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Software as a Service
Software as a service (SaaS) is a software application delivery model where a software vendor develops a web-native software application and hosts and operates (either independently or through a third-party) the application for use by its customers over the Internet. Customers do not pay for owning the software itself but rather for using it.

Drivers for SaaS
The traditional rationale for outsourcing of IT systems is that by applying economies of scale to the operation of applications, a service provider can offer better, cheaper, more reliable applications than companies can themselves. The use of SaaS-based applications has grown dramatically, as reported by many of the analyst firms that cover the sector. But it’s only in recent years that SaaS has truly flourished. Several important changes to the way we work have made this rapid acceptance possible.*
  • More people have computers and are familiar with web applications, thus lowering learning curve
  • Computing itself is a commodity. It’s the business processes and the data itself that matters.
  • Applications are standardized. Most people spend most of their time using standardized applications.
  • Web systems are reliable.
  • Security is sufficiently well trusted and transparent.
  • Security and redundancy tools are equal or better than what is found in most organizations.

Where SaaS Makes Sense "The prime reasons for a CIO to consider SaaS are its faster deployment times, its lack of up-front license and infrastructure costs, and its ability to address vanilla business processes so you can focus your resources on custom processes that make a real difference, says Accenture’s Modruson. 'Your startup costs are not as large, and you have the ability to get up and running quickly and change direction if needed. I don’t have as much flexibility with packaged applications,' he says. Equally as important, says Modruson, SaaS 'gets us to having standard processes and a standard system across all units.'"
- CIO.com "The Truth About Software as a Service (SaaS)" (by Galen Gruman)
*Wikipedia