Software-as-a-Service (SaaS) Definition & Applications

Software-as-a-Service (SaaS) Definition & Applications

Software as a Service (SaaS) is a software use model where customers and users access applications via the Internet, and where the software applications are hosted in a multi-tenant cloud infrastructure. With SaaS, a business service provider hosts an application at its data center and customers access it via a web browser or API. There are a few major characteristics that apply to most SaaS providers:

  • The service is purchased on a user subscription basis
  • No additional hardware is required to be installed by the customer
  • Updates are applied automatically without customer intervention

The legacy model of installing perpetual software product licenses on servers was viable for many years, but Internet speeds have seen an exponential increase over several decades. This has been a key contributing factor in mainstreaming SaaS products. Virtualization, containers, microservices, and big data platforms are additional significant technology enablers for the rise of SaaS business offerings.

SaaS application delivery is used in a number of vertical industries including financial services, banking healthcare, communications, education, and manufacturing just to name a few. There are thousands of SaaS vendors, but Salesforce.com and Microsoft Office 365 are perhaps the best known examples. Salesforce was one of the first SaaS vendors to significantly disrupt and displace legacy Customer Relationship Management (CRM) software.