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Software as a service (SaaS) is a software development distribution model in which a third-party provider hosts applications and makes them available to customers over the Internet. SaaS is closely related to the application service provider (ASP) and on demand computing software development delivery models.
Depending upon the service level agreement (SLA), the customer’s data for each model may be stored locally, in the cloud or both locally and in the cloud. There are SaaS applications for fundamental business technologies, such as email, sales management, customer relationship management(CRM), financial management, human resource management (HRM), billing and collaboration.


SaaS removes the need for organizations to install and run applications on their own computers or in their own data centers. Other benefits of the SaaS model include:
  • Flexible payments
  • Scalable usage
  • Automatic updates
  • Accessibility and persistence


SaaS also poses some potential disadvantages. Businesses must rely on outside vendors to provide the software development, keep that software up and running, track and report accurate billing and facilitate a secure environment for the business' data. Issues can arise when providers experience service disruptions, impose unwanted changes to service offerings, or experience a security breach, all of which can have a profound effect on the customers' ability to use SaaS offerings. To proactively mitigate these issues, customers should understand their SaaS provider's service-level agreement, and make sure it is enforced.