SaaS stands for software as a service, a way of selling programs where you sign in through a web browser or app and pay a monthly or yearly fee instead of buying and installing a copy. The provider runs the software on its own servers, keeps it updated and stores your data in the cloud.
If you have used an online email inbox, a shared calendar, a video meeting tool or a web based accounting program at work, you have used SaaS. The term comes up in job posts, startup news, budget meetings and tech sales calls.
Quick facts
Stands for
Software as a ServiceType
Acronym, usually said "sass"Common spelling
SaaS, with a lowercase a in the middlePaid by
Subscription, often per user per monthRelated terms
PaaS, IaaS, cloud computing, APIUsed in
Business software, tech jobs, startup and investor talk
SaaS stands for four words, with odd capitals
The four letters come from four words:
- Software
- as
- a
- Service
The small words "as" and "a" get lowercase letters, which is why the standard spelling is SaaS. You will also see SAAS in all capitals, especially in headlines and spreadsheets, and it means the same thing. The idea in the name is that software is delivered like a utility. You do not own it; you pay for access to it while you need it.
How software as a service works
With older software, a business bought a license, installed the program on each computer and handled updates itself. SaaS moves all of that to the provider.
- The provider hosts the program on servers in data centers.
- You sign in with an account, usually through a browser.
- Your data lives online, so you can reach it from any device.
- Updates happen automatically, often without any action on your part.
- You pay on a schedule, and you can usually add or remove users as your team changes.
A small office: A dental practice signs up for an online scheduling program. Staff log in from the front desk and from home, patients get text reminders, and the practice pays a monthly fee per staff seat. Nobody installs anything, and if the office computer breaks, the schedule is still safe online.
SaaS vs PaaS vs IaaS
SaaS is one layer of what people call cloud computing. Two other "as a service" terms sit underneath it.
| Term | Stands for | What you get | Who uses it |
|---|---|---|---|
| SaaS | Software as a Service | A finished program you log in to | Almost anyone at work or home |
| PaaS | Platform as a Service | Tools and a hosted space to build and run your own apps | Software developers |
| IaaS | Infrastructure as a Service | Rented servers, storage and networks | IT teams and engineers |
An easy way to remember the stack: IaaS is renting the building, PaaS is renting a furnished kitchen, and SaaS is ordering the meal. Many SaaS products also offer an API so other programs can connect to them.
Common kinds of SaaS
Most business tools now come in this form. Typical categories include:
- CRM (customer relationship management) for sales teams
- ERP (enterprise resource planning) for finance, inventory and operations
- Payroll and HR systems
- Email, chat and video meeting tools
- Project management boards and shared documents
- Online stores and point of sale systems
- Learning platforms, often called an LMS
Companies that sell SaaS often track ARR, annual recurring revenue, because steady subscriptions are the heart of the model.
How to say and use SaaS
The usual way to say it is "sass," rhyming with class. A smaller group says "sahs." Spelling it out letter by letter, "S A A S," is rare. Since it is spoken like a word, it counts as an acronym.
Examples in sentences:
- "We moved our billing to a SaaS platform last quarter."
- "She works in SaaS sales."
- "Our SaaS costs went up after we hired ten people."
- "Is this a one time license or a SaaS subscription?"
Use a before it, "a SaaS company," since the spoken word starts with an s sound.
Pros and cons of the SaaS model
Buyers like the low starting cost, the quick setup and the fact that someone else handles security patches and backups. Teams can work from anywhere and always have the newest version.
The tradeoffs are real too. Monthly fees add up over the years. You need an internet connection. Your data sits with an outside company, so contracts often spell out uptime promises in an SLA, a service level agreement. Switching providers later can be hard if your records are in their format. For more workplace letters, see the business acronyms list.
Questions people ask
What does SaaS stand for in simple words?
It stands for software as a service. In plain terms, you rent a program over the internet instead of buying and installing it.
What is SaaS, and what does the SaaS full form stand for in business?
In business the full form is the same: software as a service. It often also describes a company whose main product is subscription software, as in "a SaaS startup."
Is SaaS the same as cloud computing?
SaaS is one part of cloud computing. Cloud computing also includes PaaS, which gives developers a platform, and IaaS, which rents out servers and storage.
How do you pronounce SaaS?
Most people say "sass," like the word for cheeky talk. Some say "sahs." Both are understood in an office.
Is SaaS an acronym?
Yes. It is formed from the first letters of software as a service and is usually said as a word, which makes it an acronym.