What Is SaaS and Why Does It Matter?

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The tech industry likes to come up with its own verbiage. But if you're not in that world, it's easy to feel alienated, even overwhelmed. We're over here with our KPIs, PPCs, MRRs, MBAs, PhDs, LEDs, MRIs, CFPs, CDCs, etc. And what does that leave you with? Confusion. So today we're going to answer two questions: What is SaaS? And why is it important enough that you should use it?

What is SaaS?

Sass means to be cheeky or rude to someone, possibly with an air of humor. Completely unrelated is SaaS, an acronym standing for "Software-as-a-Service." You're probably familiar with it, even if you haven't used the term before. To explain how SaaS is different from traditional software, let's talk about traditional software.

Traditional Software Overview

In the days of old, yesteryear, a bygone era, way back when - getting software meant ordering a physical product from a supplier, and uploading/setting up that software on your desktop or laptop computer. That software was installed as a program on that computer, which you could then use as needed. If you wanted to have that same software on multiple computers, you would probably have to spend several hundred dollars again and again, as software was usually limited to 1-3 installs per physical copy.

So if your office was looking at getting QuickBooks for everyone, you'd be in for a several thousand dollar, one-time investment (that you would have to remake every few years when a new version was pushed). SaaS gives you the same software in a much different (better) way.

How is SaaS Different?

SaaS stands for "Software-as-a-Service." Instead of paying an upfront fee to own a product, you pay much smaller amounts, ongoing (usually monthly or yearly), to use that software. It's like paying for any other service: golf club memberships, cleaning services, etc. Rather than paying for tangible product, you pay for access and to have an account/profile. All of this information/data is stored in what's referred to as "The Cloud." Sounds magical, right? It's not.

Before, you would install software on a single device, and the software would live in only that device. Now, SaaS lives in The Cloud, which you can access at any time from anywhere on any device via the internet. More or less, that's what the cloud is: remote servers hosted on the internet to store, manage, and process data, rather than a local server or a personal computer. If it sounds complicated, it's not. Think of it as the internet, because The Cloud has (for all intents and purposes) become synonymous with the internet. SaaS is software stored in the internet.

What Are Some SaaS Examples?

Let's start with something simple, like Netflix. Netflix has about 75 million paying subscribers, and possibly hundreds of millions more who use their spouses' and friends' account credentials. Netflix allows you to access a library of movies and television series, simply by creating an account and logging in. You do not have to manually install the thousands of viewing options on your computer or SmartTv before you can use Netflix. You just login and go!

Another easy example would be Pandora or Spotify. You create an account online. You pay a few bucks every month to access your account. And you're gifted with virtually endless, commercial free streaming music from anywhere in the world. Now let's get slightly more complex, and describe what the elitists would call "a true SaaS product."

Just about every business has some kind of Customer Relationship Management tool, or CRM. These help you keep track of clients and prospects, along with important dates, case notes, scheduled tasks, and a plethora of other helpful stuff. If you've bought a CRM in the last few years, it's probably a SaaS. Somebody probably pays for the service monthly or yearly, and all you have to do to access your information is login to some online account.

Examples of larger CRMs include Salesforce, Google Analytics, HubSpot, Microsoft Dynamics, Zendesk, Zoho, and SAP, among others. Other variations of SaaS include WebEx for video conferencing, HootSuite for centralized social media, and Bit.ly for converting and tracking web links.

Why Should You Use Saas?

You should use SaaS products because they're relatively new, and new is always better. Not true. You should use SaaS products because they'reĀ simple. You create an account, you login, you use the product. That's it. You can do this from any device (smartphone, desktop, tablet, laptop), and see what you need to see.

Multiple users (usually) can all login and interact with each other in real-time. You don't have to worry about the product expiring. Since it lives in the cloud (internet), updates happen automatically. Software-as-a-Service products take a much smaller starting fee (like $25), and usually offer more flexibility. You should use SaaS products, because they create a better user experience for everyone, which means they provide better operations for your organization.