What is SaaS? Understanding its meaning and mechanisms | Differences with PaaS/IaaS, advantages and disadvantages, representative examples, and how to choose

We are increasingly hearing the term "SaaS" in the context of business efficiency and digital transformation, but surprisingly few people have an accurate understanding of what it can and cannot do, or how it differs from PaaS and IaaS.

SaaS is a software delivery method that allows you to access the necessary functions via the Internet, rather than purchasing and installing software. It has become widely used due to its ease of implementation and light operational burden, but if you choose the wrong software, you may face increased costs and operational constraints.

In this article, we will clarify the meaning and mechanism of SaaS, and explain the differences between it and PaaS and IaaS, its advantages and disadvantages, examples of typical services, and key points to keep in mind when selecting a service.

What is SaaS?

SaaS is a delivery model that changes the way software is used from "ownership" to "use." First, we will explain the basic definition and how it differs from traditional models, as well as the division of roles in SaaS.

SaaS Definition

SaaS is an abbreviation for "Software as a Service," and refers to a form of software provision in which software is used as a service via the Internet, rather than being purchased and installed by a company. Users access functions through a browser or dedicated app, while the software itself and servers are managed by the provider.

A notable feature of this service is that you can start using it immediately after signing the contract, and software updates and maintenance are also performed automatically.

Difference from the installed type

With installed services, the software is installed on the user's PC or in-house server, and the company is responsible for building the environment, maintaining and updating it. With SaaS, the provider manages the software and infrastructure, allowing the user to focus on using the features.

SaaS reduces the initial implementation effort and costs and can flexibly accommodate changes in the number of users. On the other hand, since functions and specifications depend on the service, it is not suitable for highly flexible individual customization.

SaaS: What users do / what vendors do

With SaaS, you cannot leave everything to the provider. You need to understand the division of roles before using it.

The provider is responsible for operating the servers and infrastructure, updating software, responding to failures, and implementing security measures at the infrastructure level, etc. Users can always use the latest environment without having to be aware of these things.

Users are still responsible for managing accounts and permissions, establishing usage rules, device management, and formulating data handling policies. Neglecting ID management and access control increases security risks, even with SaaS.

How SaaS works

SaaS is not simply software that can be used on the cloud, but a system designed to include provision, billing, and operation. Here, we will explain how SaaS is provided, how fees are incurred, and how daily operations and updates are handled.

Provision form

SaaS runs software on a server prepared by the provider and is provided to users via the Internet. In many cases, it can be used from a browser, and no special installation work is required.

The "multi-tenant" model, in which multiple users share a single system, is common, allowing providers to operate efficiently. Users do not need to build and manage their own servers or software environments, shortening the time it takes to start using the system.

Pricing Model

SaaS pricing is typically in the form of a monthly or yearly subscription. The pricing structure varies depending on the service, such as "user fee" based on the number of users, "plan fee" based on the features used and processing volume, or "pay-as-you-go" fee.

While initial costs are kept low, it is important to note that costs will gradually increase as the number of users increases and functions are added.

How updates and maintenance work

With SaaS, software updates and maintenance are handled collectively by the provider, eliminating the need for users to perform individual updates, and allowing them to always use the latest features and fixes.

On the other hand, the timing of updates and changes to specifications are decided by the service provider, which can affect business operations. In case of important changes to functionality or UI, operational aspects such as checking update information and notifying employees are required.

The differences between SaaS, PaaS, and IaaS

SaaS, PaaS, and IaaS are all cloud service delivery formats, but the difference lies not in the number of things they can do, but in who manages what.

The difference is not the "scope of provision" but the "scope of management"

The difference between SaaS, PaaS, and IaaS is not a hierarchy of functions. The important point is whether each element, from the application to the infrastructure, is managed by the user or the provider.

• SaaS uses the application itself as a service.

• PaaS provides an execution environment for running applications.

• IaaS provides infrastructure such as servers and networks.

The wider the scope of management, the greater the degree of freedom, but the greater the design and operational burden on the user.

Comparison chart (managed by the user)

It's easier to understand if you think of SaaS as "just using it," PaaS as "renting an environment to create and run it," and IaaS as "designing it yourself from the ground up."

common misconceptions.

A common misconception is that PaaS is a higher-level version of SaaS and IaaS is the highest level. However, these are not hierarchical; they are options with different uses and roles.

For example, SaaS is suitable if you want to use specific functions immediately for your business. On the other hand, if you want to develop your own company's own applications, PaaS or IaaS are your options. The important thing is not "which is better," but "to what extent does your company want to manage and operate it itself?"

Benefits of SaaS

The reason why SaaS is being adopted by many companies is not simply because it is "convenient because it is cloud-based," but also because it reduces the burden from implementation to operation and makes it easy to adapt to changes.

Fast implementation

Since there is no need for initial work such as server construction or software installation, you can start using the service immediately after signing the contract. Its distinctive feature is that it eliminates the procurement, configuration, and verification processes that were required for traditional system implementation. It is particularly suitable for those who want to improve their business operations in a short period of time or who want to introduce a tool on a trial basis.

Easy to operate

With SaaS, the provider is responsible for the infrastructure, such as system maintenance, updates, and troubleshooting. There is no need for users to prepare a specialized operational system, which reduces the burden on the IT department. One advantage is that daily operational tasks are limited to account management and checking usage status, making it easy to manage even with a small number of people.

Difficult to choose location and device

Another feature of SaaS is that it can be used anywhere, including outside the office or at home, as long as there is an internet connection. Many services are compatible with tablets and smartphones as well as PCs, expanding the range of devices available. This system is easy to adapt to the diversifying ways of working, such as teleworking and multi-location deployment.

Easy to expand

It is designed to allow for flexible increases and decreases in the number of users and functions later. Its distinctive feature is that it is easy to adjust the plan and number of users in line with business expansion and organizational changes. Because you can use only what you need, when you need it, you can operate the system in line with growth while avoiding excessive investment.

Disadvantages and points to note about SaaS

Here we will summarize the points you should be aware of before implementation.

Customization Constraints

Because it is a service provided to many users in common, there are limits to how freely it can be customized to meet individual requirements. If detailed specification changes are required in the same way as with installed or in-house developed systems, it will be difficult to operate.

When introducing SaaS, it is necessary to decide whether to "adapt business processes to the system." Rather than simply reproducing existing business processes, the success or failure of the introduction depends on whether the business process can be revised in line with standard functions.

Impact of failures and specification changes

Because it runs on the provider's system, users cannot fully control the impact of failures and maintenance. In addition, updates and specification changes are sometimes made on a regular basis.

When implementing a service, it is necessary to check the SLA, which indicates the availability rate, the contact system in case of a failure, and the method for notifying update information. For services that have a large impact on business operations, a system is required to regularly check release information and reflect it in internal operations.

Data migration and vendor lock-in

The longer you use a service, the more your data and operations become dependent on that service. When migrating to another service or terminating your use, it is important to check in what format your data can be retrieved.

By knowing in advance whether an export function is available, the supported formats, the availability of APIs, and the data retention period after cancellation, you can reduce future migration risks.

Security is not "automatically secure"

With SaaS, the provider is responsible for infrastructure-level security measures, but this does not guarantee safety. In fact, there are cases where the actual risk increases depending on how the user operates the service.

Specifically, it is the user's responsibility to manage IDs and permissions, manage devices, check access logs, establish usage rules, etc. Failure to do so could lead to information leaks or unauthorized use, even in the case of SaaS.

Typical SaaS examples

SaaS offers a wide variety of services for specific business areas. Here we will organize the most common genres that are frequently used by companies and the main business issues that they can solve.

Groupware/Communication

This is SaaS that supports internal and external communication and information sharing. Many services offer email, business chat, web conferencing, schedule sharing, and more, all in one, enabling communication regardless of location or device.

It is well suited to teleworking and multi-location operations, and is characterized by its ability to prevent information from being dispersed or communication from being missed.

CRM/SFA/MA

This SaaS manages customer information, visualizes sales activities, and automates marketing initiatives. It centralizes customer data management, making it easier to understand the effectiveness of sales processes and initiatives.

In many cases, it is introduced with the aim of standardizing sales and marketing tasks, which tend to be highly dependent on individuals, and increasing reproducibility within the organization.

Accounting, expenses, and human resources

It is a back-office SaaS that handles accounting, expense settlement, payroll calculation, attendance management, etc. It is characterized by the fact that the service side continuously handles compliance with legal changes and document management.

This reduces manual and paper-based work, leading to greater efficiency in the entire back office and stronger internal controls.

Project Management/IT Operations

This SaaS supports project progress management, task organization, inquiry response, system monitoring, etc. It visualizes the business status and makes it easier to prevent missed responses and dependency on individual personnel.

It is widely used not only by IT departments, but also by development teams and business departments.

Security SaaS

It is a security-related SaaS that performs ID management, device behavior monitoring, visualization of cloud usage, etc. As SaaS usage increases, it is sometimes introduced to complement access control and log management.

Because it requires a high level of specialization, it is common to start by considering the bare minimum areas, such as ID management and strengthened authentication.

How to Choose a SaaS That Won't Fail

The reason why SaaS selection often goes wrong is because people make decisions based on impressions such as "it seems to have a lot of features" or "it's famous." The important thing is to clarify the purpose of implementation and operational assumptions, and then determine whether the service is suitable for your company.

Decide the purpose and scope of use first

The first thing you need to do is clarify "what tasks will be performed, who will use it, and to what extent." The requirements will vary depending on whether it will be used company-wide or limited to certain departments, and whether it will be a core or auxiliary tool for daily operations.

If you make a selection without having a clear purpose in mind, you may end up with unused features, or conversely, you may find that necessary requirements are missing later on.

Five things to check before features

When selecting a SaaS, before looking at the list of features, check the following operational aspects.

• Data transfer (export/API)

  • Considering the possibility of migrating to other services in the future, we will confirm in what format the data can be output and whether API integration is possible.

• Permissions, Audit Logs, SSO/MFA

  • Setting permissions for each user, acquiring operation logs, and supporting single sign-on and multi-factor authentication are important in terms of both security and operational efficiency.

• SLA/contact in case of failure/operational system

  • Find out in advance whether there is an SLA that indicates uptime, how you will be notified in the event of a problem, and the response times of the support desk.

• How fees increase (the pitfalls of user charges and pay-per-use)

  • We check not only the initial costs, but also how costs will rise as the number of users and usage increases. There are many cases where costs increase more than expected.

• Terms and conditions (cancellation, data retention period, support scope)

  • Points that are often overlooked include cancellation procedures, data retention periods, and the extent to which standard support is provided.

How to do a PoC

Rather than jumping straight into a full-scale implementation, it is effective to conduct a free trial or PoC (pilot implementation). In a PoC, rather than focusing on the number of functions, you want to check whether the system can be used without any problems in actual business operations and whether the operational load is as expected.

Specifically, checking the ease of operation using real data, the ease of setting permissions, and the clarity of the management screen will help reduce any gaps after implementation.

Cases where SaaS is suitable/unsuitable

SaaS is suitable for many business processes, but it is not optimal for all systems. It is important to determine whether it is suitable for your company's business characteristics and operational structure.

Suitable cases

SaaS is suitable when business operations are standardized to a certain extent. In many cases, the standard functions of SaaS are sufficient for common business operations across industries, such as accounting, attendance, and customer management.

It is suitable for organizations that want to implement it in a short period of time and start using it immediately, and for organizations with few dedicated IT staff. Because it has a light operational load and is easy to manage even with a small number of people, it is effective in situations where speed is important.

Unsuitable cases

When business requirements are highly unique or when systems require detailed customization, the limitations of SaaS can become an issue.

In some cases, such as when operation is required on a strict closed network or when complex integration with older core systems is required, SaaS alone can be difficult to implement. In such environments, flexibility in design and operation is required.

Alternatives (SaaS + IaaS, Hybrid)

Even if SaaS is not completely suitable, there is no need to go back to building everything in-house. One option is a hybrid configuration, where standard operations are covered by SaaS and parts with more unique requirements are built on IaaS.

By combining the optimal delivery format for each business, it is possible to balance operational load and flexibility. The important thing is not to choose between SaaS or not, but to have the perspective of choosing the optimal format for each business.

Frequently Asked Questions (FAQ)

What is the difference between SaaS and cloud?

Cloud is a concept that refers to the entire system of using IT resources via the Internet, while SaaS is a form of service provision that uses the cloud, and refers to the use of software as a service.

In other words, SaaS is a type of cloud service, but cloud does not equal SaaS. IaaS and PaaS are also included in cloud services.

What is the difference between SaaS and ASP?

ASP (Application Service Provider) is similar to SaaS in that it provides applications over the Internet, but its design philosophy is different.

ASPs often provide individual environments for each user and generally require customization, whereas SaaS is based on a design where multiple users use a common platform, with an emphasis on standardization and scalability.

Is free SaaS safe?

It is not possible to simply classify free SaaS as dangerous or paid SaaS as safe. The important thing is to check the provider's management system, security measures, and terms of use.

The free plan may have limited functionality, reduced support coverage, and data retention period. If you are using it for business purposes, you should understand the reasons for its free nature and its limitations before using it.

What is the minimum security requirement?

At the very least, you should manage identities and permissions, specifically deleting unnecessary accounts, setting appropriate permissions, and enabling multi-factor authentication.

It is also important to manage devices, check access logs, and clarify usage rules. Even if the SaaS infrastructure is secure, the risks vary greatly depending on how the user operates it.

How do you estimate the cost of SaaS?

Generally, monthly or annual fees are charged, and they increase or decrease depending on the number of users and usage volume. When estimating, it is necessary to consider not only the current scale of usage, but also future increases in users and the addition of new features.

Also, even if the initial cost is low, the total amount may increase over the long term. It is important to understand the costs over several years before implementing the system.

My Feelings, Then and Now

SaaS is a form of software provision where software is used as a service via the Internet, rather than being owned. While it has advantages such as quick implementation and a light operational burden, it also has some points to be aware of, such as customization restrictions, operational rules, and user responsibility for security.

The important thing is to understand the difference between SaaS, PaaS, and IaaS not as a matter of "level of functionality" but as a difference in "scope of management," and to determine the extent to which your company should be responsible. Then, you need to select a service that suits your business operations and operational structure.

SaaS is particularly effective in situations where standardized operations and speed are important. On the other hand, if you have very unique requirements, it may be effective to consider a flexible configuration, such as combining it with IaaS.

Taking into account the points outlined in this article, utilizing SaaS in a way that suits your company's objectives and prerequisites is the quickest way to prevent failure after implementation.