Software as a Service

1310 Words5 Pages
Software as Service Software is ubiquitous in today's business world, where software applications can help us track shipments across multiple countries, manage large inventories, train employees, and even help us form good working relationships with customers. For decades, companies have run software on their own internal infrastructures or computer networks. In recent years, traditional software license purchases have begun to seem antiquated, as many vendors and customers have migrated to software as a service business model. Software as a service, or 'SaaS', is a software application delivery model by which an enterprise vendor develops a web-based software application, and then hosts and operates that application over the Internet for use by its customers. Customers do not need to buy software licenses or additional infrastructure equipment, and typically only pay monthly fees (also referred to as annuity payments) for using the software. It is important to note that SaaS typically encapsulates enterprise as opposed to consumer-oriented web-hosted software, which is generally known as web 2.0. According to a leading research firm, the SaaS market reached $6.3B in 2006; still a small fraction of the over $300B licensed software industry. However, growth in SaaS since 2000 has averaged 26% CAGR, while licensed software growth has remained relatively flat. Demand for SaaS is being driven by real business needs namely its ability to drive down IT-related costs,
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