Software as a Service (SaaS)

Contributor(s): Kathleen Casey

Software as a service (SaaS) is a software distribution model in which a third-party provider hosts applications and makes them available to customers over the Internet. SaaS is one of three main categories of cloud computing, alongside infrastructure as a service and platform as a service (IaaS and PaaS).

SaaS is closely related to the application service provider (ASP) and on demand computing software delivery models. The hosted application management model of SaaS is similar to ASP, where the provider hosts the customer’s software and delivers it to approved end users over the internet.  

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In the software on demand SaaS model, the provider gives customers network-based access to a single copy of an application that the provider created specifically for SaaS distribution. The application’s source code is the same for all customers and when new features or functionalities are rolled out, they are rolled out to all customers. Depending upon the service level agreement (SLA), the customer’s data for each model may be stored locally, in the cloud or both locally and in the cloud.

Organizations can integrate SaaS applications with other software using application programming interfaces (APIs). For example, a business can write its own software tools and use the SaaS provider's APIs to integrate those tools with the SaaS offering.

There are SaaS applications for fundamental business technologies, such as email, sales management, customer relationship management (CRM), financial management, human resource management (HRM), billing and collaboration. Leading SaaS providers include Salesforce, Oracle, SAP, Intuit and Microsoft.

SaaS applications are used by a range of IT professionals and business users, as well as C-level executives.

Pizza as a service


SaaS removes the need for organizations to install and run applications on their own computers or in their own data centers. This eliminates the expense of hardware acquisition, provisioning and maintenance, as well as software licensing, installation and support. Other benefits of the SaaS model include:

Flexible payments: Rather than purchasing software to install, or additional hardware to support it, customers subscribe to a SaaS offering. Generally, they pay for this service on a monthly basis using a pay-as-you-go model. Transitioning costs to a recurring operating expense allows many businesses to exercise better and more predictable budgeting. Users can also terminate SaaS offerings at any time to stop those recurring costs.

Scalable usage: Cloud services like SaaS offer high vertical scalability, which gives customers the option to access more, or fewer, services or features on-demand.

Automatic updates: Rather than purchasing new software, customers can rely on a SaaS provider to automatically perform updates and patch management. This further reduces the burden on in-house IT staff.

Accessibility and persistence: Since SaaS applications are delivered over the Internet, users can access them from any Internet-enabled device and location.


SaaS also poses some potential disadvantages. Businesses must rely on outside vendors to provide the software, keep that software up and running, track and report accurate billing and facilitate a secure environment for the business' data. Issues can arise when providers experience service disruptions, impose unwanted changes to service offerings, or experience a security breach, all of which can have a profound effect on the customers' ability to use SaaS offerings. To proactively mitigate these issues, customers should understand their SaaS provider's service-level agreement, and make sure it is enforced.

This was last updated in April 2020

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Unlike traditional software which is conventionally sold as a perpetual license with an up-front cost (and an optional ongoing support fee), SaaS providers generally price applications using a subscription fee, most commonly a monthly fee or an annual fee. Consequently, the initial setup cost for SaaS is typically lower than the equivalent enterprise software. SaaS vendors typically price their applications based on some usage parameters, such as the number of users ("seats") using the application.
Roughly 50% of all SaaS contracts aren't on a subscriber's contract template. To put yourself in the best possible position to use your SaaS or cloud computing contract template, you have to get the contract template in front of prospective bidders as a part of a competitive bid. But that implies you have a SaaS contract template to begin with. For a comprehensive SaaS contract and to learn how to negotiate critical cloud terms and conditions, check out the Contract Negotiation Handbook: Software as a Service.
What made you choose SaaS for your enterprise?
We wanted to save time as we have many clients using public cloud services and optimizing costs for each of them was time consuming. So we started using several SaaS - cloud monitoring tools and now we use Unigma which helps us managing Azure, AWS and Google Cloud together providing partner billing, cost analytics, reporting, policy-based alerting, etc.
One of the best thing that I found about SaaS is the cost. This depends on the fundamentals of you pay only for those things that you use. It is a cost saving option and thus preferred above IaaS and PaaS.
However with APIs being brought into play for application development and communication, PaaS has gained momentum is and is up and rising.
HI, If I install a game(GTA) in my SaaS, will all the users will be able to play the game without installation or licence?
That's a really great material, showing how easily you can nowadays adopt a modern technology in your organization, using SaaS products.

I believe SaaS software will be an extremely important part of businesses' growth in the near future.
Hey, thanks for this article, it clearly explains what SaaS is in understandable language. I am writing a school project about SaaS and researching a lot about this topic currently. I also got very interested in SaaS startups and I found this article which I think could be interesting to share here:

can i make our website business <a href='' title='kost jakarta'>kost jakarta</a> be Saas System?
I personally think for a business growth SaaS plays an extremely important role, with the help of SaaS we can easily save our time and manage many clients without any time consumption. You can easily purchase this service on a subscription basis by the cloud hosting provider and optimize your work accordingly. The cloud hosting provider provides the access of software to you over the internet. Provider hosts the application in its center and you can access it through a standard web browser and when any updates are required it starts automatically without customer intervention and the best part of this that there is no need to install hardware by the customer. 
This is great info, as always. Binaryfolks, being into SaaS application development, were indeed happy to see that 93% of CIOs said they are adopting or considering the cloud, and a majority (54%) expect to use cloud software for mission-critical applications within the next 3 years.
SaaS solutions can be a highly engaging option for small-medium enterprises that wish to carry out their digital transformation while avoiding the download and installation of different software on each computer.

PaaS solutions are aimed at a much smaller audience. They help developers to create their applications in a much easier, efficient and economical way.

I am Soumya Banerjee from <a href=>SolutionValley</a>. We can create 100 % Successful SaaS Products With Our Dedicated Engineers & Quality Auditors.

We have uploaded an awesome video on <a href=>100 % Successful SaaS Products</a>. 

Kindly watch my video. I have discussed some unique things on 100 % Successful SaaS Products. You will get an all-round overview of this topic. You will also get a good clarity on understanding what is a product-based and a service-based business or company.

 I would also love to discuss more on this topic.

Soumya Banerjee
the reason why i want to use saas service is because i want to do a online busines in drop service where i will pick a niche to deliver service to company  
I think nowadays SaaS is an excellent solution for business. Just look at these examples here. They've got millions of users as an index of quality

Totally agreed with your blogs in today's world services plays a major role and f services are related to software then it is amazing. Today many of the companies are providing software services but the main thing is that you need to be unique I.e VOIP services and services related to offers and bonus and services in which one can generate his own qr code. Your blog define all things very well thanks for sharing.

Here's an amazing blog about the multi tenant architecture for a SaaS application.

Software as a Service has been evolving for over 40 years. What is it now, and why is it so appealing both to vendors and end-users?

Take a look at the interesting article, and consider SaaS as a potential revenue model for your future web or mobile app -
At Origami Studios, we have a history of dealing with clients from various niches. Moreover, nor that we only focus on building new solutions or apps but we have developed apps that were half-baked by its previous developers and due to the concerns of the client, they lacked the client's need. We treat each query as our own and build apps that are bound to take the business to a next level.

saas programming
At Origami Studios, we have a history of dealing with clients from various niches. Moreover, nor that we only focus on building new solutions or apps but we have developed apps that were half-baked by its previous developers and due to the concerns of the client, they lacked the client's need. We treat each query as our own and build apps that are bound to take the business to a next level.