If you’ve ever purchased software for your organization, then you’re likely familiar with the term SaaS, or Software as a Service. SaaS is a licensing and delivery model that offers customers all the benefits of an application without requiring continuous software upkeep by in-house staff or a third party. True SaaS applications deliver the latest and greatest through the Internet to a computer or mobile device.

Think of SaaS like owning a car that never gets old, because you’re always driving the latest version.

Upgrades and enhancements happen automatically, without having to download patches or new versions. Examples of true SaaS software applications are Netflix, Instagram, or Expedia – to name a few. You can access any of these tools from your computer or mobile device, and you will always receive the latest version available to the general public.

When it comes to online payments, SaaS solutions are particularly important for addressing the unique needs of your organization. Here’s why.

The importance of SaaS for Online Payments

1. Pace of Innovation

Your industry is changing rapidly, and your organization needs the ability to keep up with new technologies. True SaaS delivers continuous improvement and requires no maintenance on your part. Since only one version of the software exists, it is simple and straightforward to roll out frequent and concurrent upgrades — so all clients are always current.

2. Importance of Security and Compliance

Ensuring the security of customer data is one of the most important tasks for an organization. When it comes to payments, making sure you have the latest security patches to remain compliant with industry standards is critical. Multi-tenant architecture creates a single instance of a software application that serves multiple customers, as opposed to a single tenant model hosted in the cloud. Client data is secured in individually partitioned databases, providing superior performance and maintenance while the entire application is wrapped and monitored in a secure environment.

SaaS solutions automatically roll out new security patches used by all clients at the same time, which ensures your organization is offering the best (and most compliant) in data security. By their very nature, on-premises and hosted solutions cannot offer this far-reaching level of security or PCI compliance

3. Seasonality and Scale

Depending on your billing frequency, payments and collections are often seasonal. This means your organization needs the ability to scale up quickly and cost-effectively. Since true SaaS uses configuration rather than customization, it’s easy to scale the solution to meet your business needs.

Hosted and on-premises solutions, on the other hand, can actually stand in the way of growth. Since these hosted and on-premises solutions are built on individual stacks of code for each client, software upgrades become a manual process for both the provider and your organization. Not only does this create a burdensome workload for your staff, but service issues may arise if your chosen system can’t keep pace with company, or natural adoption, growth. This potential spike of service issues could then negatively impact your customer satisfaction and even contribute to unwanted churn.

Beware of Cloudwashing

To take advantage of the growing client demand for SaaS delivery models, many software providers claim to deliver SaaS applications, when, in reality, they are offering a traditional hosted or on-premises software solution with web-based access. Software cannot be “hosted” and be true SaaS because “hosted” software supports a single client. True SaaS is multi-tenanted, with a single instance.

Cloudwashing is a term used to describe the practice of “rebranding” on-premises or hosted software. It involves taking traditional software and running it on a cloud instance, while still marketing it as ‘cloud’ or ‘SaaS based’ to make is sound like true SaaS. Since organizations are becoming more aware of the benefits of true SaaS solutions, many companies without this setup are trying to position themselves as SaaS – without actually offering the real benefits of SaaS.

What does this mean for you? It means your organization needs to be able to tell the difference between a true SaaS vendor versus one that is cloudwashing to avoid issues like costly customizations or time-consuming updates.

At first glance, it can be difficult to notice this difference. There are, however, a few pointed questions you can ask a solution provider to answer to help you determine the true configuration of their system.

The following questions can be used to determine whether a provider is offering a true SaaS solution.

  • Are all your clients on the exact same codebase or are they on variations of a common codebase?A true SaaS solution has a single codebase for all clients.
  • Is the platform single instance multi-tenant or is it multi-instance?A single instance, multi-tenant solution is a configurable SaaS platform with a single codebase. This is the only true SaaS model. Multi-instance implies multiple instances of code that are unique to each client.
  • Does their website accurately depict what they provide?If a provider’s web site promotes “SaaS-based” solutions instead of true SaaS, it’s most likely cloudwashing.

Finding the right SaaS solution for your organization

When it comes to selecting any software solution for your organization, it’s important to understand and evaluate the claims providers are making. True SaaS software offers scalable, highly configurable and innovative solutions that continuously deliver value. These solutions enable your organization to provide your customers with the experience they are looking for as their needs change, while also addressing the unique characteristics of online billing and payments.