Definition of Software as a Service (SAAS)

What does the term "Software as a Service" mean? What is meant by "SAAS"? What is an example of a "SAAS" Service?

"Software as a Service" refers to when you purchase access to software via a subscription (weekly, monthly, year) and access this software via a central host (software provider's web site, for instance).

In the past, you'd simply buy a computer program at a store, load it onto your computer and away you'd go. You'd pay a one-time fee and that would be that.

In this day and age, companies want the recurring revenues instead of a one-time fee, which is why the "SAAS" model was born.

An example of a SAAS business? Slack, which is a company that allows for employees of a company to easily communicate with each other and collaborate on workflow.

Slack is a SAAS business because:

1) Everything is hosted in the "cloud"
2) Slack has a recurring subscription model

You can't just download Slack onto your work computers - instead, you access Slack's software online, and all of the information is stored in the cloud and shared with the other employees of the company who are part of the conversation. All files, messages, etc. are hosted in the cloud.

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SAAS companies have soared in value over the past decade or so, as the total sales for the SAAS market rapidly approaches $100 billion.

The downside to using SAAS products, of course, is that you lose your access if the host has an outage or you can't connect. With that being said, the pros far outweigh the cons, which is why SAAS products have grown so popular.


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