Software as a Service (SaaS)

Updated Sept 29, 2020 · 5 min read

What is SaaS?

Software as a service (SaaS) is a way of delivering and licensing software over the Internet, typically through a recurring subscription. SaaS relies on cloud computing as a way to connect users to applications over the Internet.

Companies that provide SaaS applications rent out space on computers located in data centers. Companies upload their software to rented computers in data centers and have their customers access the software on those computers through the Internet.

Cloud service providers manage and maintain the computers for companies, reducing complexity and cost. Popular cloud service providers include Amazon Web Services, Microsoft Azure, Google Cloud Platform, and IBM Cloud Services.

Companies that use the SaaS model include:

  • Netflix, which provides a video streaming service.
  • Salesforce, which provides a customer relationship management (CRM) tool.
  • Workday, which provides human resources and financial tools.
  • Zoom, which provides video and web conferencing tools.

Advantages of SaaS

Some advantages of the SaaS model include:

Continuous enhancements. Customers of SaaS don’t need to maintain code on their own machines. Instead, they can receive new software updates quickly as companies enhance their software.

Pay per use. Businesses like to use cloud service providers because businesses don’t need to scale up and down based on software usage. As their software is used by more customers, the service providers automatically distribute the software on more computers across the systems in their data centers.

Access anywhere. Customers can easily access applications from any device, such as their desktop, mobile device, or tablet. Before the SaaS model, customers installed software on their desktop, making it impossible to access that same downloaded software from other devices.

Related Terms


Web browsers (or “browsers”) are software applications used for accessing and viewing information on the internet.

Data Centers

Data centers are dedicated physical spaces (often groups of buildings) that house networks of computer systems for running applications...


A server is a computer that provides a service (such as providing data) to other computers and its users, known as the clients.