Software as a service (SaaS) is a software distribution model where applications are hosted by a vendor or a service provider and are provided to the customers over a network, such as the Internet. Software as a Service is also referred to as “software on demand”. With SaaS, a provider licenses an application to customers either as a service on demand through a subscription, or at no charge. This approach to application delivery is part of the functional computing model where all of the technology is in the “cloud” accessed over the Internet as a service.
SaaS is closely related to the ASP (application service provider) and On Demand Computing software delivery models. IDC (International Data Corporation) identifies two slightly different delivery models for SaaS. The hosted application management (hosted AM) model is similar to ASP. It is a provider that hosts commercially available software for customers and delivers it over the Web. In every offshore software development company, in the software on demand model, the provider gives customers network based access to a single copy of an application created specifically for SaaS distribution.
The traditional model of software distribution, in which software is purchased for and installed on personal computers, is sometimes referred to as software as a product.
Benefits of SaaS are as follows:
- Global accessibility
- Save money by not having to purchase servers or other software to support use.
- Automatic updates and patch management
- Focus Budgets on competitive advantage rather than infrastructure i.e. Low Total Cost of Ownership.
- Monthly obligation rather than up front capital cost
- Reduced need to predict scale of demand and infrastructure investment up front as available capacity matches demand
- Multi-Tenant efficiency
- Easier administration
- All users will have the same version of software
- easier collaboration, for the same reason
- Flexibility and scalability
SaaS was initially widely deployed for sales force automation and Customer Relationship Management (CRM). Now it has become a usual practice for many business tasks involving custom application development techniques, including accounting software, computerized billing, ERP software, invoicing, human resource management, financials, content management, collaboration, document management, and service desk management.
SaaS characteristics are as follows:
- Network-based access to, and management of, commercially available software.
- Activities managed from central locations rather than at each customer’s site, enabling customers to access applications remotely via the Web.
- Application delivery typically closer to a one-to-many model (single instance, multi-tenant architecture) than to a one-to-one model.
- Centralized feature updating, which prevents the need for end-users to download patches and upgrades.
- Frequent integration into a larger network of communicating software either as part of a mashup or a plugin to a platform as a service.
The Saasmodelcan add efficiency and cost savings for the both the vendor and customer. Customers save time and money since they do not have to install and maintain programs.