What is SaaS and 10 FAQs About This Cloud-Based Software

By Catherine Li

What is SaaS? Otherwise known as cloud-based software, Software-as-a-service (SaaS) has now become mainstream in 2020. For almost every kind of business technology in the world, this cloud-based software has become the main deployment method in both small mom-and-pop shops and large corporations. 

And it is absolutely justifiable. Difficult installations or strict contracts are avoided with business applications delivered via a web browser, and can be paid over a certain time instead of all at once. Subsequently, systems are both more affordable and flexible for any budget. 

However, many business leaders that we interact with regularly at MassLight still have questions on what is SaaS and why it is a good choice for their company. In light of these considerations, here are 10 frequently asked questions on what is SaaS and how it can help your business?

  1. What is SaaS?

\SaaS primarily differs from traditional on-premise software delivery model in the following two ways: 

  • SaaS systems typically provide a flexible payment model: SaaS systems allow for a subscription based payment model, while on-premise software is usually paid through a permanent license, which is paid upfront.
  • SaaS usage does not require extensive hardware: This allows consumers to outsource the majority of IT responsibilities, usually required to either maintain or troubleshoot in-house software. 

  1. On-premise versus SaaS: Which one do I pick?

To begin, the first step is to answer the question of how complex your business is. These few questions can help you determine if what SaaS is and is it right for your company:

  • How niche or specialized is your business in comparison to others in the same industry?
  • Do off-the-shelf products provide enough functionality?
  • What level of software customization do you anticipate needing?

what is saas

In addition, another essential factor is to consider your budget. As already mentioned, SaaS’s subscription payment models help companies with smaller budgets lay out the total cost of ownership over a certain period, which ultimately allows even smaller businesses to have modern and efficient software. 

Now, buyers no longer have to face the decision between either functionality or flexibility. Most cloud-based software today is able to offer experiences identical to an on-premise installation. 

The big question focuses more on data ownership. While most vendors still place data in the possession of the end user, be sure to always review the service contracts to understand how exactly your data will be used. 

Few industries are slow to use cloud software (some manufacturers still use a traditional ERP deployment), but cloud is always the new default when searching for new technology. 

  1. What is the history of SaaS?

In a 1961 speech, John McCarthy, a distinguished computer scientist that won the Turing award for his studies in artificial intelligence (AI), he famously said to his MIT students, “computation may someday be organized as a public utility.” He had pointed out that the concept of cloud computing starts as a shared resource of computing power.

The web-based technology required to support SaaS only matured in the late 1990s, though the idea had already existed for some time. That’s when companies such as Salesforce and ServiceNow—both of which were founded to create cloud software—started offering traditional enterprise solutions, like customer relationship management (CRM) through a SaaS model. 

cloud based software

While before, enterprise software industries did not hold much hope for SaaS. However, the recent decade has revealed how fast SaaS growth and adoption with new waves of businesses using software for the first time. Adoptions of software are now increasing far quicker in comparison to other cloud technology segments. Like Infrastructure-as-a-Service (IaaS) products. 

  1. How can I personalize SaaS software?  

Yes, SaaS is definitely customizable based on the business! Now, web-based software can be modified for both business uses and individuals users. Customers can tailor the user interface (UI) to themselves, changing the look and feel of the program, modifying certain areas like data fields, and altering what the data is shown as. Some business process features can be turned off and on at will. 

Users can also change their personal workspace, like organizers and task lists, and only show what is necessary to optimize work style. Both on-premise and SaaS systems can be thoroughly personalized for each customer, but cloud-based software by far still offers higher flexibility and efficiency for an average company. 

  1. Who has ownership of my SaaS data?

In most cases, you still have ownership of your data in a cloud-based system. Most service level agreements (SLAs) still assure your business data’s ownership situated in the vendor’s servers, including your right to retrieve any data. 

Most SaaS contracts also have prepaid and built-in contingencies that will give access to your data if the seller goes out of business and guarantees that you still have ownership of that data. 

In addition, the majority of SaaS vendors will let you export the data and then back it up on a local drive at any time you are willing. It is highly unusual for any vendor to claim ownership of your personal data. If you see this in clauses, do not sign the agreement. As mentioned above, the SLA is a crucial and complex document that should not be dismissed, and should be thoroughly understood with your stakeholders before committing to a new solution. 

As well, carefully review these aspects in the SLA:

  • Responsibilities of the vendor of the software for security, updates, and/or support
  • As a client, your responsibility should be to notify to vendor of problems in a timely manner
  • Assurances for service, like level of uptime and how consumers should respond to poor service


  1. Is my data safe in cloud-based software?

Of course, clients have been long wary of cloud security and vendors work hard to prove the safety and reliability of data stores in their servers. Many SaaS providers use highly secure public to employ and store their software data and other instances. 

Data is at more risk in-house for most companies, where there is a lower budget allocated to IT security. Employees or even other individuals could unintentionally leak data and reveal gaps in the security. In fact, Gartner is now predicting that through 2022, at least 95% of cloud security failures will be the customer’s fault

As the discussion around cloud security for ERP systems continues, it symbolizes one of the last software segments that experiences large amounts of security failures. Some of these include weak passwords, and often creates more security problems than hackers. 

Truth is, data security is independent of whether the server is right next to you or across the world. Cloud-based software vendors are able to invest more into security, backups, and maintenance than any small to midsize businesses. 

  1. What if my vendor goes out of business?

Whether through business failure or industry consolidation, software vendors come and go all the time. Usually however, the data is always yours to keep. 

Most SaaS vendors will safeguard their data by prepaying their data center hosting company. This will create essentially a safety net for the accessibility of their data in the event something should happen with the vendor. 

On your shortlist, keep these in mind about your provider:

  • How long has the company been in business?
  • Is the business expanding in terms of customers and/or employees?
  • Do they have a roadmap for technology growth?

Most importantly, always make sure that your SLA explicitly states that you still have the ability to export your data from the provider, which should be standard today. This clause should then also include what format you access your data and how often you do. It’s common for SLAs to also specify any fees the vendor may charge to help move the data. 

software as a service
  1. What are some limitations of the internet and operating system (OS)

Undeniably, one of the main downsides of using SaaS is that it needs a good internet connection. However, unless your business resides in a remote location, that connection will be sufficient to utilize today’s SaaS systems. 

No system is immune to downtime, though many still believe that on-premise systems are more reliable. On-premise software is still susceptible to hardware failures, electrical outages, and a wide variety of other risks. Being a safeguard, vendors of SaaS have now developed “offline” functionality which allows clients to stay connected in the event that the internet goes down. As soon as the connection is stabilized, all the data is synced to the system. 

Beyond the internet connection, some clients worry about the different operating systems and their compatibility. It’s unlikely you’ll need to consider, since most are delivered via web browsers and are fully OS agnostic. Worst case scenario however, you may need to download a different web browser for your SaaS system. 

  1. Cloud versus SaaS: Is there a difference? 

In comparison, the cloud refers to a set of incredibly complex technological infrastructure. Understanding its fundamental level, it is a connection of computers, databases, and servers that clients can lease access to share their services. This collection of computing power is scalable, and thus buyers are able to easily increase or decrease the amount of computing power they lease. 

Furthermore, the cloud encompasses anything that can be hosted and delivered remotely via the internet. Although all cloud programs operate through underlying software, SaaS refers specifically to business software applications that are sent through the cloud. 

Given the rapid expansion of cloud accessibility, it is much more efficient, inexpensive, and easier for SaaS developers to roll out applications in comparison to traditional on-premise software development. Nearly every core business function today—from human resources to resource organization—is functionable through SaaS services. 

  1.  What is the private cloud?

Using infrastructure technology that runs on a public cloud, a private cloud takes this information and stores it on the physical location, or on-premise. This way, clients can achieve the same usage and ability for accessing their data through a web browser. Instead of sharing the computing power with the public however, users at one company share its computing power. 

Contradicting the rapidly expanding public cloud model, a private cloud needs an IT department to regularly maintain and upkeep the software. Creating your own cloud can also prove expensive and requires investment into the infrastructure needed to maintain and create a cloud environment. 

As well, private clouds often require complicated and large-scale projects to generate a return-on-investment. Especially for large businesses that don’t want information publicly accessed cloud, it is an attractive option.


Does SaaS sound like a fit for your business, but don’t know where to start? Reach out to MassLight and we can help. Our company helps mitigate challenges of business ventures by building software for early startups. Check out the different enterprises we work with and how we work with developing equity for startups.

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