What is SaaS? Software-as-a-service defined


One of the most popular forms of is software-as-a-service (SaaS). Here’s a simple SaaS definition: a software distribution model in which a service provider hosts applications for customers and makes them available to these customers via the internet.

SaaS is one of the three major categories of cloud services, along with and .

SaaS examples

Given its ease of access, the SaaS model of software delivery has become common for many types of business applications, and it has been incorporated into the delivery strategies of many enterprise software vendors.

SaaS companies have offerings available for a variety of business applications, including email and collaboration, customer relationship management (CRM), billing/payroll processing, sales management, human resources management, financial management, database management, enterprise resourcing planning (ERP), content management, and document editing and management.

As with other cloud services, organizations typically pay for SaaS applications through a subscription fee, on a monthly or annual basis. This contrasts with the traditional model of paying for software through a perpetual license, with an upfront cost and optional ongoing support fee.

SaaS pricing

Providers usually price SaaS products based on some type of usage parameters. For example, they might charge based on the number of people using the application, the number of transactions, or some other measure of usage.

, that can compromise safety of the enterprise’s data and the availability of the services.

Other potential risks relate service quality and user experience. Despite improvements in networking technology, because SaaS applications might be hosted far from where users are located, there can be latency issues that affect response times for applications.

Many organizations do not have a broad cloud strategy, and this has led to a rise in business users acquiring SaaS applications on their own—without the knowledge of IT—to fill in gaps that exist. That can lead to wasteful spending, poor data management, and extra work to move processes and data from one non-integrated system to another.

Salesforce and other SaaS companies

Salesforce.com was an early SaaS company and its SaaS platform remains one of the most popular cloud-based applications. The SaaS business market continues to grow and SaaS technology continues to gain in popularity.

Among the other leading enterprise SaaS providers are ADP, Adobe Systems, Box, Citrix Systems, Dropbox, Google, IBM, Intuit, Microsoft, Oracle, SAP, ServiceNow, and Workday. But hundreds of companies offer their software as SaaS, from mobile management tools to expense report management, from video transcoding to financial calculations, from customer data cleanup to computer-aided design (CAD).

SaaS integration

Because SaaS offerings are available from so many providers, a key trend is the rise in integration among vendor offerings. There are both services meant to integrate multiple SaaS applications, such as to provide single signon and access management across them, and efforts within the SaaS vendor community to create integrations across multiple providers’ software so enterprise processes can flow more easily across those applications sourced from multiple providers.