What’s Software as a Service (SaaS)? – definition and examples | ELITPEDIA
16 July 2020
Software as a service (in short SaaS, also known as “on-demand software” or “rentware”) – is a cloud-based software delivery and business model in which the application is located on the service provider’s server and is made available to users via the internet, e.g. through a web browser.
This type of solution eliminates the need to install software on the user’s machine. Thus, all operations, updates and maintenance are performed by the service provider.
Examples of SaaS
- Google (Google Apps)
- Salesforce (CRM system)
- Dropbox (file hosting service)
- Cisco (security)
- Microsoft (Hotmail, Windows Live, OneDrive).
The growing popularity of SaaS comes from the simplicity of this model – the user or an organization pays for the functionality, so they do not have to create a dedicated IT infrastructure. At the same time, it enables access to the latest IT technologies without much effort or substantial investment outlays from the organization.
The SaaS model involves a cyclical, not a one-off, fee for the so-called monthly, quarterly, or annual subscription. As a result, the expenditure incurred by the customer is permanent and not one-off.
Software as a service providers price is typically based on the number of users using the software. Still, it could be depending on the number and value of transactions or amount of computing performance required.
Some SaaS providers offer a freemium model, where free service is made accessible with limited functionality, whereas enhanced functionality is available after payment. There are also free to use applications without any limits – a business model based on advertising.
What is software as a service (SaaS)? – summary
- Pay-as-you-go pricing
- User pays for the software on a subscription model
- The provider makes all updates and maintenance
- Access to the latest technologies without significant investment or technical facilities
- Better protection of providers copyright
- Licensed on a subscription basis
- Access on-demand
- No physical distribution (cloud-based applications).
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