What is SaaS? - Definition, Examples & Benefits

Instructor: Sudha Aravindan

Sudha has a Doctor of Education degree in math education and is currently working as a Information Technology Specialist.

Have you sent a message on Twitter or shared a picture on Facebook? These are examples of SaaS, or software as a service. In this lesson we will learn about SaaS and how it's used.

What is SaaS?

Software as a service, or SaaS, is a software delivery system where the user does not have to purchase and install the software on their computer. They can simply go to the website offering the service, create an account and login to the system. Some of these software services like Twitter and Facebook are offered at no cost to the users.

In some instances, the company that provides the services gets payment from advertisements on the web space, allowing a balance between free service for users and profits. In other instances SaaS is similar to renting a software, where basic features are provided at no cost and more advanced features are available for a monthly or annual subscription cost. A good example of this is Office 365, which is a subscription plan where you are basically renting instead of purchasing the software. The subscription plan includes licenses that allow you to install the Microsoft suite of products including commonly used programs such as Word and Excel on multiple devices. The cost of the subscription is much lower than the cost of purchasing the software outright. SaaS is also sometimes known as on-demand software because it allows users to access the software from any location and any device at short notice.

Benefits of SaaS

Some of the benefits of SaaS include:

  • Lower Costs: Purchasing the full Microsoft Office software is more expensive compared to subscribing to Office 365. The subscription cost can be paid monthly or annually and you can often cancel the subscription at any time if you decide you are not interested in using the software any more.
  • Access from any location: With websites such as Facebook and Flickr there is no software to install, and this allows for you to be able to login to Facebook from your friend's computer or the computer in a library. All you need to know is your user name and password. This allows tremendous flexibility to the user because the software service is not linked to only the users' personal computer.
  • Automatic Updates: Whenever an software update is available for any of the subscription services like Office 365, the same version of the update is available for download and installation on all devices owned by the user. The user does not have to remember what version of the update is installed in each individual computer or mobile device.
  • Data Backups: Since the company that provides the software is responsible for backing up of data, and the data is automatically backed up, the user does not have to take the responsibility of making backups of data. Also the user does not have to be concerned about loss of data if their computer is lost or stolen since no data lives on the computer itself.

Examples of SaaS

Here are some common examples where SaaS is used in the business world:

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