Software as a service (SaaS) is a way of delivering applications remotely over the internet instead of locally on machines (known as “on-premise” software). SaaS applications are also known as:

• Web-based software
• On-demand software
• Hosted software
• Hosted software

As the name suggests, SaaS transforms software from a product that’s purchased — a commodity that you buy once and download to your device — into a service that’s rendered: a set of capabilities that you subscribe to. Traditionally, IT departments installed business software on employees’ computers and had to manually update and maintain it. Users had only so much storage on their hard drives, and companies had to buy individual licenses for everyone. That made it difficult to collaborate, to work from a communal database, and to update data as needed. With SaaS, applications live on software providers’ servers. That frees users from licensing and hardware limitations, as well as maintenance responsibilities. Cloud computing is a key enabler. In its most basic form, the cloud is “software, data storage, and processing power” that’s available via the web. Users therefore access cloud-based software as a service through websites and apps.