As SaaS is web based, companies have the advantage of reducing traditional IT costs as they do not have to pay large upfront costs for hardware infrastructure (such as servers), nor the installation and subsequent management and support of these. Users rent the required online software which are hosted by the service provider instead of purchasing and installing this on their own on-premises computers.
For many businesses this method is favourable as companies are only paying for what the business requires. In addition to this, costs can be spread, paying either a monthly or annual subscription fee. This fee usually includes the software licences, maintenance and support fees.
SaaS is frequently used to deliver many business applications, including office and messaging software such as email, CAD software, accounting, customer relationship management (CRM) and human resource management (HRM) to name just a few.