Software as a service
Software as a Service (SaaS) is a cloud-based software delivery model in which applications are hosted by a third-party provider and made available to customers over the internet, typically through a web browser, on a subscription or pay-as-you-go basis, eliminating the need for local installation, maintenance, or infrastructure management.[1][2][3] The origins of SaaS trace back to the mainframe computing era of the 1960s and 1970s, when users accessed centralized applications via remote terminals, but the modern form emerged in the late 1990s as internet infrastructure improved, with Salesforce pioneering the model in 1999 by delivering customer relationship management (CRM) software entirely online.[4][5][6] This shift addressed limitations of traditional on-premises software, such as high upfront costs and lengthy deployment times, by enabling providers to handle updates, security, and scalability centrally.[7][8] SaaS offers key benefits including cost efficiency through reduced hardware needs and predictable subscription pricing, scalability to adjust usage dynamically, automatic updates for the latest features and security patches, and accessibility from any device with an internet connection, making it suitable for businesses of all sizes.[9][6][10] Prominent examples include Salesforce for CRM, Microsoft Office 365 for productivity tools, Google Workspace for collaboration, Slack for team communication, and Dropbox for file storage, which collectively serve millions of users worldwide.[11][12] In 2025, the global SaaS market reached approximately $464 billion in revenue, driven by increasing cloud adoption and the demand for flexible, remote-accessible solutions, representing a significant portion of the broader public cloud services economy.[13] This growth underscores SaaS's role in transforming software consumption, with leading providers like Microsoft, Salesforce, and Adobe dominating by market capitalization and innovation in areas such as AI integration and multi-tenant architectures.[14][15]Fundamentals
Definition
Software as a Service (SaaS) is a software licensing and delivery model in which applications are hosted by a third-party provider on cloud infrastructure and made available to customers over the internet, typically accessed through a web browser or mobile application without the need for local installation or maintenance by the user.[16] This model allows consumers to utilize the provider's applications running on a shared cloud infrastructure, where access is enabled via thin client interfaces such as web browsers, while the consumer has no control over the underlying network, servers, operating systems, storage, or application capabilities beyond limited user-specific configurations.[16] SaaS represents a subset of cloud computing, emphasizing remote delivery and management of complete software solutions.[16] In SaaS, the provider assumes responsibility for managing the entire stack, including infrastructure, platform, data centers, security measures, regular updates, and scalability, enabling users to focus solely on application usage rather than operational overhead.[1] Access is typically granted through a subscription-based model, where customers pay recurring fees—often monthly or annually—for on-demand availability, contrasting with traditional one-time purchase licenses.[6] This arrangement ensures automatic delivery of updates, patches, and new features without user intervention, enhancing reliability and reducing downtime.[6] SaaS evolved from traditional on-premises software models, which required organizations to purchase, install, and maintain applications locally on dedicated hardware, shifting instead to a remote, pay-as-you-go paradigm that prioritizes accessibility and cost efficiency.[17] A foundational principle of SaaS is multi-tenancy, where a single instance of the software serves multiple customers (tenants) by sharing underlying resources such as compute and storage, which optimizes efficiency, lowers operational costs, and enables rapid scaling without dedicated infrastructure per user.[18] This shared approach allows providers to deliver consistent service levels while isolating tenant data for security and compliance.[18]Comparison to Other Models
Software as a Service (SaaS) is one of three primary cloud computing service models defined by the National Institute of Standards and Technology (NIST), alongside Infrastructure as a Service (IaaS) and Platform as a Service (PaaS).[19] IaaS provides consumers with fundamental computing resources such as virtualized servers, storage, and networking, enabling them to provision and manage operating systems and applications on demand.[19] PaaS offers a higher-level platform for deploying and managing applications, including runtime environments, databases, and middleware, without the need to handle underlying infrastructure.[19] In contrast, SaaS delivers fully functional applications over the internet, accessible via a web browser or client interface, where the provider manages the entire stack from infrastructure to application updates.[19] The key differences among these models lie in the division of responsibilities and the level of abstraction provided to the consumer. In IaaS, the provider handles only the physical infrastructure, leaving the consumer responsible for operating systems, storage configuration, deployed applications, and limited networking, which allows for high customization but requires significant management effort.[19] PaaS shifts more control to the provider by managing the infrastructure and platform components, enabling consumers to focus on application development and deployment while configuring hosting environments as needed.[19] SaaS, however, assumes nearly all responsibilities, including application configuration, data management, and security, with consumers limited to user-specific settings; this model suits end-user applications like customer relationship management (CRM) tools such as Salesforce.[19][20] For instance, IaaS supports raw infrastructure like virtual machines in Amazon Web Services (AWS) Elastic Compute Cloud (EC2), while PaaS provides development environments like Google App Engine for building and scaling applications.[21] SaaS often integrates with IaaS and PaaS in hybrid cloud setups to create tailored solutions that combine the ease of ready-to-use software with customizable infrastructure or development platforms.[22] In such hybrid models, organizations can run SaaS applications on top of IaaS resources for enhanced control or use PaaS to extend SaaS functionality with custom code, facilitating seamless data portability and resource bursting across environments.[19][20] This integration allows enterprises to leverage the scalability and management benefits of each model without being locked into a single approach.[23]| Service Model | Provider Responsibilities | Consumer Responsibilities | Examples | Scalability Features |
|---|---|---|---|---|
| IaaS | Underlying physical/virtual infrastructure (e.g., servers, storage, networking) | OS installation, application deployment, runtime management, limited networking | AWS EC2, Microsoft Azure Virtual Machines | On-demand provisioning of resources; consumer configures auto-scaling for infrastructure elasticity[19] |
| PaaS | Infrastructure, runtime environment, middleware, OS, and platform tools | Application development, deployment, and configuration of hosting settings | Google App Engine, AWS Elastic Beanstalk | Provider-managed platform scaling; automatic resource adjustment based on application demands[19][21] |
| SaaS | Entire stack: infrastructure, platform, applications, data, and user access | Limited to application-specific configurations and data input | Salesforce CRM, Microsoft Office 365 | Fully provider-handled; seamless multi-tenant scaling with no consumer intervention for growth[19][20] |