Software as a Service

What is SaaS?

Software as a Service (SaaS, typically pronounced 'sass') Is a model of software deployment whereby a provider licenses an application to customers for use as a subscription service.The term "SaaS" was first used in a white paper called "Strategic Backgrounder: Software as a Service" by the Software & Information Industry's eBusiness Division published in Feb. 2001.

As a term, SaaS is generally associated by software professionals and business associates with business software and is typically thought of as a low-cost way for businesses to obtain rights to use software as needed versus licensing all devices with all applications. The on demand licensing enables the benefits of commercially licensed use without the associated complexity and potential high initial cost of equipping every device with the applications that are only used when needed. Virtually all software fits the SaaS model.

SaaS Characteristics

SaaS software vendors host the application on their own servers and provide all upgrades and support services during the term of the subscription. The software is hosted at a central location and does not reside on client computers. SaaS reduces traditional End User License Agreement (EULA) software maintenance, ongoing operation patches, and patch support complexity in an organization. On-demand licensing enables software to become a variable expense, rather than a fixed cost at the time of purchase. It also enables licensing only the amount of software needed versus traditional licenses per device. SaaS also enables the buyer to share licenses across their organization and between organizations, to reduce the cost of acquiring EULAs for every device in their firm.

Reducing Cost Through SaaS

Using SaaS reduces the up-front expense of software purchases, through less costly, on-demand pricing from hosting service providers. The sharing of end-user licenses and on-demand will also reduce investment in server hardware with the shift of server use to SaaS suppliers.

See Features and Benefits for additional information.