Software as a service (SaaS, typically pronounced ‘Sass’) is a software application delivery model where a software vendor develops a web-based software application and hosts and operates the application for use by its customers over the Internet.  Customers do not pay for owning the software itself but rather for using it. All the infrastructure details are taken care of by the platform – hardware, software, maintenance, scalability, performance, backup, disaster recover.  All the user requires is a browser.

 SaaS differentiates itself from “On Premise” software by avoiding the need to purchase and maintain the computer hardware and related infrastructure to run an application. The only infrastructure required remains a personal computer to run the software and sufficient networking connectivity to reach the internet.

Typically a SaaS offering is “licensed” by the user or transaction – focusing on charging money based on how the application provides value. But some SaaS offerings are charged as a monthly service fee.

SaaS is different from a predecessor hosting technology: ASP (Application Services Provider). The ASP model is based on a company purchasing a traditional software product but choosing not to host it themselves. Instead the software is hosted in a 3rd party data center – with exclusive access given to the purchasing company.

SaaS is designed to scale much more smoothly than the ASP model (which is much more infrastructure and installation limited) by offering multi-tenanted single instance software. With users sharing in a common infrastructure, the application makes more efficient use of hardware and is designed to scale across multiple machines. Google’s Gmail is an example of a SaaS application that has scaled to very large measure.

Software as a service (SaaS) is a software application delivery model where the vendor develops as well as operates the software application for use by its customers via the internet. Although SaaS is not limited to business applications only, it is typically considered an economical way for businesses to gain the same benefits of commercially licensed, internally operated software, without taking on the associated complexity and high initial cost that would normally go with purchasing software.

The SaaS model is well suited to many types of software. This is important since most customers may have little interest or capability in software operation, but do have considerable computing requirements. For example some applications such as Customer Relations Management, Financial Applications, Accounting and Email, Video Conferencing as well as Human Resources are just a tip of the iceberg when looking at the original markets showing success in the SaaS field.

Although there were earlier applications delivered over the internet, the distinction between SaaS and those earlier applications is that SaaS solutions were developed exclusively to power web technologies such as the browser. The term “SaaS” was coined by John Koenig for the SDForum Software as a Service Conference in March of 2005 and has become the industry adopted reference term, generally replacing the earlier terms “On-Demand” and “ASP” (Application Service Provider).

Examples, WebEx, RightNow, Taleo, Blackboard and NetSuite


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