What Is a SaaS Company?

2 min read
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Executive Summary

The acronym SaaS stands for Software-as-a-Service, and it represents the shift from selling software licenses to providing access to services on a weekly, monthly, or annual subscription basis.

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The Background and Growth of the SaaS Model

Selling access to centrally-managed software for a recurring fee does in fact have a long history, stretching back to the days when computers took up entire rooms and companies would pay to come in and run programs and calculations on them- although my guess is they weren’t using trendy acronyms to describe this! The SaaS market is now a huge force in software, and getting bigger: one Statista survey estimates that the SaaS market has grown over two-fold since 2014, to nearly $160 billion. This trend shows little sign of slowing down, likely because buyers and sellers appreciate the benefits of the SaaS model. This means there will also be growing demand among SMEs for guidance on navigating a complicated SaaS market.

SaaS for Small and Medium Businesses

As small and medium-sized enterprises (SMEs) take advantage of the many new SaaS products available, they may become overwhelmed by the recurring charges, the difficult purchase choices, and the security issues that assigning credit cards and bank accounts to SaaS subscriptions creates. 
A variety of companies are popping up to help SMEs manage these challenges, from services that aid in training employees how to use specific software programs (eg Apty) to apps that consolidate, track, and manage companies’ subscriptions (eg NachoNacho).

Saas for small and medium businesses
SaaS for small and medium businesses

SaaS Benefits for SMEs

You probably already have an increasing number of subscriptions in both your personal and professional life. The great news is that so many of the business servicess that used to require substantial time and investment to set up and manage (like your website, payroll, HR, legal help and more) is now available on a pay-as-you-go SaaS basis. 

Companies love selling their services on a SaaS basis, but there are lots of reasons it’s a win for customers as swell. Delegating the difficult parts of the software implementation process to the seller allows the customer to focus on their own work instead of concerning themselves with installing hardware or downloading programs. The SaaS model’s recurring billing periods mean that software updates, bug fixes, and improvements are often covered by the customer’s plan without another purchase. Regular SaaS customers also often receive high-quality customer service, and enjoy a more precise pricing scheme: they get the opportunity to pay for their product only for the amount of time they need to use them, rather than swallow the large upfront cost of a single forever purchase.

These many benefits explain why SaaS companies are becoming so ubiquitous, and also point to why understanding what a SaaS company is and how they operate will be increasingly important in the tech industry.

About the author

Ken So

Written by Ken So

Ken is the Founder and CEO of Flowcast and Tillful. Having spent most of his career before Tillful in tech and investment banking, he covers all things business credit and finance with a twist of insider knowledge.

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