What is SaaS?

SaaS - Software as a service, is a software distribution model in which the software provider allows users to access data from any device with an active Internet connection via a web browser on its own network.

It is a network model that allows software providers to store and manage the servers, codes, and databases of users of a developed application.

There are several basic features used to classify a system as a SaaS solution. The approach methodology is the first. To be considered a SaaS solution, the software must be network-based and managed from a central location or hub. Users access the software via the Internet. Each user site offers a range of unique usernames and profiles. The software is able to recognize the user and provide him with the appropriate display and access to data.

The business aspects of software management, from pricing, partnership, and overall architecture, are designed to pay per user. Such a structure must be set up at the initial design of the system and requires significant effort to achieve. However, once the software is developed, the same rules apply to all users, regardless of the amount of new users.

All system maintenance is managed centrally. This is a big advantage because the service provider (software provider) has a much higher degree of control over the software. The provider retains access rights and can apply system configurations and fixes to all users at the same time. This type of control handles much of the work that is done with regular software at the user’s location.

The infrastructure required to run this type of software is significant and is often based on a service-oriented architecture (SOA). Such a structure creates opportunities for various functionalities such as interoperable services or modules. Each client is able to activate different services and expand their set of tools and modules based on their own needs and schedules. The design ensures that each module functions as an independent unit, integrating with other aspects of the software.


There are two important reasons why a SaaS application differs from traditional local software:

  • SaaS implementations do not require the installation of extensive hardware. This quality allows companies to transfer most of their IT responsibilities and reduces the time and costs involved in internal troubleshooting and software maintenance.
  • Second, SaaS products eliminate license payment costs, as is the case with the traditional software model, as it allows users to purchase and use on a subscription basis.

All SaaS solutions have three common features:

Licensing model: Customers pay by subscription or by consumption.

Deployment: The software is owned, supplied and operated by a third party using the Cloud.

Architecture: works on the principle of "one-to-many" model, one set of common rules and code is applied to all users.


History and development

In a speech to MIT students, John McCarthy, a renowned computer scientist who won the Turing Award for his work in artificial intelligence (AI), famously said, "Computing may one day be organized as a public service."

In other words, the concept of computing in the Cloud began as a shared resource of computing power. Although the idea has been around for some time, the internet technology needed to support SaaS matured in the late 1990s. Then companies like Salesforce - which was founded specifically to create cloud software - began offering traditional enterprise solutions, such as customer relationship management (CRM), through the SaaS model.


SaaS vs on-premise software?

On-premises or local software is installed and run on computers in the physical premises of the client or organization that uses the software, not in a remote facility such as a server headquarters or the Cloud. On-Premise software is established within the organization’s system along with the hardware and other infrastructure required for the software to function. The software consists of a database and modules that combine to specifically meet the unique needs of large organizations in terms of enterprise-wide business system automation and its functions.

The choice between SaaS and a local solution involves the assessment of several factors. It is no longer the case that customers have to choose between flexibility and functionality. Most cloud-based software today can offer exactly the same experience as a local installation.

The bigger question is about data ownership. The vast majority of software companies still place data in the possession of the end user, but it is certainly essential to review the service agreement to understand exactly how your data will be used.

There are several important items to understand before choosing the right solution, and these are software cost, implementation, customization, maintenance and customer support, scalability, upgrades, and security.



The initial investment of single and multi-purpose SaaS is quite low compared to local solutions. But the annual cost of SaaS can be high and companies could end up spending more in the long run. SaaS pricing models are flexible, while upgrade costs are also quite low. SaaS minimizes the costs associated with internal resources and IT support because the service provider is responsible for most things.

Input and operating costs of local solutions are high, but current maintenance costs are low. Companies also need their own IT infrastructure and human resources to create a new environment and provide support. Own solutions also have higher upgrade and maintenance costs.



SaaS solutions can be implemented in a shorter time compared to internal solutions. This is because users can start work immediately after signing up for a subscription. SaaS solutions use an existing platform that has already been implemented, prepared and tested by the vendor. On the other hand, local solutions need time, human resources and money, while they also need to be upgraded manually, either software or hardware.



Personalizing multitenant SaaS solutions is usually not possible because a large number of users have to share the same instance of the application. However, customizing a single SaaS tenant is fairly simple if the application allows it. Local solutions offer more flexibility in this regard and allow companies to adapt almost anything. Better customization also refers to greater control over how information is processed, stored and presented, which is not something that most SaaS vendors pay attention to.


Maintenance and support

SaaS requires very little or no IT to maintain and support applications, which is mostly limited to validation and customization. Because the service provider takes responsibility for ensuring availability, security, and disaster recovery, companies do not have to worry about IT matters. However, companies must entrust the processing of valuable corporate data to the service provider.

As for local solutions, companies are responsible for everything themselves, including software installation and maintenance. Internal IT staff must also ensure availability, but in return, companies gain complete control over their data and a much more pronounced sense of ownership.



SaaS solutions can be easily adapted to growing business needs, while they can also very easily cancel or unsubscribe to reduce resource wastage. Local solutions require long-term scaling planning and are often not the best solution for growing companies because they require large investments in the form of IT.



Local upgrades are often expensive and time-consuming, while IT staff is responsible for planning, implementing, and validating upgrades. SaaS upgrades are easier, repetitive, and require little involvement from internal IT staff.


Safety and compliance

Local solutions require additional time and resources for a high level of security. Top SaaS providers offer significant security and take care of server and network monitoring. Providers provide basic validation for user review, and enforcing regulatory requirements is fairly straightforward. In the case of internal solutions, internal IT staff is responsible for verifying and implementing regulatory requirements. But because they have complete control over the system, enforcing regulatory requirements is relatively easier.


SaaS, PaaS and IaaS

Software as a service

SaaS - Software as a service uses the Internet to provide various services through applications and platforms. Third parties manage SaaS systems, and users do not need to download or install software. Examples of SaaS applications include Salesforce, MailChimp, and Slack.

Infrastructure as a service

IaaS - Infrastructure as a service, which provides services such as data storage, network access and virtualization based on pay-as-you-go models. It allows a company to purchase resources on demand. IaaS service providers include DigitalOcean, Google Compute Engine and OpenStack.

Platform as a service

PaaS - is a type of platform that enables the development of web applications, quickly, easily and without the complexity of procuring and maintaining the necessary software and infrastructure, because this service allows developers to develop applications and services via the Internet.


Horizontal vs Vertical SaaS

  • The Horizontal SaaS focuses on a range of categories or skills. Horizontal SaaS services are mainly used in marketing, automation, human resources and IT niches.
  • Vertical SaaS services are specific to specific niches such as e-commerce, project management and so on.

The horizontal SaaS is usually the more common model on the market, and the model has been around for more than ten years. This type of SaaS focuses on a category of software, which meets a wide range of business needs.

Some prominent examples include QuickBooks (accounting), Salesforce (CRM) and HubSpot (marketing). Horizontal SaaS wants to provide a broad service that can cover a wide range of markets across different industries. Slack is one example - they run paid advertising for different types of companies.

Unlike horizontal, vertical SaaS providers, they produce software that is targeted at a very specific industry. This is a newer trend in SaaS, which is not as mature as the horizontal market.

Some examples of vertical SaaS include:

BioIQ - Health Testing Software.

Guidewire - Software solutions for the insurance industry

MachineDesk - Production project management system

The vertical SaaS model does not aim to cover a wide category of products; instead, they focus closely on specific industries. Their solutions are intended for clear industrial niches and thus narrow the size of their potential market.

Differences between horizontal and vertical SaaS

Security and data management

Data security is one of the most important things that every organization must take care of. The SaaS provider must ensure that the storage of SaaS data is in a very secure environment. Several SaaS freemium offer no guarantee of privacy and data management policies.

Therefore, companies must be sure to contact a trusted SaaS vendor that has strict privacy regulations, along with an appropriate data protection agreement.

To ensure the security of customer data, regulators have issued security guidelines, including the GDPR, the EU-US and the Swiss-US Privacy Policy, which are mandatory to follow as a SaaS company.


Where is my data?

"Cloud" refers to servers accessed via the Internet and software and databases running on those servers. Cloud servers are located in data centers around the world. By using Cloud computing, users and companies do not have to manage physical servers or run software applications on their own machines.

Cloud computing is possible because of a technology called virtualization. Virtualization allows you to create a simulated, digital “virtual” computer that behaves as if it were a physical computer with its own hardware.

Servers accessed via the Internet

Types of Clouds

Private Cloud: A private Cloud is a server, data center, or distributed network entirely dedicated to one organization.

Public Cloud: A public Cloud is a service that is run by an external vendor and that may include servers in one or more data centers. Unlike the private cloud, the public cloud is shared by multiple organizations.

Hybrid Cloud: A hybrid cloud deployment combines public and private cloud, and may even include local legacy servers. An organization can use its private cloud for some services and its public cloud for others, or it can use public cloud as a backup for its private cloud.

Multicloud: Multicloud is a type of cloud implementation that involves the use of multiple public clouds. In other words, a polyphonic deployment organization leases virtual servers and services from several external vendors - to continue the analogy used above, this is like renting several adjacent plots from different renters.


SaaS in business

Software as a service

Advantages and disadvantages of SaaS

Here are some key benefits of SaaS:

  • No need to maintain or download data on the user's system
  • The user can find simple and flexible subscription-based payment models
  • Allows business owners to select only those features that are necessary for their business in the SaaS system
  • The SaaS system is easily available worldwide

Disadvantages listed by people using SaaS products

  • SaaS products cannot be owned, data and everything related disappears the moment you stop paying for the software, ie the subscription is terminated
  • Integrating SaaS products with other programs is always complex


SaaS implementation

Here are some tips that allow any organization to easily adapt to SaaS-based solutions:

  • Conducting high-level training for employees and staff and teaching how SaaS differs from other software solutions and how it can be used effectively for the growth of a company or organization
  • Planning a distinctive financial model that ensures the cash flow of the organization in a different way and easy monitoring and analysis of cash consumption


The most famous examples

Many people use SaaS products without knowing that it is a SaaS service. Here are some SaaS products commonly used by people around the world.

HubSpot - is an American retailer of software products for marketing, sales and customer service.

Shopify - is a Canadian multinational e-commerce company.

Dropbox - is an American company that provides services of "hosting" (storage) files.

Mailchimp - an American platform for marketing automation and email marketing services.

Jira Software - is software development or project monitoring software developed by Atlassian, which enables error tracking and agile project management.


SaaS in industrial companies

In recent years, Software as a Service (SaaS) has emerged as a solution for manufacturers as an alternative to local systems. Significant developments in cloud technology have made SaaS more powerful and affordable for businesses.


Here are 3 reasons why SaaS is a great solution for manufacturers:

SaaS has lower total cost of ownership
With SaaS, the manufacturer does not bear the initial infrastructure costs. They don’t have to pay any maintenance costs because the software company maintains the servers. The manufacturer also saves on the cost of training and retraining of IT staff.

SaaS is more reliable
SaaS works on multiple data centers, which means that data can be accessed from 0 to 24 hours. SaaS also uses sophisticated data encryption so that your sensitive data is well protected. Furthermore, SaaS allows you to update software and fix bugs in real time, so you'll never have to wait for the latest version. You can avoid the cumbersome local update process, so there is no need to reconfigure and migrate.

SaaS is faster and more flexible
Perhaps the biggest benefit of SaaS for manufacturers is its flexibility and ease of use. SaaS is simpler than local solutions from the start. There is no need to install software, so getting started is as simple as signing up online. Implementation time is significantly shorter. Once you get started, you can access the software from anywhere. You can gain insight into each part of the production and the department using your phone or tablet because you are not connected to the application on your desktop computer.


The biggest advantages of using SaaS in manufacturing companies:


Reduced operating costs

Access to the software package is by subscription (usually annual or monthly), however, the use of traditional software requires obtaining a license. In addition, maintenance costs need to be planned to use traditional software, while maintaining and updating SaaS software is done automatically by software providers. Hence the economic interest in using SaaS in industry.


Accessibility and mobility

To access the SaaS system, simply connect to the Internet via a multimedia device, whether it is a computer or a smartphone. This emphasizes the concept of data mobility, which is an advantage of the digital transformation of the industry. In fact, the software package allows you to connect a remote workshop to the same database to ensure better communication and information exchange.


Data security

Because it is based in the Cloud, SaaS is protected from any disaster that may occur in the factory. Therefore, industrial data is reliable, which ensures the continuity of production.


Examples of SaaS solutions intended for production companies

The transition to Industry 4.0 and digital ways of doing business is a growing trend in business, including the manufacturing industry. With the advent of ERP (Enterprise Resource Planning) and MES (Manufacturing execution system) solutions, manufacturing companies are moving to an increasingly automated way of working, easier to run production and become "smart factories".

Such software offers many possibilities - from automated management and monitoring of warehouses and machines, to data collection and connection of employees, machines and all departments of the company. There are a large number of such software in the world, and even in Croatia.

MachineDesk SaaS solution in the Cloud is intended for small and medium-sized companies from machining industry. This software makes it easier to monitor and manage the entire production process, from material procurement, production and machine management, to final products and tracking results. Connecting all departments in one place and a simple overview of projects, employees, machines and storage, allows complete digitalization and a significant increase in productivity.


 SaaS solution in Cloud for project management in machining


Compared to traditional software solutions, the benefits and flexibility offered by SaaS solutions are many.

Some of the most significant are low implementation costs, time savings due to the introduction of ready-made and existing solutions, instead of new personalized software, and payment based on subscription or consumption, which allows you to cancel your subscription and cancel costs at any time.

Cloud-based SaaS solutions can transform a business. They can significantly help organizations looking for a more accessible and easier-to-manage IT infrastructure that can be maintained by a smaller and less specialized IT team.

SaaS solutions automate many time-consuming day-to-day software maintenance tasks, offering both data protection and disaster recovery support - as well as the flexibility and agility to scale the software to meet the company's growing needs.

Although there are potential disadvantages of SaaS, such as possible data security breaches, the advantages outweigh the disadvantages. Therefore, software as a service can help companies save valuable time and resources while helping them focus more on their core business.

Are you ready to improve your business with SaaS software?


Klara Markotić
Content Creator at MachineDesk with a particular interest in marketing and social media.