Software as a service (SaaS) is a software application delivery model where a software vendor develops a web-native software application and hosts and operates the application for use by its customers over the Internet. Customers do not pay for owning the software itself but rather for using it.

Benefits of the model:

  • No need for capital expenditure on software or hardware
  • Turn large capital expenditure into predictable operating expenses
  • The provider's hosting centers are the most sophisticated in the industry, far better than the average internal IT departments server rooms
  • Simple to roll out an application - all you need is a web-browser
  • Companies can concentrate on their core-activities and not on running an IT system
  • Single point of responsibility in case of a failure. All the customer needs to monitor is the SLA. No need to chase evasive internal resources

This is a new model but the uptake is accelerating. Look at www.salesforce.com for an example of how many customers are turning to this model.

Studies have shown that in the old model where companies built their own systems in house, 40% of developer's time was spent fixing bugs in live applications. In the Software as a Service model everything is taken care of by the vendor. Don't get caught in the old world.