What’s SaaS and why is it important you know?


If there’s anything the smaller business operator doesn’t need right now, it’s yet more jargon.

Just when they think they have grasped the latest technology trend, along comes another to make its predecessor oh so last decade.

In the case of SaaS, chances are business owners have actually been using it for the last decade and not even known it.

SaaS is ‘Software as a Service’ – essentially ‘cloud software’ that is subscribed to rather than purchased outright.

SaaS is absolutely everywhere at the moment. Book-keeping software, websites, collaboration tools, even the Google docs you are most likely using are a software as a service.

And they aren’t even new.

A rose by any other name

SaaS has been around since before the turn of the millennium. But the reason you didn’t hear about it back then is that it had an entirely different name!

Yes, back then it was known as ASP or Application Service Provider.

So why the change of name when the last thing we need is yet more jargon and acronyms?

The problem with the ASP was that it was hot around the time of the dot com boom and subsequent bust. And a lot of investor money was burnt on the concept.

So instead of simply ride the wave of its eventual resurrection, vendors didn’t want to be tarred with the dot com brush and so gave it a whole new name.

Makes sense right?

A growing SaaS market

Book-keeping software is probably the most common SaaS offering. After a slow start and the entry of several pesky upstarts, most providers now offer their software as a SaaS product.

Unlike traditional software, this is typically not stored on your hard drive, instead being hosted by the vendor.

This approach means that maintenance is far easier than it once was. Rather than constantly having to download upgrades and technical ‘patches’, the software is maintained by the vendor themselves on their own servers, so you never have to worry about it again.

More recently, websites and their management systems have gone a similar way.

Websites as a service

Rather than have to arrange your own servers or hosting, the platform or Content Management System (CMS) is bundled with hosting. And again, you never have to worry about upgrading plugins or anything else for that matter ever again.

There are also significant security implications of the SaaS model. Unlike ‘open source’ website platforms, all of the plugins are either developed or sanctioned by the vendor.

Open source platforms allow you to ‘plug-in’ third party functionality. The problem with this approach is that the third party constantly has to ensure that their plug-in is fully compatible with the core platform’s constant updates and upgrades.

If it isn’t, it can open up some serious security holes that can soon have your website falling over in all kinds of ways, some malicious.

Sleeping with the enemy

Unfortunately SaaS website platforms are seen as the enemy by most web developers, who see them as ‘locking them out’ of being able to program/code the website freely.

In turn what this means is that many web developers rarely recommend SaaS platforms, even if the business case is compelling for the business operator to acquire one.

They often consider SaaS solutions as being ‘locked in’ to a technology or provider. That may well be true, but so is the open source alternative, albeit in a different way. With open source you are ‘locked in’ to the ongoing cost and inconvenience of upgrades which you simply don’t get with SaaS.

Making the right choice

So in looking for a new website, it’s important to understand whether the one you are buying is SaaS or open source.

Because purchasing the wrong one will soon have you spending much more time, money and energy than you bargained for.

The golden rule my business uses around this decision is: if your functional requirement is unique, go open source. Otherwise, go SaaS.

More recently SaaS has been joined by PaaS (Platform as a Service) and IaaS (infrastructure as a Service). But that is the stuff of another blog. 

In addition to being a leading eBusiness educator to the smaller business sector, Craig Reardon is the founder and director of independent web services firm The E Team, which was established to address the special website and web marketing needs of SMEs in Melbourne and beyond.


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Matthew Keath
Matthew Keath
5 years ago

The author has no real understanding of what open source is. The article is full of inaccuracies, half truths and is completely self serving while having a broad swipe at other web developers who don’t share his narrow views.

As such, I cannot recommend this article is read by anyone.