As organizations struggle with the cost of software, many are turning to a licensing model known as Software as a Service (SaaS, usually pronounced “;sass”;).

The gist of SaaS is that you pay someone to use software.

The software is owned by a provider who grants you a license to use it.

Furthermore, this software is accessed over the Internet, and runs on hardware that is owned, operated and maintained by the SaaS provider.

SaaS provides a couple of major benefits.

First, there is no huge initial outlay of money to buy software and all the things it depends on, like hardware. Typically, all you need is a mid-grade PC with an Internet connection. Sign up with the SaaS provider and you can begin using the software immediately. Fees are usually billed monthly.

A modest startup fee is sometimes charged, but overall the main selling point of SaaS is that it costs less than doing it yourself.

Furthermore, costs are reduced over time because the provider takes care of all of the operational and maintenance issues associated with the software.

This includes keeping the hardware up and running, applying software upgrades, patches, and hotfixes, and backing up the system.

  Some people tout it as new trend, but actually SaaS has been around ever since computers have been used for business purposes.

In the old days, when mainframes ruled the world, only very large organizations actually owned their own software. Instead, most folks bought time on computers from what were then known as service bureaus.

These computers were accessed by telephone lines instead of the Internet, but the idea pretty much remains the same.

With the advent of PC's and other more affordable computers, service bureaus pretty much went the way of the telegraph.

  As some folks began to realize that running their own software was easier said than done, the SaaS model began reappearing in the late 90's.

SaaS providers were referred to as Application Service Providers (ASP), but again, the idea remained the same. ASP's provided for the care and feeding of the software and let organizations focus on their core compe- tencies.

  A major concern with the use of SaaS is security. Users are legitimately concerned that their data is kept secure. After all, a good SaaS vendor will have more than one customer using its software. SaaS vendors are sensitive to this concern and all of them go to great technical pains to ensure proper security. SaaS vendors typically address this issue contractually as well.

  As SaaS matures it will become more cost-effective and pervasive.

While SaaS is currently popular for accounting, human resource management, forms management and specialized applications, we expect it to encompass a wider breadth of applications in the future.