Software as a service or SaaS is a software application hosted on a remote server and accessed through the Internet. It has two different delivery models. First is the Hosted Application Management or Hosted AM model which provides hosts with commercially available software for customers and delivers it over the Web. Second is the Software on Demand Model which gives customers network-based access to a single copy of an application created specifically for SaaS distribution.

SaaS has three main types of services.

• The On Demand Software Purchasing provides a fast and easy way to obtain software for users and provides a cost-effective sales channel and software delivery for vendors.
• The On demand IT Service-Oriented Architecture or SOA is a flexible approach to application development that encourages service reuse and reduce the need to build point-to-point connection for data and application integration.
• On demand Application Services that trim the software and hardware cost. This approach is an interim step before bringing the application software in-house.

SAAS has risen for several reasons. The key benefits of SaaS are:

• Low cost of entry - Payment for SaaS is on monthly basis. The monetary risk is lower and less scary. This means the costs are granular in nature and incurred only as long as benefits are achieved.
• Smaller Storage Requirement – Data Storage is the responsibility of the SaaS provider.
• Fewer Personnel - SaaS lessens the need for IT personnel to handle maintenance, monitoring and software update. The SaaS vendor will handle all of these tasks.
• Easy to implement – SaaS eliminates software installation and setup at the customer’s end because it is delivered through the Internet.

SaaS relieves the customer's load of software maintenance, current operation, and support. With SaaS, a company can focus on its core competencies while their IT needs are handled by the professionals. SaaS helps a company to achieve its main goals and IT solutions at the same time.