SaaS (Software as a Service)
Software delivered via the internet on a subscription basis, eliminating the need for local installation.
Definition
SaaS (Software as a Service) is a software distribution model where applications are hosted in the cloud and accessed via the internet, typically through subscription pricing. Users don't install or maintain software locally—they access it through web browsers or apps, with providers handling infrastructure, updates, and security.
SaaS transformed software economics and delivery. Instead of large upfront purchases and IT-managed installations, organizations pay predictable subscriptions for always-current software accessible from anywhere.
Why It Matters
SaaS is now the dominant software model for business applications. Understanding SaaS dynamics—subscription economics, data portability, integration capabilities—helps organizations select and manage their software stack.
For vendors, SaaS metrics (MRR, churn, LTV) and customer success models differ fundamentally from traditional software businesses.
Examples in Practice
A startup runs entirely on SaaS tools, avoiding upfront software investments while accessing enterprise-grade capabilities.
A company's SaaS stack integrates through APIs, creating automated workflows across marketing, sales, and customer success.
An enterprise migrates from on-premise software to SaaS, trading control for reduced IT burden and continuous updates.