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What is SaaS Hosting?

Software as a Service (SaaS) is a model of software development and usage in which customers access the software remotely — usually through a web browser — and pay a recurring subscription fee. The bulk of computational service and data storage is done on the remote server, and the user does not typically need to load and install the software onto their own local computer (though there are exceptions to that).

History of Software as a Service

Long before anyone ever used the phrase “Software as a Service,” the practice of sharing remote computer resources was common. In the 1960s, before the advent of the desktop computer, small companies who needed access to computing power would rent time on the mainframes of larger companies and universities. Within companies that owned large mainframes, individual users would access the computer using a terminal or “thin client” at their desk or work station.

After desktop computers became common, this mode of software consumption diminished. By the 1980s and 90s, the dominant model of application use was based on the idea of a personal computer.

With the rise of the internet in the 90s, a semi-hybrid model of application distribution evolved. Software that required multiple users, potentially at multiple locations, could use the internet to link several client applications to a server without having to build substantial infrastructure. These internet-enabled applications often continued to have robust desktop applications as well — partly out of developer habit, partly to reduce load on the server, and partly to reduce load on the network (this was before the days of highspeed internet).

As the technology and culture of web development have evolved into the first two decades of the twentieth century, several trends have contributed to rapid growth in the SaaS model:

  • Standards-compliant web browsers have made it easier to build in-browser user interfaces.
  • The AJAX paradigm and web services generally have helped spread an increased awareness of web application architecture.
  • The rise of social media has trained users and customers to want applications that connect them to each other.
  • The volatility of the economy has made software consumers wary of investing capital in software applications.

These factors — and many more besides — have led to huge growth in the SaaS sector, fueling the current startup boom and fundamentally changing how business thinks about software consumption.

Advantages of SaaS

As compared with the “conventional” model of software distribution — providing physical or downloadable copies of software for users to install on their own computers — the Software as a Service model has several advantages.

Advantages for customers include:

  • Lower upfront cost
  • Minimal per-user cost increase when adding new employees
  • Faster onboarding of new employees
  • Less complicated IT requirements
  • Easier integration of remote workers using their own computers
  • A more integrated and social application experience.

Advantages for developers and development companies include:

  • Ongoing, predictable revenue stream from subscription payments
  • Fewer compatibility and platform problems
  • Easier dependency management
  • No need to assist user installation
  • Lower barrier to sale
  • Decreased or eliminated need to troubleshoot onsite issues
  • No need to support multiple versions
  • Single-point update and release cycle
  • You don’t have to convince people to spend money to upgrade
  • You only have to worry about a release onto one server, the configuration of which you can control
  • Ability for a very short, or continuous, release cycle.
  • Natural affinity between SaaS development cycle and an iterative development approach, which generally reduces bugs and increases developer satisfaction
  • The low marginal cost of each customer, and the relative ease of moving between one type of plan and another, makes a Freemium business model viable. The helps spur growth, as it reduces the risk to purchase.


Problems and Disadvantages of Software as a Service

  • Since data customer data is being regularly transmitted over the internet, and stored by the development team, security is extremely important.
  • Some people have fundamental issues with third-party data management and computing altogether — either because of specific legal requirements (common in worked for the Federal Government) or because of philosophical reasons (see, for example, Richard Stallman’s essay on SaaS and Freedom).
  • Not owning a physical copy of the software makes you reliant on the ongoing viability of the company and their ongoing support of the product.
  • The business of software development now has to include the business of server management.


Hosting for SaaS Applications

For developers of SaaS applications, the hosting and server management required to keep near-100% uptime is a critical part of the business and IT planning.

Many — perhaps most — developers of Software as a Service applications do not directly run and manage their own servers. This is particularly true of startup SaaS businesses, for whom the capital investment simply doesn’t make any sense. Instead they tend to rely on scalable, cloud-based, managed hosting plans, becoming consumers themselves of “Infrastructure as a Service.”

This allows them to concentrate on their core business, while leaving the hosting and server management to expert dedicated to providing an excellent service.

SAAS Frequently Asked Questions

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