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Software as a service (SaaS, typically pronounced 'sass') is a model of software deployment over the internet. With SaaS, a provider licenses an application to customers for use as a service on demand, either through a time subscription or a “pay-as-you-go” model. Also known as “software on demand,” the SaaS model allows vendors to develop, host and operate software for customer use. Rather than purchase the hardware and software to run an application, customers need only a computer or a server to download the application and internet access to run the software. The software can be licensed for a single user or for a group of users.

Key characteristics

Characteristics of SaaS include:

• Network-based access to, and management of, commercially available software
• Activities managed from central locations rather than at each customer's site, enabling customers to access applications remotely via the Web
• Application delivery typically closer to a one-to-many model (single instance, multi-tenant architecture) than to a one-to-one model, including architecture, pricing, partnering, and management characteristics
• Centralized feature updating, which obviates the need for end-users to download patches and upgrades.
• Frequent integration into a larger network of communicating software - either as part of a mashup or as a plugin to a platform as a service. (Service oriented architecture is naturally more complex than traditional models of software deployment.)

 Benefits

• Save Time
• Save Money
• Focus Budgets on Competitive Advantage rather than Infrastructure
• Pay as you go -costs that scale with demand without upfront capital investment.
• Multi-Tenant Efficiency
• Flexibility and Scalability

User Satisfaction

Gartner's 2008 survey of 333 enterprises in the US and UK found a low level of approval from customers, describing overall satisfaction levels as "lukewarm". Respondents who had decided against SaaS cited high cost of service, difficulty with integration, and technical requirements.[14] A recent report from Forrester, “The ROI of Software-As-A-Service,” examined a range of companies that chose SaaS solutions and found that SaaS does in fact result in long-term value.

Companies interviewed for the report cited several reasons for their ROI of SaaS:

• Rapid deployment
• Increased user adoption
• Reduced support needs
• Lower costs for implementation and upgrades