The History of SaaS

SaaS, Software as a Service, has developed significantly in recent years, but the technology itself has been around for more than 20 years, albeit in a far simpler form.

In 1999, the world’s first SaaS company was established, taking the world by storm in the middle of the internet boom of the 20th century.

Although the technology has changed and evolved significantly since then, the startup that introduced the world to the innovative idea of SaaS is still going. In fact, not only is it still going, it’s one of the top 50 most successful businesses in the world, and as of 2024, it’s now worth $242.22 billion.

But, a lot has happened since Salesforce was first launched by Mark Benioff, Parker Harris, Dave Moellenhoff and Frank Dominguez just before the turn of the millennium. The SaaS industry has exploded and now has applications in just about every sector you can think of.

The Early Days of Saas

While the first SaaS product was only developed and launched in the late’ 90s, the concept that initially give rise to SaaS can be traced all the way back to the 1960S and ’70s. At that point, computing was dependent on and dominated by expensive mainframes and time-sharing was developed as a type of solution.

Time sharing allowed users to access a single powerful computer simultaneously, something that previously hadn’t been possible. Instead of each organisation having to purchase, own and operate their own expensive computer, they were suddenly able to “rent” time on a central mainframe system and access the computer remotely, thus giving rise to the earliest notion of SaaS.

IBM (International Business Machines Corporation) and DEC (Digital Equipment Corporation) played a significant role during this period, developing centralised computing systems to which businesses would connect, perform computations and run software applications, ultimately setting the stage for modern cloud computing.

By the ’80s, personal computers (PCs) became more commonly used, with software applications hosted on local servers and accessed by client computers with a company’s internal network. This change allowed businesses to have more control over their computing environments.

As the turn of the millennium was looming, the internet was becoming widely adopted and the idea of being able to deliver software over the web gained increasing traction. And then, Application Service Providers (ASP) became a thing, hosting and managing business software applications on behalf of clients. This was one of the earliest forms of software being provided through a web interface.

The Development of SaaS

The late ’90s and early 2000s marked the real beginning of SaaS as we know it today, with high-speed internet and cloud computing technology creating the perfect environment for SaaS to flourish.

Salesforce’s “no software” model allowed for the development of a sophisticated CRM solution that could be used in its entirety through a web browser without the need to install software locally.

Another important contributor to the development of SaaS was NetSuite, founded in 1998. The company offered an integrated suite of business management applications, hosting its software on the cloud and providing businesses with real-time visibility and the automation of business processes.

The success of Salesforce and NetSuite marked a fairly significant paradigm shift in internet and tech, allowing the world to see the possibilities that SaaS could potentially provide, along with all its advantages.

Once the pros of SaaS had become fairly clear, cloud computing experienced a boom and the SaaS industry grew significantly – of course, the latter was very much influenced by the former.

In 2006, Amazon Web Services (AWS) was launched, offering a scalable cloud infrastructure for companies to implement SaaS solutions. This allowed businesses to “rent” cloud-based servers and storage, allowing SaaS providers to scale more quickly and efficiently.

In the same year, Google got involved, launching Google Workspace (which was first known as Google Apps and the G Suite). It provided users and businesses more generally access to a variety of tools via the cloud, including email, spreadsheets, documents and more. In many ways, it was this move by Google that really allowed SaaS to enter the mainstream, allowing web-based applications to replace traditional desktop software.

Since then, SaaS has evolved and developed dramatically. With far more APIs, businesses have been able to integrate their SaaS applications with other tools and systems. Customisation options began to improve too, allowing companies to tailor the applications to their needs, ultimately making the software far more useful.

From there, the use of artificial intelligence (AI) in SaaS platforms became more common, allowing for the provision of personalised customer experiences, advanced analytics and predictive capabilities, all of which have developed even more over the last five years or so.

SaaS Today and in the Future

Nowadays, SaaS is a major part of the global software market, with many industries and businesses relying on specific platforms for everything from marketing and customer relationship management to human resources issues and project management. Indeed, the market is still growing quickly, and this growth has been fueled by an ever-increasing need for digital transformation across industries.

There’s no doubt that SaaS has proven to be an incredibly valuable contribution to the modern tech world, and not only is it still popular and widely used now, but it seems to have a pretty solid future too.

For instance, vertical SaaS, platforms that are designed for specific industries, is something that’s growing rapidly, along with wide micro-SaaS solutions (targeting very specific problems). Of course, AI and machine learning are developing and changing at a rate of knots, so there’s really no telling how that’ll change the industry in the future.

But, if one thing’s for sure it’s that  SaaS has made a massive impact on the tech world as well as the way in which businesses are able to be run. It’s carved out an incredibly important role for itself in its industry and it’s only going to get bigger, better and more sophisticated.