Software as a service refers to the delivery of software-based business tools via the Internet as an alternative to traditional on-premise installations.
SaaS makes it possible to give employees the tools they need to do their jobs quickly at minimal cost. Once licenses have been purchased, the application can be brought online immediately. By contrast, on-premise applications can take weeks or months to install and configure.
SaaS gained popularity because it allows organizations to minimize IT overhead to provide routine business functions and there are no long-term commitments or maintenance costs.
SaaS also requires minimal investment in hardware or IT resources. Technical support, configuration, maintenance, and upgrades are all handled over the air by the SaaS vendor. This means the company won’t need to hire additional IT staff and will leave existing IT staff free to work on higher priority projects.
Finally, SaaS licenses are usually sold on a month-by-month basis, meaning there is no long-term commitment. Licenses or even the entire application can be dropped or replaced without lost investments costs.
When using the software as a service, the business does not have strict control over where its data is stored, who has access to it, or visibility into how the data is protected from theft or breach. Thus, SaaS is not a good fit for highly sensitive data or regulated data. If the application involves regulated data of any kind, such as personally identifiable customer data, then a SaaS model could put the organization out of compliance.
Today, few SaaS providers offer transparency regarding the storage location or security methods that would ease concerns over the privacy and security of business data, though this may become a competitive differentiator for SaaS providers in the future.
Many business applications are available as SaaS today. Examples include: customer relationship management, accounting, project management, databases, content management, and collaboration.