SaaS Architecture Guide: Types, Benefits, Best Practices, and More

Quick Overview: Understanding SaaS architecture is crucial for businesses to make sound digital decisions for their product requirements, scalability needs, customization preferences, and budget considerations. In light of that, we’ve prepared this article to provide an overview of SaaS architecture. We will also talk about its types, business benefits, best practices, and its evolution. Keep reading!

“Given the widespread adoption of remote work, it is no surprise that every single employee acknowledges using SaaS applications in their work environment.”

Pratik Mistry - EVP - Technology Consulting, Radixweb

As an engineer, project manager, CEO, CTO, or product owner, it’s your responsibility to make architectural decisions that help you create scalable and innovative products, and optimize technology costs.

The choice of infrastructure for product and service delivery significantly impacts the level of control you wield over data, systems, and customization possibilities. Among the prominent architectural models available in the market today, Software as a Service (SaaS) stands out. Today, the global SaaS market is valued at around $300 billion, as per the latest SaaS statistics.

SaaS architecture enables your organization to provide services to customers seamlessly – anytime and anywhere. Hence, with many organizations migrating to cloud and subscription-based models, the implementation of SaaS has skyrocketed. And business conglomerates like Salesforce, Microsoft, and Google are not left behind to take advantage of SaaS architecture.

With the introduction of Salesforce CRM, Salesforce became the first company to shift to the Software as a Service model. Shortly after, Google introduced G Suit followed by Microsoft’s debut of Office 365 as their flagship SaaS solutions.

As an experienced SaaS development company, we found out the reason behind switching to the SaaS model was because of its cost-efficiency, ease of implementation and maintenance, scalability, and more. These benefits have been the motivation for over 200+ businesses that have turned to us for SaaS solutions through the years.

Such demands call for a careful and in-depth look at SaaS products, which often starts from understanding the innate setup and framework. Bearing that in mind, now is the time to understand SaaS architecture in detail. This blog will serve that very purpose.

Introduction to SaaS Architecture

A SaaS architecture model is one type of method to deliver software to end-users via the Internet. A SaaS application architecture enables organizations or businesses to stay away from installing and maintaining the system on their end.

It is the fundamental framework, infrastructure, and strategies on which SaaS products are designed, developed, and delivered to end users. The blueprint or network determines the end-to-end process of hosting an app on a remote server or centralized platform and then distributing the service to users through the internet.

The architecture of SaaS systems has certain principles. For example, it should be built on cloud infrastructure, it must handle dynamic data storage and management techniques, it has to incorporate multiple layers of security, and so on.

Additionally, SaaS architecture designs specify the system’s dependencies, tech stack, control flows, boundaries, and non-functional requirements like redundancy and response times.

As the app scales, the architecture should maintain stability. The choice of architectural design is critical to system performance, reliability, and cost-effectiveness throughout the entire SaaS app development life cycle.

The Evolution of SaaS Architecture

SaaS-based application architectures have come a long way from old monolithic models to on-premises, multi-tenant, and serverless solutions. The reasons for the steady yet progressive evolution are many – advancements in cloud computing, changing user needs, and scalability requirements, among others.

Let us explain.

There was a simple and straightforward arrangement when the software architecture was based on monolithic, from the 1990s to the early 2000s. All the components and subcomponents of an app were integrated into a single module or codebase. This is why making any change to the service or scaling the app was a major hurdle. Developers had to start from scratch and rebuild the entire app to make any adjustments. These constraints actually paved the way for improvements.

Then as SaaS platforms grew in complexity with their diverse offerings, developers started breaking the app into small, independent modules called microservices architecture. Each of these handles a specific task and can scale separately. This solved the essential challenges of working with the monolithic approach.

Then with the prominence of cloud adoption and its benefits, multi-tenant architecture became a key focus in the SaaS industry. Architectural designs of this type support code changes and scalability through dynamic resource allocation and centralized management. Saas providers found it much more cost-effective and scalable than provisioning separate instances for each tenant.

Eventually, with the larger user bases of today, the demand to respond and communicate in real time gave rise to event-driven and serverless architectures Every new functionality runs on demand in a fully managed environment without the need to manage the underlying infrastructure.

SaaS system architecture keeps evolving as per new-age development needs, user expectations, business requirements, etc. We're expecting to see even more breakthroughs in scalability, security, and integration capabilities as businesses remain dependent on cloud solutions.

Also, AI is reshaping and fueling the growth of the SaaS industry.

Different Types of SaaS Architecture

Generally, there are two main criteria for categorizing SaaS architecture.

The first type is based on the tenancy model. Every customer is considered to be a tenant. Thus, you will find two primary architectures in this context - single-tenant and multi-tenant.

Your ideal choice of tenancy model doesn’t impact the application performance. It actually helps you meet the specific demands of your customers, provide flexible solutions for your dedicated development team, and simplify service complexities.

And the second type is based on the components of the architecture and their structural approaches. Here we’ve got monolithic, microservices, and serverless.

Beyond this, there are other SaaS cloud architectures that emerged to address modern development needs. Event-driven and API-first are the two of them.

Take a closer look at each:

1. Single-Tenant Architecture

As the name suggests, a single-tenant SaaS backend architecture refers to a model, which only caters to one customer at a time. Here, each customer or tenant is assigned to an individual instance of the software. This instance is backed by a single infrastructure and database and runs on a separate server.

Hence, there will not be any channel between tenants to share resources. Also, every customer's information is separated from other customers.

While this setup offers enhanced control and customization capabilities, it may incur higher maintenance costs for the provider due to the necessity of managing multiple instances of the software.

The primary benefit of the single-tenant architecture is better customization and enhanced security level.

If we look at its disadvantages, it requires a huge amount of money to maintain.

2. Multi-Tenant Architecture

“Multi–tenancy is really the future of our industry.”

Marc Benioff - CEO, Salesforce

Multi-tenant architecture emphasizes sharing resources, including software instances and databases.

However, it offers robust and tight security around each tenant’s data that is saved in different places. Unlike the single-tenant model, this version is more cost-effective and efficient while offering less control and customization to individual clients.

In the coming years, the global multi-tenant data center market is expected to experience significant growth. As per Research And Markets, the market will achieve a value of $48.4 billion by 2027, with a CAGR of 7.49%.

The financial advantage of this model is it’s very cost-effective. It also offers smoother maintenance and easier integration services.

While considering this mode’s disadvantages, there are some potential security loopholes. It gets complicated with updates as well.

3. Monolithic Architecture

As said earlier, Monolithic architecture is the traditional architecture model. SaaS applications built using this architecture comprise a single module that cannot be split. It’s one large set of databases developed around a server-side and client-side interface for better solutions.

The primary advantage of monolithic architecture is that it is easy to monitor. Also, it provides simple testing options along with fewer cross-cutting issues.

On the other hand, technology barriers, complexity, and inflexibility stand out as disadvantages.

4. Microservices Architecture

In this model, every functionality is divided into independent modules that can be used separately for deployment. Then with the help of APIs, these modules are responsible for communicating with each other and aligning their separate processes to work as a single entity. Furthermore, each individual service gets updated, upgraded, and scaled for better flexibility.

The biggest advantage of microservice architecture is its enhanced scalability and resource utilization.

Besides those, it offers some drawbacks like testing problems, complex architecture dynamics, and cross-cutting issues.

5. Event-Driven Architecture

This type of SaaS product architecture is based on the need to respond to user inputs in real time. One of the biggest benefits of SaaS is rapid accessibility, and to make that possible, apps must have an architecture that can facilitate system responses and workflows instantly.

Event-driven architecture or EDA is highly useful for its asynchronous nature. This means that through decoupling system components, the app is able to handle multiple requests simultaneously. Hence, users can perform multiple tasks at once, without the need to complete one to continue another.

The highlighted benefit of this architectural pattern is its real-time data processing power and fault tolerance capabilities. It's almost the de facto architecture of SaaS in cloud computing.

Among its limited disadvantages, its complex design and implementation process is something businesses should be most aware of.

6. API-First Architecture

The API-first approach involves designing and creating the APIs before the SaaS app itself. Since efficient communication is a must-have feature of SaaS systems, developers using this architecture build APIs first and then integrate those with third-party services and external tools.

It also helps with scalability as APIs are much easier to upgrade or displace with minimum disruption to other systems and deliver uninterrupted service. For this reason, organizations are gradually turning to this SaaS platform architecture.

The ease of extending the software, building new functionalities, and integrating with external services is the biggest benefit of API-first architecture.

However, the advantage also comes with its fair share of challenges in maintaining large sets of APIs.

Benefits of SaaS Architecture

We know, there’s a lot of hype about the SaaS architecture model at the recent time. Many big brands are adopting it along with top SaaS frameworks.

So, now the question is, why do many organizations or enterprises choose this architectural approach over others?

There are many reasons. Let’s understand the three major benefits of SaaS enterprise architecture:

Faster Implementation

By adopting a SaaS technical architecture, enterprise solutions become easier and faster to implement as they are hosted and maintained by the software provider. This eliminates the time and effort in the development, setup, or installation process. Instead, you can simply subscribe to the functionality which is required.

Scalability

Scalability is one of the key advantages of SaaS application architecture in cloud computing. This allows users to scale capabilities up or down as per business requirements. For example, when your organization grows, adding more users or features becomes a simple task without investing in additional hardware or software.

Cost Effective

Since the SaaS application model is based on the subscription, it only lets you pay, which is required as per your usage. Moreover, it eliminates the huge upfront costs and ongoing maintenance as the service provider takes care of everything. Hence, the cost to build a SaaS application is very pocket-friendly.

SaaS Architecture Challenges and Best Practices

Implementing a well-designed SaaS deployment architecture directly impacts the bottom line of a business but you will not find a universal formula on how to do it. There will always be challenges in SaaS implementation. Businesses and developers follow some standard methods for an optimal outcome but there’s always a scope to be creative and flexible.

Nevertheless, here are some of the most prevailing challenges in setting up a SaaS deployment architecture and a few proven strategies to overcome them.

1. Provisioning Resources

Provisioning SaaS resources efficiently to support a fluctuating user base is a demanding task. Over-provisioning can lead to high costs, while under-provisioning results in performance bottlenecks.

2. Service Availability and Uptime

You must guarantee high availability of services; that’s what SaaS is all about. Any downtime or service disruption can significantly impact customer experience and trust.

3. Latency and Performance Management

Another challenge of SaaS cloud computing architecture is delivering services with low latency, especially for real-time or interactive applications. High latency can degrade the user experience, particularly for customers in distant locations.

4. Data Management and Backup

Handling massive amounts of data in a SaaS infrastructure is a further issue you have to address. Setting up an effective data storage with fast data access and avoiding data loss is complex.

5. Security of Service Delivery

Security in SaaS apps should be top-notch. All the layers in the service delivery architecture, including data transmission, storage, and access must be well-guarded in accordance with advanced security standards.

6. Cost Control and Optimization

You must ensure cost-effective infrastructure provisioning while maintaining high availability and performance. Inefficient resource allocation can lead to escalating costs.

Now, below are some tried-and-true strategies to tackle the above-mentioned challenges and then some more:

• Customize to Your Needs

Although SaaS platforms offer pre-built and off-the-shelf functionality, many providers come up with customization options. This is a perfect solution that you should take advantage of so that your clients/users have the freedom to use your service within their preferred budget and needs.

• Verify Data Security

Data security is an essential parameter in the cloud. Hence, you have to be cautious while implementing security measures in your SaaS database architecture. You have to provide tighter security and protection for user data and information.

One of the standard strategies is to implement strong encryption, role-based access controls, and secure API endpoints. Additionally, do frequent security audits, regularly back up data, keep a disaster recovery plan handy, and stay up to date with the latest SaaS trends.

• Work With Compliant Vendors

Given the industry, it is crucial to adhere to specific compliance regulations such as HIPAA, GDPR, PCI DSS, and others. It is likely that you will invest considerable time and resources in ensuring ongoing compliance.

By doing so, you not only mitigate the risk of financial implications but also safeguard your organization from potential legal repercussions.

• Monitor Performance and Costs

Finally, after successfully implementing a SaaS application for your business and establishing a well-functioning architecture, it becomes imperative to monitor performance, costs, and associated SaaS metrics.

It is crucial to track end-user satisfaction and ensure seamless utilization of the solution by your team members. Through this evaluation, you can gauge the effectiveness of the SaaS model and ascertain the stability of the architecture.

Furthermore, ongoing monitoring of SaaS costs is essential to prevent overspending and to ensure that your service architecture model remains cost-effective in the long run.

Practical Examples of SaaS Architecture Implementation

As we've emphasized throughout this blog, the way you design and implement your end-to-end SaaS infrastructure plays a crucial role in the success of your service delivery operations. The more thoughtful and strategic your approach, the better the outcomes will be.

How does a well-architected Software as a Service architecture influence outcome? What role does the service environment play, and how does it function for users?

Let's find out with some of our flagship SaaS projects:

1. SaaS Auto Insurance Portal

For a complex and demanding platform like an insurance and loan management platform, there should be separate layers of interface, business logic, and data storage so that each layer efficiently performs specific high-algorithm tasks.

Also, the client had plans to keep updating their insurance terms and policies and introduce new features. Hence, the architecture had to become more modular and easier to optimize.

The solution we found to these requirements is a layered architecture (3-tier). It’s divided into three key layers - the presentation layer (frontend/UI), the business logic layer (structured as microservices to manage domain-specific tasks), and the data storage layer for secure storage for documents. Further strategies like API-first design and asynchronous processing gave it a boost.

2. SaaS Pharma Marketing App

Supporting multiple pharma organizations (tenants) on a single platform was the client’s requirement. A Saas app with multi-tenant architecture seemed to be the perfect approach to do this neatly while isolating data between tenants.

The frontend layer allows customizable branding and role-based views. Microservices manage campaigns, CRM, analytics, and content management. The database uses either a shared or dedicated model for data isolation, and cloud storage handles marketing materials with tenant-specific structures. Finally, we added a compliance layer for data privacy and regulatory protocols.

Get a Head Start with RadixwebIf you’re considering implementing SaaS technical architecture or building a product from scratch, you count on us. With a strong legacy in SaaS development services, we build secure and scalable infrastructures with optimized performance in the most cost-effective way possible.Having collaborated with us, you don’t have to worry about regulatory compliance, data security, and other concerns. Our experienced SaaS developers offload the burden of development and maintenance on your terms while giving you complete control of the infrastructure.If you are planning to work on SaaS architecture, we’d love to hear from you. Let's connect and discuss what we can achieve together?