Software-as-a-Service SaaS also referred to as On Demand Software is a cloud computing service delivery model. It provides users with access to software services over the internet. In this system, the functionality in terms of the software and appurtenant data is centrally hosted on the cloud. These can then be accessed by the user via the internet. The cloud service providers create a web extended application that can be employed over a particular terminal termed the thin client. For larger companies, they can be deployed through a fat client, which is a server, which receives the software service from the provider and then distributes access as needed within the company intranet.
SaaS can be either multi-tenant or multi-instance. The first, a multi-tenant architecture on its centralized cloud server hosting, refers to just a single software instance that has been installed to run on the server layered onto the cloud API. This single instance is designed to serve multiple users who are the client organizations. The single instance of software is virtually partitioned to enable different users to access services concurrently. Under this design, each user is provided with their own virtual instance of the software being deployed.
In multi-instance architecture, several software instances are installed on the centralized cloud server hosting. All client organizations have their version of the software which they can access and modify to their needs. The architecture of this model allows users to access services asynchronously. Currently, while there are these two service delivery models, there is no industry agreement on which is better. SaaS service providers decide which to use depending on the structure of the cloud API onto which they will layer the software. The SaaS model does not need an indirect distribution mechanism as it allows users to interact directly with the software-vendor. The vendors of the software, in most cases, are also the developers; this is designed to keep costs low and create more effective service delivery.
As for the cost and pricing model, SaaS can be quite cheap due to several factors. One, there is no margin created by the supply chain. Two, the functionality is usually priced on a subscription model. This enables the user to take up services as and when they need them. Unlike traditional software, SaaS allows the business to cease using the service without rendering their original investment wasted. Lastly, the use of the freeâ€“premium model eases costs. In this model, the service provider provides simple functionality for free and increased service comes at a premium cost.