When you think of SaaS, what comes to mind? I would say most people jump to SaaS pioneer companies like DocuSign or Salesforce, since they are all big names in the game today.
SaaS is now a regular way of purchasing and using software. With it’s cloud benefits and month-to-month subscriptions, SaaS is not only growing, but surpassing the downloadable software of the past with projections showing continued growth for the future.
Even though SaaS has changed the way businesses operates, especially during the year of remote workers and Covid-19, SaaS began on an experimental level back in the 1960s. Known as ‘a time sharing system,’ SaaS started as a way to combat big and expensive computers that many businesses could not afford.
In this article, we will review key moments in SaaS history and share what you need to know about software as a service.
What is SaaS?
SaaS is the most popular form of cloud computing. Arguably, SaaS is the easiest form of cloud computing too, with little to none pressure on managing your own software. Likewise, SaaS is out-of-the-box ready to go! You do not need to install SaaS onto your device, rather your applications can be accessed via cloud. An example of SaaS is Microsoft Office 365, where you can share files via Microsoft Teams and edit in real-time using the cloud!
Other key characteristics of SaaS include:
- Cloud based software
- Hosted online / delivered online
- Most commonly used cloud service
- Does not need to be downloaded or installed
- Out of the box solutions
- Offering security, compliance, and maintenance as part of the cost
- Most modern SaaS platforms are built on IaaS or PaaS platforms
The History of SaaS
Though computers did exist in the 1960’s. their ability to perform functions took a lot of time. With the help of MIT, the first demonstrated SaaS was developed and known as Compatible Time-Sharing System (CTSS). CTSS not only reduced the cost of computers, but helped them become a bit faster with computing!
Over the next 30 years, computers kept improving, becoming faster, more affordable, and more compact, which allowed for businesses to switch from manual to more automatic practices. This began the ‘ownership’ idea with personal computers, which incorporated paid on-premise, downloadable software in order to do functions / tasks.
Another big boom was the rise of the dot com, which can be attributed to 1994. Netscape Navigator shared the Secure Sockets Layer (SSL) protocol, enabling encrypted transmission of data over the internet so customers could shop online without fear of losing their data/ personal information. With this, there was development of online marketplaces, which now Amazon dominates.
Additionally, the growth of internet usage helped cloud computing develop into what it is today!
On-premise vs Cloud Computing
On-premise was the way we used to do things, but after the development of the cloud it is easy to see that on-premise should be left in the past. A huge downfall of on-premise is where and how the applications are managed. You must use the same device the application is installed on to use it. Additionally, you are required to manage it on your own, which means ensuring you perform the updates, track your usage, and ensure you are not in violation of your licensing agreements.
When using on-premise, you must manage:
- Applications
- Data
- Runtime
- Middleware
- O/S
- Virtualization
- Servers
- Storage
- Networking
But thankfully SaaS takes away all that pain and worry by automating business practices through the cloud.
Cloud computing allows software to be installed on remote servers. This helps reduce the amount of maintenance on IT, as well as encourages a global workforce, because cloud software can be accessed from anywhere. SaaS developers often focus on being the best-of-the-breed in their core area of focus/ function, which allows businesses to pick and choose which software they need for each function they are looking to improve. Of course, this boosted the creation of SaaS service providers, which is the best option for helping businesses manage their current software usage and spend.
Key Figures and Moments in SaaS
Event #1 – The invention of the software compiler
In 1952 Grace Hopper was working for the US Navy when she created the first software compiler for the A-0 programming language. This meant for the first time software could be written once and then transferred from one computer to run on many others. The idea was further developed by IBM and it became the norm for software to be written once and used on many different devices for different users. This had implications for software in that it became a product in it’s own right. Interestingly when Grace Hopper was asked why she created the compiler she explained that basically she was lazy and didn’t want to keep doing the same thing over again when she could do it once and transfer it many times.
Event #2 – Bill Gates’s letter to hobbyists
Early in the career of Bill Gates he became frustrated by hobbyists taking the software that he and Paul Allen had created and copying it and using many times. In February 1976 he wrote an open letter to computer users complaining that the hard work of computer programmers was being taken and used free of charge. He distributed the letter through the computer magazines of the day and started to put in place his strategy for selling software licenses. Microsoft followed the model of selling software that would work on personal computers made by other vendors and their licenses would need to be paid for.
Event #3 – Larry Ellison meeting with Evan Goldberg and Marc Benioff
In the late 1990s Larry Ellison was discussing the future of computing with Evan Goldberg and Marc Benioff. The internet was gaining popularity and all three were contemplating the impact this would have on business software. The discussion focussed on what has become known as cloud computing and how this would change the face of software. Business Insider magazine pinpoints this discussion as the invention of cloud computing and the SaaS business model. Evan Goldberg went on to found Netsuite and Marc Benioff started Salesforce.com, the rest is history.
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