SaaS, or Software as a Service, is a software distribution model that allows subscription-based software to be licensed and hosted by an external server. It is accessible via the web to subscribers.
The SaaS (Software as a Service) concept involves a cloud provider hosting applications and making them available to users via the internet. With this model, the Independent Software Vendor (ISV) partners with a third-party cloud platform to host the application. Larger companies, such as Microsoft, may also be software vendors in addition to cloud providers. As a category of cloud computing, SaaS is one of three, and the other two are Platform as a Service (PaaS) and Infrastructure as a Service (IaaS).