Software As A Service - SaaS

DEFINITION of 'Software As A Service - SaaS'

A software licensing model in which access to the software is provided on a subscription basis, with the software being located on external servers rather than on servers located in-house. Software-as-a-Service (SaaS) is typically accessed through a web browser, with users logging into the system using a username and password. Instead of each user having to install the software on his computer, the user is able to access the program via the internet. Businesses commonly use software as a service (SaaS) in customer retention management, human resources and procurement. Technology companies, financial services companies and utilities have lead the business world in adopting SaaS technology.

BREAKING DOWN 'Software As A Service - SaaS'

The rise of SaaS coincides with the rise of cloud-based computing. Before Software-as-a-Service was available, companies looking to update the software on their computers had to purchase compact disks containing the updates. For large organizations, updating software was a time-consuming endeavor. Over time, software updates became available for download through the Internet, with companies purchasing additional licenses rather than additional disks. However, this still required a copy of the software to be installed on all devices that needed access to it.

SaaS offers a variety of advantages over traditional software licensing models. Because the software does not live on the licensing company’s servers, there is less demand for the company to invest in new hardware. Users can access the software through a web browser, and can access the software from multiple locations, including outside the office. It is easy to implement, easy to update and debug and can be less expensive (or at least have lower up-front costs), since users pay for SaaS as they go instead of purchasing multiple software licenses for multiple computers. SaaS has numerous uses including tracking leads, scheduling events, managing transactions, automating sign up, auditing and more.

Drawbacks to the adoption of SaaS involve data security and speed of delivery. Because data is stored on external servers, companies have to be sure that it is safe and cannot be accessed by unauthorized parties. Slow Internet connections can reduce performance, especially if the cloud servers are being accessed from far off distances. Internal networks tend to be faster than Internet connections.

Types of software that have migrated to a SaaS model are often focused on enterprise-level services, such as human resources, customer relationship management, and content management. These types of tasks are often collaborative in nature, requiring employees from various departments to share, edit, and publish material while not necessarily in the same office.

RELATED TERMS
  1. Currency Trading Software

    Trading software to help the currency trader with forex trading ...
  2. Accounting Software

    Computer programs that assist bookkeepers and accountants in ...
  3. Forex Forecasting Software

    An analytical tool used to help currency traders with forex trading ...
  4. Ad Blocking Software

    Ad blocking software removes advertisements from websites. Some ...
  5. Maximizer

    A brand of customer relationship management software popularly ...
  6. Technology Sector

    A category of stocks relating to the research, development and/or ...
Related Articles
  1. Investing News

    How Intuit's Transition to the Cloud Has Driven Revenue Growth (INTU)

    Learn how Intuit is transitioning its users to the cloud, and how the company's revenue growth is being affected in the short and long terms.
  2. Personal Finance

    World's top 10 Software Companies

    Want to invest in software stocks but finding it difficult to identify companies with major software revenue? Here is a list of top software companies
  3. Stock Analysis

    The Home Run In HR Software

    Cloud applications for human resources are a natural extension of the movement. For investors, adding exposure to the tech sub-sector could provide big long-term gains.
  4. Investing

    Cloud Investments: Profitable If Chosen Carefully

    By owning stock in cloud-based service companies, you can follow the latest trends and make money from the explosive growth in the cloud industry.
  5. Trading Systems & Software

    The Vital Importance of Choosing The Right Day Trading Software

    Software has made day trading quick and automatic--all the more reason to be as painstaking as possible when choosing the right one for your needs.
  6. Stock Analysis

    2011 In Review - Software Stagnates

    Software had a down year, but many stocks outperformed.
  7. Financial Advisor Technology

    Technical Difficulties? Here's What a Good Advisor Does

    Few things are more important for advisors than using technology these days, but glitches can bring business to a halt. Here's how to deal with outages.
  8. Stock Analysis

    The 5 Biggest Chinese Software Companies (CHL, TCEHY)

    Read about the five largest and most influential software companies in China, including a new startup considered to be an upcoming superstar.
  9. Stock Analysis

    The Top 5 Large-Cap Software Stocks for 2016

    Discover the top five large-cap software stocks for 2016, with a summary of each company and what will make the stock appreciate in the upcoming year.
  10. Trading Strategies

    Picking The Right Algorithmic Trading Software

    Willing to enter the tech-savvy world of algorithmic trading? Here are some tips to picking the right software.
RELATED FAQS
  1. How does portfolio management software work?

    Discover the functions of various complexity levels of portfolio management software, and learn how traders utilize portfolio ... Read Answer >>
  2. What is the best general ledger software for small businesses?

    Learn more about accounting software and general ledger features. Find out how to choose the right program for small business ... Read Answer >>
  3. How does a company decide which key performance indicators (KPIs) to use?

    Setting specific and actionable key performance indicators gives companies the ability to track the success and health of ... Read Answer >>
  4. What should I look for when choosing a forex trading platform?

    A trading platform is a piece of software that acts as a conduit for information between a trader and a broker. A trading ... Read Answer >>
  5. How do I use software to make arbitrage trades?

    Understand the meaning of arbitrage trading, and learn how traders employ software programs to detect arbitrage trade opportunities. Read Answer >>
  6. How do Internet companies profit if they give away their services for free?

    Learn how companies in the Internet sector make a profit when service, content and user applications are offered at no cost ... Read Answer >>
Hot Definitions
  1. White Squire

    Very similar to a "white knight", but instead of purchasing a majority interest, the squire purchases a lesser interest in ...
  2. MACD Technical Indicator

    Moving Average Convergence Divergence (or MACD) is a trend-following momentum indicator that shows the relationship between ...
  3. Over-The-Counter - OTC

    Over-The-Counter (or OTC) is a security traded in some context other than on a formal exchange such as the NYSE, TSX, AMEX, ...
  4. Quarter - Q1, Q2, Q3, Q4

    A three-month period on a financial calendar that acts as a basis for the reporting of earnings and the paying of dividends.
  5. Weighted Average Cost Of Capital - WACC

    Weighted average cost of capital (WACC) is a calculation of a firm's cost of capital in which each category of capital is ...
  6. Basis Point (BPS)

    A unit that is equal to 1/100th of 1%, and is used to denote the change in a financial instrument. The basis point is commonly ...
Trading Center