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What is a Saas Company?
The SaaS business model
How SaaS differs from traditional software
Types of SaaS companies: B2B & B2C
Why businesses use SaaS
Stages of a SaaS company
Top 20 SaaS companies of 2022
Top 6 SaaS companies to work for
FAQ about SaaS
Getting started with a SaaS company
What is a SaaS company? Everything you need to know
Whether you’re aware of it or not, pretty much everyone uses SaaS on a regular (if not daily) basis.
As a subset within cloud computing, ‘Software as a Service’ or SaaS has transformed how we work and interact online. You could be watching your favorite show on Netflix or hosting a web conference with Zoom. In both cases you’d be using a SaaS solution and contributing to the industry’s projected global revenue of $185.8 billion by 2024.
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SaaS adoption has been developing rapidly since 2018 and accelerated in 2020 amid the COVID-19 pandemic, with a growing need for business agility and the shift to remote work.
Since then, more SMBs have appreciated the necessity to incorporate a SaaS business model within their enterprise software systems to retain customers and pursue scalable and sustainable growth through digital marketing tools.
SaaS will continue to increase in popularity over the coming years as more companies choose to streamline their operations. With consumer expectations becoming increasingly demanding, a surging SaaS market provides a plethora of ever-evolving and cost-effective off-premise computing options to choose from.
Read on to learn more about SaaS and how it works, the SaaS companies to watch in 2022, and how to get started incorporating SaaS applications into your everyday business functionalities.
What is SaaS?
Essentially, Software as a Service (SaaS) is a solution model that provides users with externally managed, owned, and delivered software.
It’s accessed through a web browser, and customer data is stored on cloud infrastructure rather than locally. Thus, SaaS providers eliminate the need for in-house and data-center-based applications. In fact, they let users access their data from anywhere and with any device, provided they have an internet connection.
Typical SaaS solutions allow companies to pay for their services on demand (paying for the resources they use), through a licensing model, or a subscription fee. Depending on the SaaS app, users can access various tools that have a slew of benefits.
For example, SaaS products can range from cloud-based customer relationship management solutions (CRM) like Salesforce to ecommerce hosting like Shopify.
How does software as a service work?
A SaaS website or service provider offers cloud services and hosts its user’s data via the internet. The provider is responsible for maintaining and updating the servers as well as for any necessary software developments.
SaaS applications are most often multi-tenant solutions meaning that, within the cloud, two or more companies or clients may share the same server and (depending on their fees) the same database resources. This is incredibly convenient for small businesses and startups as they can pick a pricing structure to suit their budget and reduce maintenance costs that often arise using traditional software.
Indeed, with such ease of scalability, SaaS resources allow companies to increase the size of processors and online storage to meet changing customer needs or to improve the user experience.
What qualifies as SaaS?
Software as a Service is a licensing model by which users pay a subscription fee or some form of recurring charge to access software based on an external server.
The software can range in functionality from providing content management, web development, or human resources solutions to file sharing, email marketing, and social media platforms. However, to constitute as SaaS, each software company must be accessible via the internet, without the need for installation.
This means that anything can be SaaS provided it hosts applications for customers and makes them available online.
What are examples of SaaS?
Is Netflix a SaaS company?
If we follow the above definition, Netflix is a SaaS company.
It follows a subscription model whereby users pay to watch licensed video content on-demand, via the internet. While the option to download material is provided, all resources are available for immediate viewing without the need for installation.
Is Google Drive a SaaS company?
Google Drive is Google’s primary SaaS offering. Like Dropbox and other file storage applications, it runs through a cloud computing model and safely stores users’ videos, photos, and other files externally.
It’s accessible online, from both desktop computers and mobile devices, and plans are available, increasing in quantity of storage with higher monthly fees.
Is Facebook a SaaS company?
Google Drive and Netflix are more clear-cut examples of SaaS companies. When it comes to Facebook, cloud experts are undecided as to whether or not it constitutes a SaaS social media site and messaging service.
Certainly, it has several SaaS characteristics. For example, it can scale for data storage, requires no installation, and is accessible through various devices and via the internet.
The SaaS business model: How a SaaS company works
What is the SaaS business model?
Adopting a SaaS business model over selling traditional software installations can benefit both the supplier and consumer. The premise of the service is that users pay a recurring fee for access to your software, which is hosted using cloud infrastructure.
Business owners avoid investing in IT solutions and acquiring the necessary hardware for development instead of conducting their daily operations online.
For example, a company’s customer service department might use Zendesk to perform online customer support and eliminate the need to create its own in-house software solution.
How to follow the SaaS business model
SaaS success requires companies to follow a business model through its multiple growth stages. To achieve stable growth, a SaaS business often needs substantial reinvestment of profit to alter services as users demand new application capabilities and more flexible software solutions.
A SaaS business model relies on renewal expectations. Thus, to generate ongoing revenue, cloud software companies must use real-time analytics to maintain a positive customer experience and provide a service that enhances customer lifetime value (CLV).
Ensuring system reliability, security and privacy, strategic flexibility, and technical capacity at a competitive price is the most effective way to follow the SaaS business model and secure renewals.
Who fits the SaaS model?
The SaaS model is suitable for companies that supply products integral for business. The most suitable ones create management software, niche business applications, or email marketing resources and aim to update their services routinely.
Indeed, the more features software can offer consumers, alongside the promise of further developments over time; the more suited a platform is to a SaaS business model.
Recurring income is at the core of SaaS. Thus, providers of more stagnant and unchanging services may benefit from selling software as a one-off purchase as opposed to as part of a subscription plan. SaaS models work best when they are customizable and scalable to suit various customers and their evolving needs.
Pros of the SaaS model
For startups and small-to-medium businesses (SMB), one of the greatest advantages of the SaaS model is its cost-effectiveness. Traditional software installations have to support multiple operating systems and be altered to work on several devices, while SaaS only supports web browsers.
The SaaS business model also promotes customer loyalty and retention by supplying customers with easy-to-use services. Software can be used instantly after logging in and there’s no complicated installation process. This means consumers are more likely to integrate your software as part of their everyday workflow.
Offering free trials or a ‘freemium’ service option is also made easier with SaaS. For the buyer, these remove the risk of purchase and equip them with first-hand experience of the benefits of your product.
As a digital SaaS marketing strategy, freemium enables potential customers to become familiar with and reliant on your services.
Adding updates and new features is also much more convenient with SaaS. Instead of producing a product with all the necessary features during initial software development, useful updates can be offered to users whenever the need presents itself. In fact, you could even update features multiple times a week.
Cons of the SaaS model
Although a SaaS business model offers many advantages, you should consider if SaaS suits your unique business offerings and current financial position.
Setting up SaaS requires a substantial upfront investment. Hosting and maintenance costs for servers can be unfeasible for startups ,and it can take some time to build a large enough user base to become profitable.
You’ll also need a strong team, capable of web development and UI design, who are ready to adjust your software based on usability issues.
One of the greatest challenges of starting a SaaS company is that it is an incredibly competitive marketplace with new players entering every day. To stand out from the competition, you will need to combine modern software with effective marketing campaigns.
Incorporating professional S SaaS EO services into your brand promotion strategy will drive traffic to your website and boost engagement.
Accelerate Agency works with high-authority domains like Hubspot and BigCommerce to increase organic traffic and referrals. Click here to book a consultation today!
How SaaS differs from traditional software
Major benefits of SaaS over traditional or licensed software
There are several major benefits of SaaS over more traditional software, both for users and providers.
As discussed above, internet or cloud-based applications are by their nature multiplatform. For customers, this means low-maintenance services that are easily accessible for both domestic and remote teams. SaaS can often replace the costly on-site data servers that licensed software requires for storage.
They also improve the ease of disaster recovery and business continuity. Should a user’s hardware break, be stolen, or malfunction, all the business’s data is stored on cloud infrastructure and is therefore recoverable.
SaaS backup systems store data reliably and securely. The frequency of backups can be scheduled by users and happens automatically, without any manual input. With constant improvements in the way data is stored online and more developers are embracing digital ledgers like blockchain, SaaS platforms are becoming increasingly secure methods of storing data.
Disadvantages of SaaS over traditional software
Despite the benefits, SaaS sites are not the best solution for every company. If the software requires significant and ongoing human intervention, it may not be ready to adopt cloud-native architecture. Equally, without a strong existing user base it can be difficult to switch to SaaS.
To reap the most advantages, software should already be popular and have the potential to collect substantial recurring revenue. For example, Adobe was already a successfully licensed software provider before it transitioned from a one-off payment model to cloud-based monthly subscription plans. Traditional software may be the better choice for products that have yet to find their audience.
Additionally, the frequency with which SaaS systems can upgrade and change can affect for developers and users. As consumers become accustomed to SaaS and the regularity of upgrades, they expect constant improvements. Vendors are required to update functionality frequently to keep products current and competitive, costing them time and money.
Changing back-end processes and APIs can also have unintended consequences for consumers when integrating with other SaaS platforms. Businesses value SaaS solutions because they’re quick and easy. When they slow down or complicate operations, they no longer supply users with a more convenient service than traditional software companies.
Types of SaaS companies: B2B & B2C
Software providers offer different types of SaaS ,from business to business (B2B SaaS) to business to consumer (B2C Saas) solutions.
B2B provisions usually assist with day-to-day company operations and aim to automate or speed up repetitive tasks. B2C SaaS is provided to individual users, not companies.
Well-known examples of B2B SaaS products include:
Mailchimp (an email marketing platform)
Atlassian (project management software)
RingCentral (a cloud-based communications solution)
Some B2C SaaS examples include Netflix and Spotify.
Why do businesses use SaaS
B2B SaaS products are particularly beneficial insofar as they can drive rapid growth and improve sales potential. For example, they can instantly increase the customer support capacity of a business, improve the efficiency of sales teams, and generate leads by assisting with both outbound and inbound marketing campaigns.
Stages of a SaaS company
During the lifecycle of a SaaS company, there are specific stages that it moves through. Typically, they’re built in three phases, from pre-startup and setup to growth, and finally maturity.
Pre-startup can also be referred to as the problem or solution fit phase. As the name suggests, it involves identifying problems to which your SaaS offering could provide solutions.
Here, it would help to identify potential customers and conduct market research to understand their core needs. Once a minimum viable product (MVP) is created, companies should find investors and establish relationships with advisors and mentors.
As a startup, your SaaS should focus on finding where it fits into the current marketplace. This means refining the features of your software to stand out from the crowd and using key metrics to identify your target consumers.
If you have yet to secure seed money, it should be done at this stage alongside procuring your first paying customers and making essential hiring decisions.
Once you have a business with paying customers, the next stage in the SaaS lifecycle is to create a base of loyal consumers and establish trust in your services. You should refine the customer experience and focus on viral growth.
Use social media to engage with potential customers and identify possible sales channels. The aim here is to set up a repeatable sales process, one that is efficient and presents opportunities for scaling.
To grow your business, it’s crucial to drive traffic and convert site visits into sales. At this stage, your business will need to alter its focus from revenue growth to profitability. Your company may also need more investment to support customer acquisition efforts.
Make sure to track costs so they don’t scale faster than revenue and educate your team on the possible risks and problems that may arise as you scale.
A SaaS firm reaches maturity when a loyal customer base has been attained, and a consistent sales process has been put in place.
While growth will be slower at this stage, it should not halt altogether. Companies should look for growth opportunities in a wider marketplace (potentially globally) and consider adding new products and services to their existing lineup.
Alternatively, a SaaS platform might embark on an IPO or look for acquisition opportunities.
Top 20 software as a service (SaaS) companies of 2022
Dialpad is an AI-powered cloud-based business phone system. It provides users with the latest in VoIP telephony technology and can be accessed from any internet-enabled device.
User reviews highlight call quality and 24/7 customer support. The service also offers integrations with CRM tools, ensuring customers are connected with the technology they need to conduct their day-to-day business operations from one platform.
Affise is a performance marketing solution that enables brands and agencies to create and manage a global network of affiliate partners. As well as connecting you with market leaders, the platform comes with a range of tools to streamline your networking and marketing.
Automation helps you track and analyze your web-based advertising, attribute sales to the right channels, and get notifications about campaign performance.
3. Automation Anywhere
Automation Anywhere is a robotic process automation (RPA) solution. It’s designed to help businesses across various industries by automating end-to-end operations.
Bots are built based on data gathered from reports on business performance and metrics. Next, they are integrated based on individual requirements.
Unlike traditional ERP systems, Brightpearl offers a digital operations platform (DOP) built for retail. It integrates various functions from order management to fulfillment, inventory management, reporting and planning, and warehouse management.
Uniquely, it also offers integrations with digital marketplaces like Shopify, Amazon, and eBay, alongside real-time automated trading insights and reports. Brightpearl is designed to scale with your business, providing in-house tech support and ongoing business consulting.
5. Global App Testing
Global App Testing is a crowd testing and intelligent automation tool for engineering and QA teams. It enables faster product releases by allowing teams to scale processes with ease.
Global App Testing is a cloud SaaS and web-based self-serve QA solution and delivers test results in 48 hours or less. User reviews highlight the ease of use of their mobile app testing features.
RingCentral is an award-winning SaaS telecommunications and cloud contact center solution. It is a business communications platform designed to help companies conduct virtual meetings from a variety of devices.
Typical RingCentral customers are SMBs and large enterprises. Their software is compatible with both Android and iOS devices and offers services like video messaging, cloud phone systems, and team messaging alongside real-time reporting and analytics on KPIs.
PureClarity is a platform that specializes in ecommerce personalization for increased conversions. It uses AI to collect data about your website visitors, tracking all interactions to help you personalize your site and emails with relevant offers and promotions.
There are plugins for all major ecommerce platforms, and features including automated product recommenders, personalized popups, and advanced audience segmentation.
OnlyDomains is a SaaS company offering domain names and email addresses, web hosting, and a website building tool. There are more than 900 global and local domain endings to choose from, which is great news if your preferred dot-com name has already been snapped up.
You can easily build your own website with the drag-and-drop editor, and there are customizable templates and themes to help you. OnlyDomains also provides SSL certificates for new and existing sites.
9. Survey Anyplace
Survey Anyplace is a SaaS tool for creating surveys, interactive quizzes, and assessments. Integrations are available with popular solutions like Mailchimp and Google Sheets. Personalized PDF reports are created for businesses based on respondents’ answers to quizzes and surveys.
10. Referral Candy
Referral Candy is a referral marketing SaaS product for online stores. It automatically tracks referrals and notifies customers when they become eligible for a referral bonus. It is suitable for freelancers as well as SMBs and offers chat support.
Airdroid is an Android mobile device management platform (MDM). It allows users to access their Android phones and tablets from their desktop computers.
Location tracking features and a real-time remote control let businesses, service providers, and IT professionals securely access and manage their devices from a centralized platform.
Toggl is a desktop app compatible with Mac, Windows, and Linux. It is a time tracking software solution offering timing and reporting services that are accessible from anywhere.
Users of this SaaS product can track work hours, billable hours, and personal projects and improve their productivity.
13. Help Juice
Help Juice is a knowledge base SaaS offering with advanced analytics, SSO, and instant intelligent search features.
HubSpot is inbound marketing, sales, and service SaaS. It offers CRM, resources, and support alongside all the necessary integrations for effective content management.
Hubspot is used to carry out, track, and measure online marketing campaigns like blogging, email, and social media marketing.
15. Google Workspace
Google Workspace provides a suite of cloud-native collaboration and productivity apps. It offers access to Google Drive, Docs, Gmail, and more from one centralized source.
Shopify is a well-known ecommerce platform that allows users to sell online and at retail locations. It provides storefronts and payment solutions on one unified platform.
Currently powering over 160,000 retailers in over 100 countries, it offers competitive pricing in a crowded sector.
Slack is a proprietary business communications platform offering chat rooms, group, and private messaging. Its target audience is SMBs rather than freelance users. Apps and integrations are available as a workflow builder to automate routine actions.
Salesforce is a CRM tool for small and medium enterprises. It’s focused on customer service, marketing automation, and providing analytics. It supplies a unified ecosystem of tools to both connect employees and engage customers.
Avalara is tax automation software. It manages tax requirements by state, local, and other tax authorities with real-time calculations to ensure users are tax compliant. It also offers over 700 integrations with accounting, ecommerce, CRM, and ERP platforms.
Fleetsmith is a cloud-based MDM solution for small and medium enterprises. It’s designed to automate deployment and provide security and compliance for iOS devices. The platform manages tasks across multiple devices and automatically sets up new devices for employees.
Top 6 SaaS companies to work for
IT & security SaaS: Solarwinds
Solarwinds is a leading provider of IT infrastructure management software. It enables users to monitor their IT environments in the cloud or via hybrid models. Engaging with technology professionals and with a commitment to excellence in end-to-end hybrid IT management, it is a world leader in its industry.
As the company aims to further mitigate its security risks and protect its clients after a recent data breach, it will be looking to recruit employees with expertise in cybersecurity and for those who can contribute to the company’s international growth.
Customer support SaaS: Atlassian
Thanks to its popular customer support tools Jira and Trello, Atlassian has turned over billions in revenue. Various features like Jira product and issue tracking, document collaboration, and Trello boards for task management equip teams with the right tools to succeed in business.
As a company to work for, Atlassian receives strong reviews for employee care, with many employees saying it’s a good place to work.
Human resources SaaS: BambooHR
Bamboo HR offers human resourcing solutions as SaaS. Tasks include application tracking, employee onboarding, time-off tracking, and performance management, available from one centralized platform.
Currently a small team with under 1000 employees, the company is looking to recruit individuals to grow with them and share the same value for efficient problem-solving.
Product-based SaaS: Typeform
Typeform is a survey and form creation SaaS data collection tool. It works from anywhere and creates interactive and hassle-free survey solutions. Used by companies like Apple, Uber, and Nike, it has grown exponentially since founded in 2012.
As more businesses seek to automate day-to-day processes, Typeform will be one to watch. Especially as it continues to improve its developer platform.
Engineering SaaS: Browserstack
Browserstack is an India-based web and mobile testing platform. It is used by over 25,000 customers globally and ensures easy testing and seamless integration with existing business setups. Founded in 2011, it recently raised $200 million in series B round funding.
With the ongoing global pandemic making tools that test software even more necessary, Browserstack has significant growth potential.
DevOps SaaS: PagerDuty
PagerDuty is a SaaS incident response platform. It integrates machine learning and human intelligence to help teams detect and fix infrastructure problems.
As a leading player in its field, and recently having added more features for problem diagnosis and response, PagerDuty is a constantly evolving and modernizing software provider. With an increase in the pipeline, it is a top SaaS company to work for.
FAQs about Software as a Service (SaaS)
How do I choose between SaaS and on-premises?
SaaS solutions are better suited to users looking for regularly updating services without the resources to store software locally. In weighing the options, consider if you prefer a monthly or one-off payment and the pros and cons of storing your data remotely.
Can I customize SaaS software?
Generally, SaaS products can’t be modified by building customizations. However, given the ease with which providers can update and amend their services, SaaS is likely to be improved on an ongoing basis and customized to suit its user base.
Who owns my SaaS data?
The contract with your SaaS provider will outline rights of ownership. Typically, SaaS vendors own base applications ,and customers retain ownership rights and intellectual property rights for their content.
Is my data safe in the cloud?
Often, cloud data is stored more securely than data held domestically on hardware. Cloud storage solutions continue to improve their security features with technological developments, but users should be mindful of malware and phishing emails.
What is a private cloud?
A private cloud ensures data privacy through firewalls and internal hosting. It is usually offered to specific users rather than the general public.
What happens if my SaaS vendor goes out of business?
When a SaaS vendor goes out of business, they may be forced to take their services offline before you have retrieved your essential files. To avoid a crisis, businesses should ensure they have backup systems and SaaS alternatives.
Always check your service-level agreements for specified uptimes and terms of access.
What should I know before starting a SaaS company?
Before embarking on a SaaS startup, you should ensure you have budgeted for the SaaS lifecycle, formulated a business model and schedule, tested that your software is scalable, and your product is appropriate for subscription-based selling.
Conclusion: Getting started with a SaaS Company
What buyers need to know
SaaS is a cost-effective solution for streamlining your everyday business operations. To get the most out of your platform and ensure it integrates with your existing software, it is essential to assess the features and attributes of various software providers.
With so many companies offering free services and trials, buyers should test each SaaS product before committing to a subscription.
What sellers need to know
Software as a Service can be a flexible and adaptable solution for businesses looking to acquire recurring revenue from their products and services. However, to thrive in such a competitive and ever-expanding industry, it is paramount that your brand stands out from its rivals.
Before getting started with your SaaS company, refine your product, identify its target audience, and outline a marketing strategy. Here at accelerate agency, we can lend a hand. We’ll help you get quality leads and higher conversion rates. Click here to book a consultation today!
Nick Brown is the founder & CEO of accelerate agency, a SaaS SEO agency. Nick has launched several successful online businesses, writes for Forbes, published a book and has grown accelerate from a UK based agency to a company that now operates across US, APAC and EMEA and employs 160 people.