What Is SaaS?

SaaS, or Software as a Service, is a software delivery model where applications are hosted by a provider in the cloud and made available to users over the internet, typically on a monthly or annual subscription basis. Instead of buying software licenses and installing applications on individual computers or your own servers, you access SaaS applications through a web browser or lightweight app. Common SaaS examples include Microsoft 365, Google Workspace, Salesforce, QuickBooks Online, HubSpot, and Slack.

The SaaS model has transformed how businesses use software. The benefits are significant: no upfront licensing costs (you pay as you go), automatic updates (the provider handles all patches and new features), accessibility from anywhere with an internet connection, built-in data backup, and scalability (add or remove users as needed without purchasing new licenses). For small and mid-sized businesses, SaaS eliminates the need to maintain on-premises servers for many applications, reducing hardware costs and IT complexity.

However, SaaS adoption comes with considerations that businesses often overlook. Data ownership and portability matter — can you export your data if you switch providers? Security and compliance responsibilities are shared between you and the SaaS provider, and you need to understand which responsibilities are yours (access controls, user management) vs. theirs (infrastructure security, encryption). Integration between multiple SaaS applications can become complex without planning. And ongoing subscription costs can exceed the cost of traditional software licenses over time if not managed carefully.