What is SaaS Hosting? The Complete Guide
Looking for a place to host your SaaS business? Or, are you hoping to set up a SaaS hosting environment yourself and sell it to other SaaS companies - but don’t know where to start? Either way, you’ve come to the right place. We’re going to teach you everything you need to know about hosting SaaS environments.
Below, you’ll learn about the different types of hosting solutions for SaaS companies - and the pros and cons of these environments in the first place. We’ll also discuss what SaaS businesses should consider when choosing a hosting provider - along with what hosting providers should know about setting up and managing their solutions.
We’ve obviously got a lot to cover, so let’s start with a definition: what is SaaS hosting?
What is SaaS Hosting?
SaaS (Software as a Service) hosting is a cloud computing model that allows businesses and individuals to access and use software applications over the internet, rather than installing and running them on local computers or servers.
With SaaS hosting, the software is hosted and maintained by a third-party provider, who takes care of hardware infrastructure, software updates, security, and other technical aspects, while users can access the software from any device with an internet connection.
This model can be used for a variety of software applications, including customer relationship management (CRM), enterprise resource planning (ERP), human resources management (HRM), project management, and many others. In general, hosting SaaS with a 3rd party is best suited for software applications that require frequent updates, easy access, and flexible usage options. Below, we’ll highlight the pros and cons of this approach for businesses like yours.
Pros and Cons of Hosting SaaS in a 3rd Party Environment
Now - there are obvious benefits to installing and running your software applications on your own local computers or servers. So - why would you consider hosting elsewhere and sacrificing that control? Below, we’ll highlight both the pros and the cons of hosting SaaS applications with a 3rd party.
- Lower upfront costs: As mentioned in the previous section, this tactic eliminates the need for businesses to purchase and maintain expensive hardware infrastructure and software licenses upfront. Instead, businesses pay a recurring subscription fee based on their usage, which can be more cost-effective in the long run. If you’re bootstrapping your SaaS business, this is a huge advantage.
- Easy scalability: hosting SaaS offerings elsewhere allows businesses to easily scale their software usage up or down depending on their needs, without worrying about hardware limitations or installation issues. This is especially beneficial for businesses with fluctuating demands or seasonal spikes in usage.
- Automatic updates and maintenance: SaaS host providers handle software updates, security patches, and other maintenance tasks, freeing up businesses to focus on their core activities. This ensures that businesses are always using the latest version of the software and that security vulnerabilities are quickly addressed.
- Access from anywhere: Users can access their software applications from any device with an internet connection, making it convenient for remote work, collaboration, and mobile usage. This is especially important in today's increasingly mobile workforce, where employees may be working from different locations and devices.
- Easy implementation: Hosting providers typically offer easy-to-use web-based interfaces and APIs, making it easy for businesses to integrate their existing systems and workflows with the hosted software. This reduces the need for custom development or extensive training.
- Dependence on the provider: Businesses are reliant on the provider to ensure the software is available and running smoothly. This means that any downtime, service disruptions, or data breaches on the provider's side can impact the business's operations and reputation. And there’s no worse feeling than when your customers are complaining and there’s nothing you can do about their problems.
- Limited customization: Providers typically offer a standardized software solution that may not be fully customizable to the business's unique needs. This can be a drawback for businesses with specific requirements or workflows. With that said, you can address this issue by carefully vetting the host you choose. More on that later.
- Data security and privacy concerns: Because you’re storing sensitive business data in the provider's cloud infrastructure, there are obvious concerns about data security, privacy, and compliance. Again - this is a risk that can be offset by carefully evaluating your provider's security and privacy measures before integrating. We’ll talk about this later as well.
- Subscription costs: Hosting your SaaS with a 3rd party is cost-effective in the long run, but you must carefully evaluate the recurring subscription costs and ensure you’re getting the right level of service for their needs. Over time, the cumulative subscription costs can add up and eat into your profits. With that said, there are also costs associated with hosting your SaaS in your own local environment - so you’ll need to do a cost analysis of the two options to see what makes the most sense.
- Limited control over software updates: While automatic software updates can be a benefit, they can also be a drawback if businesses require more control over when and how updates are rolled out. But because you’re hosting your SaaS elsewhere, updates are typically pushed out by the provider, which can disrupt workflows or cause compatibility issues.
In the end, we feel that the pros outweigh the cons for SaaS companies - especially those that are bootstrapped and don’t have the funds or know-how to handle all this locally on their own. But before we help you choose the right hosting provider, let’s talk about your different options.
Types of SaaS Hosting Solutions
There are three main types of hosting providers you can choose from as a SaaS company. While each has its time and place, only one of these is right for you - so pay close attention to the intricacies of each provider:
Public Hosting (Shared Hosting)
Public hosting is the most common hosting solution, where the software is hosted and maintained by a third-party provider and made available to customers over the internet.
Public hosting solutions are typically multi-tenant, meaning that multiple customers share the same hardware infrastructure and software application. This allows providers to offer low subscription fees and easy scalability, as resources can be shared among many customers.
Public hosting solutions are a good fit for businesses that require easy access, quick deployment, and low upfront costs. Just be aware that with the lower cost and ease of use comes a compromise in security and customizability. However, if you’re trying to get by with as barebones cost as possible, this might be your best bet.
Private Hosting (Dedicated Hosting)
Private hosting - also referred to as dedicated hosting - is a solution where the software is hosted and maintained by a third-party provider but dedicated to a single customer or organization. This means that the customer has exclusive access to the hardware infrastructure and software application, and can customize it to their specific needs.
Private hosting solutions are typically more expensive than public solutions, but offer greater control, security, and privacy - so you get what you pay for! These solutions are a good fit for businesses that require greater control over their software environment, have specific compliance requirements, or need to integrate with existing systems.
Hybrid hosting solutions are exactly what they sound like - a combination of public and private hosting cloud environments. These solutions are designed to offer the best of both worlds - the cost-effectiveness and scalability of public hosting with the control and security of private hosting.
Sounds great in theory, right? Sure. But does it always work out this way? Not necessarily. It’s been said that a jack of all trades is a master of none - and investing in a hosting environment that combines public and private cloud environments under one roof can lead to costly problems down the line. We tend to advise
Choosing a SaaS Hosting Provider: Key Considerations
Now it’s time for us to get into what you came here for - choosing the right hosting provider for your SaaS business.
First and foremost, it’s important to recognize that we can only offer general suggestions. Your business is unique, and thus, you’ll need to consider what exactly you need in a host. What services do you want to move to an external provider? How much capital do you have to allocate toward this migration? Will you store your own backups - or do you want a host that can handle that for you as well?
With that being said, here are the most important considerations to make when finding a host for your SaaS offerings.
Uptime and Availability
One of the most critical factors to consider when choosing a SaaS hosting provider is their uptime and availability. SaaS applications must be available and accessible to users at all times, so it's important to choose a provider with a reliable infrastructure and a high uptime guarantee.
Look for providers that offer at least 99.9% uptime, and have a plan in place for minimizing downtime and addressing service disruptions. And for added peace of mind, do some digging into the reputation a company has for its uptime. While many businesses claim to maintain optimal uptime, they may have a history of falling short.
Ease of Use
Another key consideration when choosing a SaaS hosting provider is the ease of use. The software should be easy to deploy, configure, and use, with a user-friendly interface and intuitive controls. Look for providers that offer comprehensive documentation, training resources, and customer support to help you get up and running quickly.
Access to Analytics
Data analytics is an essential component of any SaaS application, as it allows you to track usage, monitor performance, and identify opportunities for improvement. Look for providers that offer robust analytics tools and dashboards, with customizable reporting and real-time monitoring capabilities. This will help you make informed decisions on what should be scaled, where you’re leaving money on the table, and more.
Backups and Security
The biggest concern over hosting SaaS offerings with a 3rd party is security. Thus, you need to thoroughly investigate the backups and security protocols of any host you’re considering. This will ensure the integrity and availability of your data.
Throughout your search, look for providers that offer automatic backups, regular data replication, and strong data encryption. Additionally, make sure that the provider adheres to industry-standard security protocols and has a strong track record of protecting customer data.
You’re entrusting a host with the very livelihood of your business. So, it goes without saying that you should have access to customer service whenever you need it. Look for providers that offer 24/7 support, with multiple channels for reaching out (e.g., email, phone, chat).
Additionally, make sure that the provider has a strong reputation for customer service and is responsive to customer needs and concerns. If SaaS businesses report negative experiences trying to work with a provider’s customer service team, it’s a red flag - and you should run the other way.
Single Sign-On & Other Key Features
Finally, consider any other key features that may be important for your business, such as single sign-on (SSO), API integrations, and customizable branding.
SSO, for example, allows users to log in once and access multiple applications, while API integrations allow you to connect your SaaS application to other tools and services. Customizable branding, on the other hand, allows you to tailor the user interface and branding to match your company's look and feel.
Wrapping Up Our Guide to Hosting SaaS Offerings Through a 3rd Party Environment
Figuring out how you’re going to host your SaaS is something that keeps business owners up at night. But you can make sleepless nights a thing of the past by investing in a quality, reliable SaaS hosting provider. We’ve talked about all the benefits of hosting SaaS offerings with a 3rd party provider along with potential drawbacks to be aware of.
And, now that we’ve empowered you with the key criteria you should maintain when searching for the right provider, there’s just one thing left to do - start your search for the perfect SaaS host provider!
Or, learn more about optimizing your company with our complete guides to SaaS subscription management or SaaS revenue models. You can also learn about accounting for SaaS, SaaS hosting, how to calculate LTV for SaaS companies, the CAC SaaS metric, SaaS customer journey mapping, and more.
And if you’re looking for a way to grow your business and connect with more customers, get set up on Whop today. Our platform is the easiest way to handle members, payments, licenses, and more. What’s more, you can get discovered by our ever-growing user base and grow your bottom line. See what the hype is all about today!