SaaS Business Model Explained: How and Why You Should Do It

April 27, 2021
SaaS Business Model Explained

In recent years, businesses are switching to Software-as-a-Service (SaaS) due to the numerous advantages this software delivery model provides to the end-users. Moreover, from versatility to scalability, the SaaS business model doubles up as a software licensing application, making it easy for businesses to render key services via the cloud. The rapid growth in the cloud computing market ascertains the burgeoning adoption of SaaS across all business sectors.

Also, with SaaS, businesses can access data from any device, anywhere through an internet connection. The SaaS has catapulted small businesses by enabling them to access high-end software services at affordable costs. Its accessibility, versatility, and flexibility have made it easier and convenient for SMBs and large firms alike to undertake enterprise operations.

Satisfying the growing IT needs of your organization means that you have to find a solution that meets the human and capital resource needs of your enterprise. Also, SaaS is growing in popularity because it’s a subscription-based pricing model. Companies with small IT budgets and on-demand software needs find this model a cost-saving, efficient and convenient system.

Let’s see how SaaS is changing the software delivery space and why you shouldn’t be left behind in the craze to adopt this system.

Why Businesses Migrate from On-Premise Servers to Cloud Solutions?

IDC points out that the effects of the COVID-19 pandemic will push 80% of businesses to adopt cloud-centric infrastructure. While the pandemic might have accelerated the adoption of SaaS platform systems, the migration from on-premise systems was already taking place.

People are moving their key software services to the cloud because of the following factors.

Pros of Cloud Solutions

pros of cloud solutions

  • It’s a Subscription-Based System

Software as a Service is rendered on a subscription basis, allowing businesses to subscribe to the software services they need. You don’t need to purchase on-premise tools that aren’t scalable when you can get similar services without enduring expensive hardware, initial installation costs, and continuing maintenance.

  • Unlimited Business Applications

Also, with the on-premise model, new apps may need additional hardware or IT professionals to implement. This adds cost and inefficiencies resulting from the slow integration of new apps into the existing system. SaaS allows businesses to access a myriad of apps and services without additional costs.

Some of the applications and services you can get from SaaS include:

  • Accounting and payroll services
  • Mobile applications
  • Customer relationship services
  • HR management application services
  • Enterprise resource planning suites
  • Office and communication apps
  • Customer retention and lead generation
  • Low Up-Front Costs

Cloud-hosted apps are significantly cheaper than the alternative software that’s hosted on physical devices. With cloud-backed systems, you only need to pay quarterly; or yearly fees to keep your content available to the masses. Consumers love SaaS installations because you don’t require footing any upfront cost to start using these services.

SaaS installations have no hidden costs as is often the case with the traditional delivery systems. The fact that you don’t need replaceable software or hardware to get your applications up and running is always a winning point for businesses.

  • Fast Deployment and Easy Set-Up

In stark contrast with the traditional business management software, SaaS business model systems are very easy to deploy. Once these systems are deployed, the rest is automatic. You don’t require expert skills to configure the systems once deployed. Even a layperson can accomplish this task. The ease of configuration and eventual deployment makes SaaS systems an absolute delight; especially for consumers in a hurry to get things rolling. Save yourself of the common delays that come with implementing traditional systems by using SaaS systems.

  • Hassle-free Upgrades

Upgrading existing software costs businesses a fortune. It costs money to acquire new hardware and software to deliver essential services to their customers. That’s never the case with businesses that have embraced SaaS. With the SaaS business model, everything is in the clouds, and the most they’ll spend is on the regular subscription. That ensures that their businesses never experience downtime when they’re upgrading the existing systems.

  • Easy Access

To use SaaS, you only require a reliable browser with an Internet connection. That means you can continue with your business uninterrupted anywhere on the globe provided you’re connected to the web. What’s more, these services are readily accessible on a wide variety of hand-held devices. Therefore, you can keep in touch with your HR department or sales team via your Android, IOS, or any other system-powered devices on demand.

  • Scalability

SaaS options are remarkably flexible to the users. For instance, you have the option of going with a different number of subscription offers depending on your needs. That flexibility allows you the freedom to work with your preferred budget as you slowly scale up your businesses. You can start with the lowest-priced offers and work your way up without having to strain your wallet. Additionally, you have the freedom of scaling your businesses using the latest IT support before you start competing with the industry titans.

Cons of Cloud Solutions

In as much as SaaS technology is great, it has a few shortcomings. Here are some of the disadvantages of taking on this delivery software system.

cons of cloud solutions

  • Minimal Control

As opposed to traditional hardware and software applications, SaaS systems can be a tad bit hard to control. Whereas you can easily control the flow and function of in-house applications; that’s never the case with these systems. That’s because SaaS systems are controlled by third parties; there’s very little you can do in the event of malfunctions. To avoid such control issues, you must ensure that your cloud-service providers are using the latest applications on their platforms. Cutting costs goes a long way in ensuring you max your long-term business prospects. Try the SaaS business model today for improved ROI.

  • Data Security Concerns

At times, you ran the risk of having your private data exposed while in the hands of third-party agents. There’s a good chance that these agents get breached by hackers and your sensitive data gets in the hands of criminals. To curtail the risk of such breaches, select a trusted and verified cloud services provider to avoid disappointments.

  • Limited Range

True, SaaS systems are taking over the world. But they’ve yet to become mainstream. Correspondingly, that means there are still many applications out there that are not yet supported by SaaS. Therefore, it’s in your best interest to ensure that the applications at your company are fully compatible with the SaaS platforms before installation. Consult with your developers to know whether there will be any compatibility issues beforehand.

  • Connectivity Issues

It’s important to bear in mind that not all SaaS systems connect to all devices. As such, you must confirm that the SaaS you’re about to deploy is compatible with the smart devices you’ll be using. Also, connectivity issues can very easily spill out of control causing you to lose your valuable business data and information.

  • Performance Matters

If you’re not careful, the SaaS installations might end up slowing your systems. Also, for optimal performances, you must tinker with your SaaS platforms such that they function with the latest upgrades. Invest in the recent SaaS upgrades to avoid frustrating your clients.

PaaS vs IaaS vs SaaS: What’s the Difference & How to Choose

paas vs iaas vs saas


These e-commerce concepts can be somewhat confusing and oftentimes used interchangeably. The truth is that there’s a very thin line separating these acronyms. Likewise, most businesses fuse the three could computing service concepts to achieve their overarching goals.


Correspondingly, SaaS applications are popular than conventional business management software. SaaS systems are great in that you don’t require to install or run them on your devices to achieve functionality. In other words, you can run these applications anywhere; on the fly, on your browsers, without the need to install and configure complex software. That ease of configuration and deployment saves you a great deal of cash you’d otherwise spent on retaining developers.

Popular SaaS examples include:

  • Google Apps
  • Mail Chimp
  • Salesforce
  • ZenDesk
  • Hubspot
  • Slack
  • DropBox


IaaS businesses operate on a pay-as-you-go model. Also, that means, you only pay for storage, virtualization, and networking services you use. Correspondingly, the main advantage of IaaS is that you require minimal initial investments to get started with the cloud services. Alternatively, these services are remarkably flexible, easy to scale, and quite affordable.

The most common IaaS cloud models include:

  • Google Compute Engine
  • Magento Enterprise Edition
  • AWS EC2
  • RackSpace
  • Digital Ocean


PaaS systems are ideal for developers actively involved in building applications and software. The model lessens the costs and complexities associated with building and deploying apps from scratch. Correspondingly, the merits of PaaS are that the developers can work on multiple apps simultaneously. Also, the model allows for great scalability. Finally, PaaS models are easy to configure and work on.

Popular PaaS cloud computing service models include:

  • Magento Commerce Cloud
  • OpenShift
  • Heroku
  • AWS Elastic Beanstalk
  • Force
  • Apache Stratos
  • Windows Azure

Moving to the SaaS Business Model: How & What to Consider

Before you transition your business to SaaS, there are a few factors you need to consider. These include:

  • The Costs

You need to strike a balance between the SaaS services you get and the profitability the services bring to your company. Also, find the right balance between value and revenue before migrating your systems to the cloud.

  • Technical Expertise

In most cases, SaaS apps like Ms. Endpoint integration requires businesses to have an IT professional who can customize the systems to suit organizational needs. Also, when migrating to SaaS, ensure you have an in-house team who can handle the technical aspects of the migration process.

  • IT Governance and Compliance

Since cloud services impact, many aspects of our business and personal lives; using SaaS means complying with regulations and compliance standards. Also, you moving to SaaS, cloud governance is critical; it involves handling compliance issues, data security, and risk management.

  • Data Security

When switching to SaaS, you are trusting a third party with your organization’s systems. Also, make digital security your priority during the migration process. Ensure that all your SaaS vendors meet relevant data security laws like the GDPR, CCPA, and SOC 2.

  • Architecture and Migration Model

Before migrating, understand the architecture of your existing apps. Correspondingly, choose between silo migration, data migration, and layered migration. Silo migration is the most popular as it requires no refactoring and each SaaS user has a dedicated infrastructure. Also, the layered model involves moving on a layer-by-layer basis to a multi-tenant model

Trust Israel IT SaaS Busines Model Migration

When migration your applications to the cloud, you need a trusted partner. You need IT professionals who can analyze your existing systems and match them up with cloud services. Israel IT understand various aspects that drive agility in the migration process. Also, we know what granularity, compliance, data security, and sustainability mean for businesses.

Israel IT assists businesses to design a migration strategy that optimizes the available resources to build a scalable and resilient model. As we roll out SaaS business model adoption and migration, we consider the pressures and challenges of your business. Also, we help you to formulate a migration roadmap anchored on the technology stack of your software, your resources, and your goals. Contact us to request a quote for any of our app development and migration SaaS services.


What is SaaS?

The SaaS is an acronym that stands for Software as a Service. Accordingly, this is a centrally hosted software that exists in the clouds. Also, this delivery model and licensing software are preferred for their great scalability, affordability, and reliable performances.

When does SaaS Come in?

Basically, the SaaS comes in when you want to want to access software services without having to install expensive hardware systems. Also, SaaS comes in for businesses that want to move their enterprise operations to reduce costs and enhance efficiency.

What does SaaS stand for?

SaaS stands for Software as a Service.

How Do I Choose Between SaaS vs On-Premise?

Consider your budget, your IT goals, and the total cost of ownership of on-premise systems over time. Also, SaaS allows small businesses to adopt robust software at a small cost while on-premise enables autonomous management but is rigid when it comes to scalability.

Who Secures the Data in SaaS Business Model?

Who controls the data depends on your Service Level Agreement (SLA) with the SaaS business model vendor. Correspondingly, SLAs provide guidelines on maintenance schedules, data ownership, and security requirements.

What Happens When My SaaS Vendor Closes Shop?

You can still export your data to another provider when your SaaS provider goes out of business. Also, you must ensure that your SLA contains a clause that states what happens when the provider enters a merger, goes bankrupt, or enters an acquisition.
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