In the business model using software as a service (SaaS), users are provided access to application software and databases. Cloud providers manage the infrastructure and platforms that run the applications. SaaS is sometimes referred to as "on-demand software" and is usually priced on a pay-per-use basis. SaaS providers generally price applications using a subscription fee.
In the SaaS model, we install and operate application software in the cloud and cloud users access the software from cloud clients. Cloud users do not manage the cloud infrastructure and platform where the application runs. This eliminates the need to install and run the application on the cloud user's own computers, which simplifies maintenance and support. Cloud applications are highly scalable—they can be scaled up or down to meet changing work demands.
The pricing model for SaaS applications is typically a monthly or yearly flat fee per user, so price is scalable and adjustable if users are added or removed at any point.
The SaaS model allows a business the potential to reduce IT operational costs by outsourcing hardware and software maintenance and support. This enables the business to reallocate IT CAPEX away from hardware/software spending and personnel expenses, towards meeting other goals and allows businesses to have an OPEX only.
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