Software as a Service, abbreviated SaaS, is a business model in which the customer pays the software provider for access to their software, and with it, the associated functionality of said software. By connecting over the cloud rather than downloading software only once, customers get access to the latest version of the software, and do not have to pay for the space and other resources associated with on-premise equipment. Both the customer and the provider benefit from lower recurring monthly fees. SaaS is sometimes called “hosted applications” or “software on demand.”

Software as a Service is becoming increasingly prevalent as more SMBs realize that they can get access to the same quality of software as much larger and more well-funded companies for a manageable cost. The growth of broadband internet has made SaaS, and its related business models, Platform as a Service and Infrastructure as a Service, explode in popularity.

The most popular services that are sold on subscription model are Customer Relationship Management (CRM), software; other examples of SaaS are cloud backup software, financial/bookkeeping software, and many VoIP-related software. Certain companies, such as CRM software developers and VoIP providers, are beginning to move away from desktop software entirely, and do more in the cloud. Companies that follow the SaaS model often use the “freemium” model, with either an ad-supported mode, or a limited usage model that will hopefully entice users to subscribe to the full version.

A great advantage of SaaS is that it is not tied to any particular computer. If a computer fails, or the subscriber is on a business trip, the service is still available to him. BYOD and SaaS are closely related. The software developers that rely most on SaaS are under the most pressure to have their software be compatible with as many devices as possible. One potential hazard of SaaS is security. The user, by placing the information vital to running his business on these cloud-based software rather than on a device that is part of a secured office, runs the risk that a malicious hacker will steal that information. SaaS providers must be constantly vigilant against security threats.

Additional Reading
What is an API?
What is BYOD?
Unified Communications Brings it All Together