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. Cloud Computing

    A model for delivering information technology services in which ...
  2. Business Software & Services Industry ...

    An exchange-traded fund (ETF) that invests in business software ...
  3. Currency Trading Software

    Trading software to help the currency trader with forex trading ...
  4. Forex Charting Software

    An analytical, computer-based tool used to help currency traders ...
  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. Insights

    The Industry Handbook: Software Industry

    Discover how the software industry has changed throughout the years to become a mainstay for businesses from programming to software as a service.
  2. Investing

    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.
  3. Small Business

    The Top 10 Hidden Factors Affecting Software Stocks

    Want to invest in software? Here are the most important factors affecting profits, revenues, and stock price of software companies
  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

    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. Financial Advisor

    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.
  7. Trading

    Forex Automation Software For Hands-Free Trading

    Automated forex trading software scans the market for favorable trades based on your input. Find out more about this valuable forex tool.
  8. Investing

    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. Taxes

    Tax Software Vs a CPA: Which Is Right For You?

    There are occasions when software will suffice, and others that require an accountant’s expertise. Here how to decide which is right for you.
  10. Investing

    Salesforce Vs. SAP: Comparing Top CRM Providers (CRM, SAP)

    Learn about the different CRM offerings by Salesforce and SAP. Understand each company's past and what kind of futures the differences indicate.
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. Should computer software be classified as an intangible asset or part of property, ...

    In accounting terms, an intangible asset is something of value that is not of physical nature. On the other hand, property, ... Read Answer >>
  4. 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 >>
  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. What is the best software for calculating the cash budget of a small business?

    Explore the various types of small-business accounting software to find the best program to calculate and track your company's ... Read Answer >>
Hot Definitions
  1. Graduate Management Admission Test - GMAT

    A standardized test intended to measure a test taker's aptitude in mathematics and the English language. The GMAT is most ...
  2. Magna Cum Laude

    An academic level of distinction used by educational institutions to signify an academic degree which was received "with ...
  3. Cover Letter

    A written document submitted with a job application explaining the applicant's credentials and interest in the open position. ...
  4. 403(b) Plan

    A retirement plan for certain employees of public schools, tax-exempt organizations and certain ministers. Generally, retirement ...
  5. Master Of Business Administration - MBA

    A graduate degree achieved at a university or college that provides theoretical and practical training to help graduates ...
  6. Liquidity Event

    An event that allows initial investors in a company to cash out some or all of their ownership shares and is considered an ...
Trading Center