What Is Software-as-a-Service (SaaS)?

Software-as-a-Service (SaaS) is a software licensing model in which access to the software is provided on a subscription basis, with the software being located on external servers rather than on servers located in-house.

Software-as-a-Service is typically accessed through a web browser, with users logging into the system using a username and password.

“Instead of each user having to install the software on their computer, the user is able to access the program via the Internet.”

SaaS is easy to implement, easy to update and debug, and can be less expensive (or at least have lower up-front costs) since users pay for SaaS as they go instead of purchasing multiple software licenses for multiple computers.

Understanding Software-as-a-Service (SaaS)

The rise of Software-as-a-Service (SaaS) coincides with the rise of cloud-based computing. Cloud computing is the process of offering technology services through the Internet, which often includes data storage, networking, and servers. Before SaaS was available, companies looking to update the software on their computers had to purchase compact disks containing the updates and download them onto their systems.

For large organizations, updating software was a time-consuming endeavor. Over time, software updates became available for download through the Internet, with companies purchasing additional licenses rather than additional disks. However, a copy of the software still needed to be installed on all devices that needed access to it.

With SaaS, users don’t need to install or update any software. Instead, users can log in through the Internet or web browser and connect to the service provider’s network to access the particular service.

SaaS is considered an example of endogenous growth theory, which is an economic theory that subscribes to the belief that economic growth can be achieved through developing new technologies and improvements in production efficiency. Technology companies, financial services companies, and utilities have led the business world in adopting SaaS technology.