Software as a Service allows organizations to subscribe to a software service where the software vendor is responsible for providing and managing the IT infrastructure, on-going software updates, and support. This leaves clients free to focus on core business activities rather than supporting software and IT functions. Clients are able to obtain lower costs as the vendor is specialized in these functions and can share the management cost across a pool of clients.

SaaS is gaining tremendous traction because of the lower initial and maintenance costs, rapid deployment, and on-going software updates.

Eighty-six percent of SMBs said they plan to deploy SaaS in their organizations before the end of the year.

SaaS is web-based, so clients don't have to install the application on any computer, yet can access it from anywhere in the world with Internet access. This provides flexibility and allows staff to access the application any time of day - regardless of geographical location.

Because the vendor provides and manages the IT infrastructure, clients avoid the overhead of investing in expensive equipment, leasing space at a data center, or supporting high-cost IT functions. The vendor is more efficient at providing these items and can split the management cost across all clients.

In a SaaS offering, clients don't purchase upgrades. As the vendor improves the application, application updates are rolled out to all clients simultaneously. Clients benefit not only from having the latest and most secure version of the application, but also from the latest innovations in web technology as the vendor is able to adapt to industry changes faster than traditional software models.

The vendor, who is most familiar with the application and its inner workings, provides a variety of support options for clients. Clients have peace-of-mind knowing they have someone to turn to should a question or issue arise.

Delivering software over the Internet is increasingly popular for its ability to simplify deployment and reduce customer acquisition costs; it also allows developers to support many customers with a single version of a product. SaaS is also often associated with a "pay as you go" subscription licensing model.