How did SaaS evolve from the ASP model of the late 1990s?
In the late 1990s, Application Service Providers (ASPs) hosted conventional client-server software and rented access to it. Each customer typically had a separate installation, so operating costs grew with every customer, and most ASPs did not survive the dot-com downturn.
Multi-tenancy changed the economics. A single application instance began serving all customers, with isolation enforced in the software, so the cost of adding a customer fell dramatically. Salesforce, founded in 1999, is widely credited with proving the model commercially.
As browsers became more capable and broadband more widespread, desktop installation was no longer needed.
Through the 2000s and 2010s, three further developments accelerated adoption: cloud infrastructure removed the need for data centres, subscription billing turned software into an operating expense, and APIs allowed SaaS products to integrate with one another.
Each development removed something customers previously had to manage. Today, data residency rules, procurement scrutiny and subscription costs are leading some organisations to seek more control again.
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Custom SaaS DevelopmentMulti-tenant platforms with billing, administration and access control built in.
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