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SaaS 101: Decoding the Key SaaS Terms

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5 mins to read

Industry jargon can be confusing to wrap your head around, whether it's a new field or you have years of experience. SaaS is no exception, with its own set of unique and constantly evolving terminology.

Here's our quick guide on SaaS terms that will familiarize you with commonly-used terms. 

Overview of the SaaS Model 

Before we get into SaaS terms, let's explain this business model a little. SaaS stands for Software as a Service. 

Simply put, the ''service'' in this business model is software. It can be anything like a project management solution, a telematics system, a collaboration tool, or a messaging platform. 

The users pay a subscription (usually on a monthly or yearly basis) to access and use the software, whereas the provider manages: 

  • Software hosting 
  • Maintenance
  • Regular updates
  • Security
  • Support 

SaaS Simplified: Key SaaS Terms You Need to Know

Now that we've cleared the basics, let's move on to common SaaS terminology. 

User Experience (UX)

User experience (UX) is how a user interacts with and experiences the software or application. It includes ease of navigation, design aesthetics, functionality, and overall satisfaction while using the software. 

Most developers dictate the following components of user experience: 

  • Usefulness
  • Desirability 
  • Credibility
  • Usability
  • Value
  • Accessibility 
  • Findability 

An example of a good user experience is Spotify's simple and intuitive interface. You can find your favorite songs with a simple search feature. The library is also organized by artists and albums for easier navigation. Spotify also releases end-of-year Wrapped stories that further improve user experience. 

The aim of user experience is to improve retention. If your website or app is hard to use, the users will look for an alternative. But if it's the opposite, they will stick around, increasing the overall customer lifetime value (CLV), which is the amount of money a customer will pay for your software throughout their subscription. 

Subscription Billing 

Earlier, we discussed that the SaaS business model has a subscription-based payment design. Subscription billing means you pay a fixed amount of money for the software or service at regular intervals. 

The most common subscription billing cycles are annual and monthly. In most cases, the formal tends to be cheaper. 

For example, Software A has three payment plans: Gold, Silver, and Platinum. Here's what they cost: 

  • Silver: $20/month, $200/year
  • Gold: $40/month, $400/year 
  • Platinum: $60/month, $600/year

Each plan will cover certain features. The more expensive the plan, the more features you'll get. 

Big Data 

A massive volume of data is called Big Data, be it social media, healthcare, defense, investment, or any other industry. The Big Data analytics market will bring in a revenue of $68 billion by 2025, mainly because the world uses Big Data for business intelligence and decision-making. 

Some examples of Big Data are: 

  • Transportation: Data from traffic sensors, public transport, weather forecasts, GPS, etc. 
  • Healthcare: Electronic Health Records (EHRs) of patients, their symptoms, medical history, surgical records, research papers, etc. 
  • Marketing: Consumer sentiment analysis data, market research, competitive analysis, historic sales data, etc. 

Platform as a Service (PaaS) 

Platform as a Service (PaaS) is a cloud computing model that provides a platform for developers to build, deploy, and manage applications without infrastructure maintenance. Some examples of PaaS are: 

  • Microsoft Azure 
  • OpenShift 
  • Google App Engine
  • AWS Lambda 
  • Heroku 
  • Oracle Cloud Platform 
  • SAP Cloud Platform 

PaaS equips developers with hardware, software, and infrastructure that they can use to run and manage applications. With this model, developers don't have to build an on-premise platform. 

Vendor Lock-In 

In SaaS, vendor lock-in happens when the vendor's technology becomes an integral part of the customer's business, making it difficult to switch to another provider. Reasons why this might happen are: 

  • High costs of switching to a new provider 
  • Technical incompatibilities 
  • Legal constraints 

As a result, the customer becomes dependent on the vendor for continued services, even if the vendor is unable to meet their needs. 

Software as a Service (SaaS) 

Software as a Service (SaaS) refers to software applications that are delivered through a subscription model over the Internet. Some examples of SaaS are: 

  • Salesforce 
  • Microsoft Office 365 
  • Dropbox 
  • Trello
  • Zendesk 
  • Google Workspace 
  • Slack

Application Programming Interface (API) 

An API is a combination of rules that allow communication between different software systems. In the SaaS context, APIs act as a bridge between a SaaS product and other applications, allowing them to share data and functionality. 

For example, Slack's API allows developers to integrate their own applications with Slack. Consequently, users can send messages and create channels without leaving their main application. 

Infrastructure as a Service (IaaS) 

Infrastructure as a Service (IaaS) is a cloud computing model in which a cloud services provider provides computing resources, including: 

  • Storage
  • Network 
  • Virtualization
  • Servers 

IaaS eliminates the need for organizations to have on-premise data centers. Instead, they can purchase on-demand access to these resources from a cloud services provider. Examples of IaaS are: 

  • Amazon Web Services 
  • Microsoft Azure 
  • Cisco Metapod
  • Linode
  • Rackspace
  • Google Compute Engine (GCE)

The difference between PaaS and IaaS is that the former provides application deployment, execution, and development tools. On the other hand, IaaS offers virtual storage and machines. Both of these are different from SaaS, which constitutes pre-made software solutions. 

Put SaaS Terms to Use: Select Your Customer Service SaaS Platform 

Familiarity with SaaS terms is essential when it comes to selecting SaaS platforms for your business. The right platform can translate to efficient workflows and better outcomes. 

Speaking of outcomes, customer service is an integral ingredient in a company's success. In a world where customers have many options, exceptional customer service is inevitably a point of differentiation for businesses. 

A SaaS solution like JustReply can help you stand out from the rest. It is built with the mindset that everyone in your team ''should do support,'' and that's exactly what customers want today. With its Slack integration, JustReply lets you manage your customer service conversations in one platform. Get started today to see its full potential. 

Experience magic with JustReply.

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