What is SaaS? How has Vietnam developed the SaaS model?

SaaS stands for Software as a Service. It is a software distribution model in which applications are hosted by a service provider or vendor and made available to customers over the Internet. Instead of purchasing software to install or additional hardware to support it, customers subscribe to a SaaS offering. Typically, this subscription is on a monthly or annual basis. SaaS removes the need for organisations to handle the installation, set-up, and often daily upkeep and maintenance of the software.

April 2, 2024

What is SaaS?

Software as a service (SaaS) is a cloud-based software delivery model in which the cloud provider develops and maintains cloud application software, provides automatic software updates, and makes software available to its customers via the Internet on a pay-as-you-go basis.

The public cloud provider manages all the hardware and traditional software, including middleware, application software, and security. So SaaS customers can dramatically lower costs; deploy, scale, and upgrade business solutions more quickly than maintaining on-premises systems and software; and predict the total cost of ownership with greater accuracy.

The history of SaaS

In the 1960s, mainframe computers were connected to dumb terminals that shared the mainframe’s software—a software delivery system known as time-sharing.

As the cost of computers began to fall in the 1980s, many businesses created their local version of time-sharing, which was called a local-area network (LAN). However, the business (not the technology provider) was responsible for supplying and managing the hardware and network.

With the advent of the Internet in the 1990s, providers began hosting software and making it available to customers via the Internet. This forerunner of SaaS called the application service provider (ASP) model, had serious limitations, however.

For example, each customer required their version of the software, which meant they had to install some software on users’ computers. Configuration was costly and time-consuming. And, finally, ASP solutions typically didn’t offer a way to collect and aggregate data efficiently.

The first SaaS solutions emerged in the late 1990s when the term SaaS was originally coined. This new model delivered much greater efficiencies than the ASP model. A single instance of the application could serve multiple users and even customers, thanks to its so-called multi-tenant architecture. Local installation of software was no longer required. And it provided a way to collect, aggregate, and centralize valuable application data.

While the delivery model has remained constant since the early 2000s, SaaS has evolved significantly from first-generation siloed solutions to modern SaaS suites that enable high visibility across the business and can extend the power of SaaS through embedded technologies such as AI, machine learning, chatbots, digital assistants, IoT, blockchain, augmented reality and virtual reality.

Some key characteristics of SaaS


SaaS applications can be accessed from any internet-enabled device, which allows users to work from anywhere at any time.

Subscription Model

Customers pay for SaaS applications via a subscription fee, which usually includes the software license, support, and most other fees. This can make SaaS more affordable than traditional software licenses.

Automatic Updates

The provider manages all updates and upgrades, eliminating the need for customers to download or install patches and updates.


SaaS solutions are cloud-based, allowing for instant scalability and flexibility. Customers can easily scale their usage up or down based on their needs without having to purchase additional hardware or software.

Security and Compliance

SaaS providers invest in security, backups, and maintenance to ensure their services are secure and in compliance with various regulations. This can reduce the burden on customers to maintain these aspects.

Integration and Customization

Many SaaS applications offer customizable settings and can integrate with other services. This allows for a more tailored experience that can fit specific workflow requirements.

SaaS is commonly used in various business applications including email and communication, customer relationship management (CRM), payroll processing, human resources management, billing, and more. Its ease of use, flexibility, and cost-effectiveness have made SaaS one of the most popular forms of cloud computing.

Advantages of the SaaS model

Thanks to knowing how to optimally utilize the Internet of Things (IoT), the SaaS model is increasingly dominating the technology market because of a series of practical benefits.

Save costs for businesses

It is a fact that the SaaS model helps businesses save cash costs, time, human resources, switching costs and opportunity costs.

With the SaaS model, you do not need to install and run software on the business system. That helps you save a huge amount of costs related to buying software licenses, installing hardware as well as building a new database system (up to $42,000 for one ERP software for example). During use, the SaaS model does not require you to pay additional support and periodic maintenance fees like on-premise software (about 15 – 20%).

Most SaaS models today focus on and sell software services in two forms: freemium, which allows you to use it for free first and then pay extra to use advanced features and premium, which is sold by subscription. Packages are based on the number of accounts and usage time. In both cases, you have the choice to stop subscribing to the SaaS service whenever you want, and the cost stops at that time.

The time and manpower required to deploy SaaS software are also much more economical than a traditional on-premise solution. Businesses have to spend up to 6 months or longer temporarily suspending the operation of some parts to completely install a cumbersome on-premise system and mobilising all the best technical staff to support it. As for the support team (usually only consisting of 1-2 members) of the SaaS provider, they only need a maximum of 2 days to set up accounts and train all employees in the business to use the software.

The SaaS model also helps businesses solve the problem of switching costs when installing and applying technology. Suppose the on-premise software encounters a problem during operation; all systems will "die." But when that software is outdated, it is difficult for businesses to eliminate it because the initial cost is too high. SaaS software is likened to a bus; you only need to spend a reasonable amount of money to take it wherever you want without having to buy a new car or worry too much about the car breaking down. middle of the street.

Always get the best software features

As a SaaS customer, you no longer need an IT department always on hand to handle technical issues during software operation. From ensuring the server system runs well and maintaining security to fixing bugs that arise,... the provider is responsible. Their tester and IT team do this part very well, and you will always get the best service from them.

Businesses also benefit from SaaS providers regularly automatically updating their software, including optimizing old features and adding more advanced features. You don't need to worry about buying newly released versions or technology patches.

Easy to use anytime, anywhere

Because SaaS providers deploy services over the Internet, users can easily access the software from any device and browser with an Internet connection.

With SaaS, you don't have to go to the office and open a computer with software pre-installed to be able to use it. When a business registers to use the software, you are allowed to create additional accounts (with a limited number depending on the package purchased) for employees in the business. You and your employees can sit anywhere at any time, perform a simple login, and use unlimited features.

Most SaaS vendors try to develop applications on multiple operating systems (Windows, MacOS, iOS and Android) and multiple browsers (Microsoft Internet Explorer, Google Chrome, Apple Safari, Mozilla Firefox, etc.) to support maximum user experience. Normally, you can log in on multiple devices at the same time.