Software as a Service (SaaS) is simply good economic sense.  There’s little reason to build, maintain, and back up applications when it’s getting cheaper and easier than ever simply to host the applications online.

Peter Coffee, director at cloud computing firm Salesforce says that the SaaS “shifts scarce, in-house IT talent away from the time-consuming but low-value tasks of acquiring, maintaining and administering commodity technology to let those resources be applied to high-value tasks creating competitive advantages for the business,”

The old business model of selling licenses for software is going to go the way of the horse and buggy.  Rather than buying software, companies simply subscribe to the application as a service.  There are no worries about keeping the programs up to date because that is all taken care of by the SaaS provider.

Billing models for SaaS vary.  Right now, most are still based on time interval usage.  For example, month-to-month recurring billing is most common.  But, as time goes on, expect SaaS billing to offer even more flexible billing models with pay per use and metered usage becoming more popular.

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