A SaaS company is a company that hosts an application and makes it available to customers over the internet.
What Is SaaS?
SaaS vs. PaaS vs. MaaS: What's the Difference?
These "as a Service" models provide different levels of technology to customers. In simple terms, SaaS gives you software to use, PaaS gives you a platform to build on, and MaaS gives you AI models to power intelligent applications.
- SaaS (Software as a Service): Delivers a complete software application that users can access through the internet. The provider manages the infrastructure, maintenance, updates, and security, while customers simply use the application. They can be single or multi-tenant.
- PaaS (Platform as a Service): Provides a cloud-based platform for developers to build, test, and deploy applications. The provider manages the underlying infrastructure, operating systems, and development tools, while customers create and maintain their own applications.
MaaS (Model as a Service): Gives users access to pre-trained artificial intelligence (AI) or machine learning models through cloud-based services or APIs. Instead of building and training models from scratch, organizations can use existing models for tasks such as content generation, analytics, automation, and decision-making.
How Does SaaS Work?
At a technical level, SaaS works by hosting software, data, and the supporting infrastructure on servers managed by the provider. Instead of installing the application on a local computer or company-owned server, users access it over the internet through a web browser, mobile app, or desktop client.
When a user signs in, their request is sent to the SaaS provider’s cloud-based infrastructure, where the application processes data and delivers the requested information back to the user. Because the software runs on centrally managed servers, customers can access the same application from virtually any location or device with an internet connection.
Unlike peer-to-peer systems, which rely on individual devices communicating directly with each other, SaaS applications operate from a centralized environment maintained by the vendor. This allows the provider to handle software updates, security patches, performance improvements, backups, and scalability behind the scenes without requiring customers to install new versions or manage complex IT infrastructure themselves.
For businesses, this model reduces the need for on-premises hardware and dedicated maintenance while making it easier to add users, expand storage, or increase capacity as needs change. The result is a flexible, cloud-based approach to software delivery that keeps applications accessible, secure, and up to date. however, they still need vulnerability management.
Read the Fortra SaaS datasheet or the SaaS DLP datasheet.
The SaaS Business Model: How SaaS Companies Work
A SaaS company maintains servers, databases, and software that allow the application to be accessed over the internet — most likely by web browsers. Users can access the software from almost any device.
SaaS customers usually pay a subscription fee — often monthly — to access the application. Some subscriptions are based upon how much data needs to be stored, the number of users who will access the application, or the level of technical support desired.
The subscription model benefits both sides: customers get lower upfront costs, automatic updates, and the flexibility to add users or features as their needs change, rather than making a large one-time software purchase. For providers, recurring subscription revenue helps fund ongoing development, support, security, and infrastructure improvements, allowing them to continuously enhance the service.
Examples of SaaS Companies
SaaS companies can handle just about every business function. Some of the more popular types of SaaS applications available include:
- Customer resource management or Customer Relationship Management (CRM): These applications allow SaaS customers to manage customer information and track sales through their pipeline.
- Enterprise resource planning (ERP): This is a system of many SaaS applications most suited for big organizations.
- Accounting and invoicing: Some SaaS companies focus on billing and invoicing services. Others offer a full range of financial tracking and reporting services.
- Project management: Software can help collaborators communicate and stay on track.
- Web hosting and ecommerce: Remote servers can handle everything a business needs in its online presence.
- Human resources: SaaS companies can offer tools to track employee hours, manage payroll, schedule and manage the hiring process.
- Data management: SaaS products can help analyze and secure a company’s data.
Many B2B companies offering software applications like marketing automation, Email marketing, social media marketing, sales automation, and more. These companies can also be divided into different categories of SaaS, such as multi-tenancy vs single-tenancy.
While many large technology companies are not "SaaS companies" they often offer SaaS products, such as Google Workspace, Google Cloud, and Adobe's creative cloud.
Your data doesn't stay inside one SaaS app. Fortra DSPM shows you where sensitive data lives across cloud, SaaS, and endpoints — and who can reach it
Benefits of SaaS Companies
A SaaS company’s major selling point is how much more efficient it is to use their centrally managed applications rather than installing software onsite. This means SaaS customers can realize the following benefits:
| Benefit | Reason |
Cost savings | Most SaaS companies charge a subscription fee that helps spread out the cost of the application over time. SaaS customers have lower initial costs because they don’t need to invest in expensive hardware to host the applications as they offer cloud services. |
Low-effort updates | SaaS companies maintain the software and update it when needed. SaaS customers do not need to install any software or install patches and updates. |
Mobility | In theory, SaaS customers can access to their systems from any device or location. This is very useful for workforces that are not confined to a central location or office. |
IT expertise | SaaS companies invest in the IT needed to troubleshoot and maintain applications so their customers don’t have to. Also, SaaS companies have the resources to maintain system reliability and data security better than customers with limited IT budgets. |
Scalability | If a SaaS customer needs to expand capacity or add users, it doesn’t need to purchase new hardware or install new software. A SaaS company can increase capacity quickly with cloud technology and cloud storage, but it most likely will come at an increased subscription fee. |
Risks of SaaS Companies
A great promise of SaaS companies is that they can handle infrastructure and maintenance so their customers don’t have to. That means a third party will be responsible for basic business functions. That entails some risk.
| Risk | Reason |
Pricing | While system flexibility is a key feature of SaaS companies, their contracts may not be so flexible. Having SaaS services on demand can be costly. Scaling back to less expensive options or cancelling the contract may not be allowed. And upgrading capacity or access could come at a steep price increase. |
Downtime | Being able to use a SaaS application and accessing the data depends on the reliability of a third party. The SaaS company's downtime could be your downtime. |
Security | Data security is in the hands of a third party. There are SaaS companies that don’t comply with security standards and aren’t transparent about security. Also consider that allowing users remote access with any device can increase convenience and vulnerability to unauthorized use. |
Solvency | A crucial aspect of the SaaS customer’s business depends on the SaaS company staying in business. If the vendor goes out of business, access to the SaaS service and data could be cut off. In the best-case scenario, the SaaS customer needs to find a new SaaS company and migrate the data. |
Aggressive Sales Team / Marketing Team | Depending on the company some SaaS software companies will have aggressive sales teams trying to upsell users. |
Customer Services | Again, depending on the company, some SaaS software providers will have limited customer service offerings. |
Best Practices for Choosing a SaaS Company
SaaS companies work very hard at making their applications easy to use for users. And they try to make it just as easy to purchase their SaaS products. Perhaps too easy. Slow the process down and consider some best practices for choosing a SaaS company:
- Find out what happens when you are no longer a customer. Can you get your user data back in a standardized format easily?
- Test customer support. Just how good is it when you’re a paying customer? How focused is the company on customer relationships and customer experience (you can even ask about customer retention rates).
- Get as much training and migration help as possible. Or use it as leverage in negotiations.
- Find out what is the backup plan. Nothing is bulletproof. There will be downtime. Have a plan for when the system is unavailable.
- Look for data vulnerabilities. Speaking of vulnerability, does the SaaS company offer strong defense against hackers and data breaches?
- Understand the prices. Look for hidden fees and what kind of usage will trigger a higher subscription tier.
- Make sure your systems are compatible. The promise of SaaS is functionality on any device used anywhere. But does the application really work with all browsers or phones?
SaaS companies can provide needed business services at a low cost. Due diligence will help ensure the user experience matches expectations and promises.
Once You Find a SaaS Company
Even if you find the perfect solution, there is a chance you won’t use it to its full potential. For complicated software, there is often a learning curve. There are a number of steps to take for each new tool your company uses.
| Step | Reason |
Utilize educational materials | Most SaaS products have tutorials, knowledge bases and other material to help users get the most out of the product. |
Speak with the onboarding team | The next level is to get on a call or video conference with a rep(s). Make sure key members of your team are there, too. |
Consider third-party setup | Some SaaS tools are so complicated, having an outside contractor set everything up is ideal. The company may also offer this service. |
Get the team onboard | The right tool paired with education and ample communication will make adoption easier, but all change takes effort to make it successful. |
Re-evaluate use at regular intervals | After a few months, it’s a good idea to see if the software is doing what you hoped it would. This is a good, regular practice for every tool your company uses. |
SaaS companies can provide needed business services at a low cost. Due diligence will help ensure the user experience matches expectations and promises.
The Future of SaaS
- AI and machine learning: AI-powered SaaS platforms can automate tasks, analyze data, generate content, and provide predictive insights, helping businesses work more efficiently and make faster decisions.
- Stronger security requirements: As more business-critical data moves to the cloud, SaaS providers are investing in advanced security measures such as encryption, multi-factor authentication (MFA), access controls, and continuous threat monitoring.
- Vertical SaaS and micro SaaS: The market is becoming more specialized, with vertical SaaS solutions built for specific industries and micro SaaS products focused on solving a single niche problem for a targeted audience.
- Mobile-first experiences: Modern SaaS applications are increasingly designed for mobile access, allowing users to securely work, collaborate, and manage data from virtually any device and location.
As these trends continue, SaaS solutions are becoming more intelligent, specialized, secure, and accessible for organizations of all sizes.
See what's really sitting in your SaaS environment. Book a demo and watch Fortra discover, classify, and protect sensitive data across your cloud apps in real time.
