is clear: AI should serve as a powerful ally to businesses. Traditional SaaS companies have a tremendous opportunity to scale by leveraging the many possibilities AI now offers.

You can see the Full interview of Satya Nadella below

In the last few decades, the number of SaaS companies has dramatically increased, making it hard for customers to choose the one that works best for them. To help you simplify this process, we will cover the best practices for choosing a cloud-based software company. 

• Define your business needs: Before looking for a specific web-based software company, try to understand what your goals are for your business and what issues you want to solve with a web-based software company. This will help you understand which particular company will fit you best. 
• Evaluate security and compliance: Try to identify if the given company has a strong focus on data vulnerabilities. Try to understand if they have a strong defense system and your data is in safe hands. 
• Assess its reliability: Research software as a service companies to identify which one is the most reliable option for your business. Look for the reviews from other users to understand the quality of their services. Try to understand if they have backup plans in case there are downtimes. 
• Examine their pricing: Try to understand their prices and see if there are any hidden fees, such as set-up or onboarding fees. This will surely help you make a better and more informed decision. 
• Evaluate its functionality before proceeding further: Many web-based software companies have trial periods that you can use for your benefit to identify the best option for you. Additionally, you can also reserve a Demo to see the key features in action and how everything works. 

Given the technological advancements that take place, the software as a service industry will continue to evolve in the coming decades. According to Statista SAAS industry will reach the volume of US$793.10bn by 2029.

• New Roles of IT and CIO: As time goes by, there are more and more IT roles coming up. In the future, IT will likely focus more on SaaS development, ensuring seamless workflow between applications. 
• More emphasis on automation: Many cloud-based software companies already incorporate automation in their services, such as having chatbots as part of their customer support. It is likely that in the future many other things will become automated, such as customer onboarding, and so much more. 
• More focus on API integrations: APIs are already in demand for web-based software companies. However, it will likely continue to grow its importance in the future. This is especially the case for startups and mid-sized companies, which might be able to set up their own integrations and automate their workflow without heavily relying on development teams. 

Traditional software and software as a service are distinct in their own ways, and usually, it becomes challenging for users to choose one over the other. Below, we will explore the key similarities and differences to help you make an informed decision.

Similarities Between SaaS and a Software Company

• Purpose and Functionality: In terms of their purpose and functionality, both serve the same function. aiming to solve specific tasks or issues of its users. 
• Security Measures: Both traditional software and software as a service must have a strong focus on security measures, utilizing certain protocols to match the security standards. 
• Licensing: Both traditional software and a SaaS company need a licensing agreement that includes information about their terms of use. 
• User Experience: While their designs may be different, both software as a service and traditional software aim to have a user-friendly and intuitive interface, which will be comfortable for users to utilize. 

Differences between SaaS and a Software Company

• Accessibility: One of the key differences between software as a service and traditional software is accessibility. While in the case of SAAS business, users have access to it whenever and wherever they want, if there is an internet connection, it is quite the opposite for traditional software. 
• Maintenance: In the case of SAAS, it is the provider’s sole responsibility to manage all the updates and ensure that users have access to the latest version of their product. In contrast, in the case of software companies, it is usually the users’ responsibility.
• Scalability: Compared to traditional software, SAAS is more scalable as users can easily add or remove their desired features through subscription tiers or extensions. On the other hand, in the case of traditional software, users may need to purchase a license, which is usually expensive. 

SAAS companies offer solutions across diverse industries, including but not limited to entertainment, data management, and project management. As you now know what a SAAS(software as a service) company is, below, we will explore a few SaaS companies that are known worldwide, and we will do it with questions. You will understand what a SAAS company is with our examples and with companies that you may know. Explore examples of SaaS companies provided by GoPeak.io. 

Is Uber a SAAS Company?🤔

Generally, Uber is not considered a SaaS company—it’s closer to a PaaS (Platform as a Service) than a traditional SaaS model. The system is connecting taxi drivers and passengers. Yes, they are using software, but they use software to deliver services.

But what is the SaaS alternative to Uber?

TaxiCaller: Taxi Dispatch Software

Is Apple A SAAS Company?🤔

If we speak about the Apple company in general, then no. But Apple presents and has SAAS products as iCloud or Apple Music.

Is Salesforce A SAAS Company?🤔

Yes, exactly, Salesforce is a SAAS company. There is no need for the installation of Salesforce tools, and people can pay monthly or yearly. It is the most famous CRM tool in the world as I know.

Is Amazon A SAAS Company?🤔

Amazon is not a SAAS company, but AWS of Amazon has SAAS products as Amazon WorkDocs and Amazon Chime.

Is LinkedIn A SAAS Company?🤔

LinkedIn is not a SAAS company itself, but it offers a B2B SAAS tool as LinkedIn Sales Navigator.

Is Facebook A SAAS Company?🤔

Facebook or Meta is not a SAAS company itself. However, Meta offers a communication SAAS platform, as we know, Workplace by Meta. Also, Meta has an Ads Manager, but users do not pay for the software, but for the ads.

Is Oracle A SAAS Company?🤔

Yes. Oracle provides ERM, CRM, HCM, SCM, and many other SAAS solutions. Oracle is more than a SAAS company. It provides PaaS (Platform as a Service) and IaaS (Infrastructure as a Service) solutions too.

Is Microsoft A SAAS Company?🤔

Yes. We can call Microsoft one of the best SAAS companies worldwide. While Microsoft is famous for traditional software, in the basket of SAAS products from Microsoft are Microsoft 365, Teams, Dynamics, and more.

Is Shopify A SAAS Company?🤔

Yes. 100% SAAS company. It is a subscription-based online tool that helps people build their e-commerce stores.

Is Adobe A SAAS Company?🤔

Yes. This is a great example of transitioning traditional software to SAAS company. Products of Adobe are provided via Adobe Creative Cloud, and it is based on a subscription.

Is Netflix A SaaS Company?🤔

Netflix is not a SAAS based company? You might ask, how come Netflix isn’t considered a SaaS company if it operates on a subscription model? The answer is simple: “The Subscription service of Netflix is providing content, not software”. That is it, and that is why.

But what is the SaaS alternative to Netflix?

Vimeo OTT: Video management software

Is PayPal A SaaS Company? 🤔

In short, No. It is related to Fintech, but it is not a SAAS company. Paypal has many integrations with SAAS companies, and there is no subscription on the platform. They earn money via their wallet and get transaction fees.

But what is the SaaS alternative to PayPal?

Stripe: A comprehensive suite of SaaS solutions for seamless and secure payments.

Is Airbnb A SaaS Company?🤔

No. You can not find any software on it. It is a home-rental marketplace, and you pay for the opportunity to rent a room or a house via their website.

But what are the SaaS alternatives to Airbnb?

Cloudbeds: One of the best hotel management software

Lodgify: Booking management system for vacation rentals

Is Doordash A SAAS Company?🤔

No. Doordash is not a SaaS company, as you order and get food. They use logistics management software, but they do not sell the software, they use.

But what is the SaaS alternative to Doordash?

Toast: Restaurant point of sale and management system

Is DocuSign A SaaS Company?🤔

Yes. It is a SaaS Company.DocuSign is SAAS platform that allows users to use their signatures to sign agreements and contracts.

Finalizing, let’s say that:

✅A SaaS company is about selling software, not just using it.

✅It should have cloud-based access

✅Subscription model

✅No software installation

✅B2B/B2C flexibility

✅Regular updates