What on earth is Software as a Service (SaaS)?

Someone asked the other day if Wave is accounting software. The answer I gave: Not really. Wave isn’t software, but it takes the place of software and provides some added benefits.

I thought it might be worthwhile to give a plain-English explanation of what SaaS is (and therefore what Wave is) right here in the blog. Here goes my take on it:

Regular Software

With traditional computer software — something like Microsoft Word — you install an application on your computer. The application’s software (a.k.a. the program) lives on your hard drive.

Your computer’s brain runs the application, performing various calculations and tasks. Any data that you create — a Word document, for instance — is also stored on your hard drive, and you can access it whenever you’re at the computer.

SaaS: Software-as-a-Service

With Software-as-a-Service or SaaS (pronounced like "sass"), there’s no application to install. Instead, the program lives on a computer in another location, which you access via the Internet. (Since it's a computer far away from you, which you never see, people refer to this as "cloud computing.")

The only software you need to install on your own machine is a web browser like Internet Explorer, Firefox, Safari or Chrome, which you probably already have.

When you use a SaaS application, instead of asking your computer’s brain to do calculations and tasks, those things are performed by the program that lives "in the cloud" -- that is, by the far-away computer that the SaaS provider maintains.

And instead of storing your data on your hard drive, the storage happens "in the cloud" as well.

The good and the bad (mostly good)

How does this impact you as a user of a SaaS application? And is SaaS a good thing?

Some people identify the following disadvantages to a SaaS application: 1. Since your data lives on a computer that belongs to the SaaS provider, you have to pick a provider whose security you can trust. 2. If you’re not at a computer with an Internet connection, you can’t access your information. (There are a few exceptions, but that's generally the way things work.)

However, those disadvantages are met and, I believe, vastly exceeded by the following advantages:

  1. Mac, PC, or anything else: Since you access a SaaS application through your browser, Wave Accounting works on any computer that uses a standard browser. So Mac is no problem. PC is no problem. And any other kind of computer that uses a standards-compliant browser (like Firefox) will not be a problem either. In fact, you can do you accounting on a Mac one day, and a PC the next, and still get the same great service.
  2. Security in storage: In many SaaS applications, including Wave Accounting, the servers that store data are very secure, both physically (under 24-hour guard) and electronically (protected from hackers). In reality, the password protection some people have on their own computers, and the protection of most office networks, is much less than what commonly exists in the cloud.
  3. Security in transmission: If you email a spreadsheet to your accountant, there’s a security risk. Your email could theoretically be intercepted en route, or if your accountant leaves the computer unprotected, your spreadsheet could be accessed by an unauthorized person. With SaaS applications like Wave Accounting, instead of sending the file, you grant access to your data. The data remains behind our state-of-the-art security walls, and is only available to guests to whom you give permission.
  4. Backup: Everyone knows that they should back up their important files, and that the backup should be stored in a different place. But the truth is, most people don’t back up at all, or they don’t very often. If your computer was lost or stolen today, or if it crashed and couldn’t be fixed, how much would you lose? A day’s work? A week’s? A month’s? (For many people, the answer is “Everything!”) With SaaS applications like Wave, data is backed up hourly (!) and stored in multiple locations. That means: • If anything happens to your computer, your data isn’t ever lost. • If anything happens to our server, there is another server in another location that can pick up where you left off.
  5. Sharing/versions: For spreadsheets, as well as most desktop computer applications, the only way to share data is to hand over or send a file to someone (let’s call that person the collaborator). Now for starters, the collaborator must have a compatible version of the software you use or they won’t be able to read a thing. The collaborator can then read your file or make changes, but you yourself can’t modify the file until you get it back. When the collaborator hands the file back, there’s a chance that the file may become corrupted, or you might get a virus from the collaborator’s computer. With a SaaS application like Wave, there are a couple of specific sharing/collaborating advantages. Since there’s no software to install, your collaborators don’t need a thing other than a web browser. While your collaborator can access your files, you can still access them, too: your collaboration can be actual two-way collaboration in real time. Since there’s no file to send back and forth, there’s no file corruption. And since the application lives on secure servers, there are no viruses to transmit.
  6. No updates, ever. With a lot of software, especially accounting software, new versions are released every year. That means you need buy and install new software every year if you want to stay up to date. Since a SaaS application like Wave Accounting lives on our servers, you never need to upgrade or install anything: We do all the work at our end, making improvements immediately available to our users. And there’s no charge for the upgrade.
  7. Access anywhere: You can travel to the other end of the world, hop onto any computer, and as long as it has an up-to-date web browser and an Internet connection, and you still remember your username and password, you can access your files and work as if you were back at your usual computer.
  8. Less demand on your computer: Since a SaaS application uses the brainpower on the SaaS provider's computer, not the brainpower on your computer, you can use a less powerful computer to do the same job. That means you can purchase an inexpensive computer, like a netbook, if you prefer.

Not every application is suited to SaaS. But we think accounting definitely is. The security and backup features, and the ability to collaborate, make a SaaS accounting model really, really smart.