Definition
Software as a service (SaaS) is a software delivery model in which applications are hosted by the vendor in the cloud and used over the network on a monthly or annual subscription, with no local installation or maintenance. It is one of the main service models of cloud computing.
Meaning and usage
Because SaaS revenue is subscription-based and recurring by nature, the industry tracks health with metrics such as ARR, churn and renewal rates. Multi-tenant architecture, continuous automatic upgrades, and per-seat or usage-based pricing are common traits.
Usage
Everything from office collaboration suites to customer-relationship management is now widely delivered as SaaS, and consumer subscription software fits the same model. The term also comes up in discussions of cloud transition and the subscription economy.
Related and confusable terms
Most SaaS is B2B, but there is plenty of consumer-facing B2C subscription software — the difference lies in the customer type. “SaaS” names a delivery model while “cloud computing” names the underlying resource model, and the two are often used interchangeably in casual talk.