Software as a Service abbreviated as SaaS refers to software available on cloud which can be used on subscription basis, example (per user per month or per user per year etc).
What is SaaS?
Software as a service is an offering from IT companies that help business by maintaining servers and applications at a centralized location and having them use required software based on subscription basis. This allows end users to use software using web enabled machine and a compatible web interface. You may use this service on multiple devices and from anywhere you have internet access.
Since SaaS allows user to browse through the required software over the internet, they need not install locally. Software installed on computer consumes memory space, when multiple softwares are installed; it takes a lot of memory. Some big software applications have a bigger footprint on machines where it is installed, thus decreases performance. Also, for client server type software, a dedicated administrator is required in every company in order to maintain and update the server. However SaaS providers host and maintain all softwares from a central location, so companies are relieved from the task of maintenance and administration. You pay only for what you use and for how long you need those services. Also as opposed to packaged software licenses which are good only for one machine, SaaS subscription is user specific and a single user can use the same login credentials to use SaaS from multiple devices. This is not only cost effective but also increases productivity as end users can operate required software anytime anywhere as required by the business.
How SaaS works?
Being an end user you only install a small application which will allow your service provider to manage your subscription. For the period your subscription is valid, you may access required software using web browser, after carrying out necessary operation you may save any changes back in to the centrally located cloud. When you log back in, you may resume where you left. It is very similar to locking machine after finishing a piece of work and then logging back in to resume where it was left, all previous operations are automatically committed.
Who provides these services?
Server hosting companies involved in distributed software delivery provide SaaS. They maintain gargantuan of application and database servers and as per the needs of a particular business they dedicate fixed amount of server space for those businesses. They administer, maintain, update and manage the servers on which client software is hosted.