What is Software as a Service (SaaS): A Beginner’s Guide

By Jeevan Tipke 1 January 2022 Updated on 19 September 2026 3 min read

Editor’s note: published January 2022 and retained for reference. Webtales has since launched its own SaaS products, Watskart and Property CRM, built on the principles described here.

By 2021, software as a service (SaaS) had become the default way most businesses bought software. What is SaaS, and why is it such a valuable field? Let’s explore.

Definition of SaaS

Software-as-a-service is a software licensing model. Software located on external servers is made accessible to users through web browsers, and users access its features on a subscription basis. Google Workspace, Netflix, Dropbox and Salesforce are common examples.

Instead of installing software on their devices, users access applications over the internet.
They connect to the application and log in with a unique username and password.
They use the features either free (Gmail) or for a subscription fee (Netflix).

For developers, SaaS tools are easy to implement, update and debug. That’s why the model has countless business applications: file sharing, email, calendars, social media, customer relationship management.

More importantly, SaaS is cheap for end users. Why purchase multiple software licences for different devices when you can access your application from any device with an internet connection? The speed and ease of delivery make SaaS helpful for users and lucrative for companies.

The role of cloud computing in the rise of SaaS

In the past, even large companies could release only a limited number of software products a year, because updating them was time-consuming. Users had to download or purchase newer versions frequently, and install copies on every device. With SaaS:

Users don’t need to install any software
Users don’t update manually
Users log in via a browser and always get the latest version

This convenience was made possible by cloud computing: delivering technology services, from storage to networking, over the internet. Developers store their SaaS tools on cloud systems, update them centrally, and every user receives the latest version on their next visit. These advances in production efficiency are compelling every industry to adopt SaaS.

The benefits of SaaS for vendors and users

Increased trust in the brand

SaaS tools don’t live on specific company servers, so companies don’t buy new hardware to add features; they buy extra cloud capacity at low cost. Upfront costs of implementing, updating and debugging are low, and the savings can go into customer retention and customer-friendly features. A growing online community of regular users boosts brand credibility.

Low cost of distribution

Software delivery used to be physical. With SaaS, developers use the cloud and users use the internet. Releasing updates is as easy as upgrading the program centrally. This is quicker and cheaper for developers.

Accessibility

You only need an internet connection. Users access tools from any location on any compatible device, and most SaaS is available pay-as-you-go: no hardware, no paying for unwanted features. Users have far more control than under traditional licensing.

Business efficiency

Many traditional tools have migrated to SaaS, including ERP systems. A SaaS ERP is far more collaboration-friendly because employees across locations and departments access it from anywhere: private email, automated sign-up for company data, shared document management, shared dashboards and calendars.

Investing in SaaS gives brands the ability to grow their own online communities. Users reward convenient solutions with loyalty. To learn more about SaaS development, see our Ruby on Rails development services or contact Webtales IT Solutions for a free consultation.

Digital marketingRuby on RailsSEOSocial media

Author

Jeevan Tipke

CEO & Founder

Bachelor of Engineering (B.E.), MBA | Certified Digital Marketing Professional (Semrush, Hubspot, Linkedin, Amazon & Skillup)

Jeevan is an accomplished marketing professional with an extensive blend of academic qualifications and industry experience. He holds a Master's degree from ITM Business School and Southern New Hampshire University (SNHU), UK, and brings a 23-year career spanning both traditional and digital marketing. He is a certified Email Marketing and Social Media Marketing specialist from HubSpot, with further certifications in Entrepreneurship from HarvardX and as a Sponsored Products Ninja from Amazon. As CEO of Webtales IT Solutions, Jeevan drives the company's growth, innovation and client success in the digital marketing space.

Frequently asked questions

What is SaaS in simple terms?

Software as a service (SaaS) is software that runs on the provider's servers and is used through a web browser or app, usually for a subscription. Users log in with an account instead of installing the program on each device. The provider handles hosting, updates, security patches and backups, so customers always use the latest version. Gmail, Google Workspace, Dropbox and Salesforce are common examples.

How is SaaS different from traditional installed software?

Traditional software is bought as a licence and installed on each computer or company server, and the buyer handles updates, hardware and maintenance. SaaS is hosted by the vendor and accessed over the internet, so updates reach every user at once and there is nothing to install. The trade-off is ongoing subscription payments and dependence on the vendor and an internet connection.

What is the difference between SaaS, PaaS and IaaS?

SaaS, PaaS and IaaS are three layers of cloud computing. IaaS (infrastructure as a service) rents servers, storage and networking, as in Amazon EC2. PaaS (platform as a service) adds a managed environment for running your own code, as in Heroku. SaaS delivers a finished application ready to use, as in Gmail or Salesforce. Each layer leaves the customer less to manage.

How does cloud computing make SaaS possible?

Cloud computing lets a SaaS vendor run one central copy of its application on remote servers and deliver it to every user over the internet. When the vendor updates that copy, all users get the new version on their next login. Cloud capacity can also be added as the customer base grows, without the vendor buying and installing its own hardware for each new customer.

How do SaaS products usually charge customers?

SaaS products usually charge a recurring subscription, billed monthly or yearly. Common models are per user or seat, tiered plans with more features at higher levels, usage-based pricing tied to volume such as messages or storage, and freemium plans where a basic version is free and advanced features are paid. Check whether a plan includes support, integrations and data export before comparing prices.

What are the main benefits of SaaS for a business?

The main benefits of SaaS for a business are low upfront cost, no hardware to buy or maintain, automatic updates, access from any location with an internet connection, and easier collaboration because teams share one live system. Many business functions, including CRM, accounting, HR and ERP, are now available as SaaS, so smaller companies can use tools that once needed an in-house IT team.

Is company data safe in a SaaS application?

Company data in a SaaS application can be well protected, but safety is shared between the vendor and the customer. The vendor secures the servers, encryption and backups. The customer controls user access, passwords, two-factor authentication and what data is uploaded. In India, a business that decides why personal data is collected remains accountable as the data fiduciary under the Digital Personal Data Protection Act, 2023.

What should I check before choosing a SaaS tool for my business?

Before choosing a SaaS tool, check where the data is hosted, how you can export it if you leave, which integrations it supports, what support hours and response times are promised, and how pricing changes as users are added. Run a trial with real tasks and several team members. Also review the vendor's uptime history and its terms for account closure.

What is a SaaS ERP and why do teams in different locations use it?

A SaaS ERP is enterprise resource planning software, covering areas such as finance, inventory, purchasing and HR, that is hosted by the vendor and used through a browser for a subscription fee. Teams in different offices, warehouses or cities use it because everyone works on the same live data, shared dashboards and documents without installing servers. Updates are applied centrally, so every location runs the same version.

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