SaaS: Software as a Service
It means, to put it very simply, software available for use online. There is no need to download it. Just signup on the internet and use it. It is similar to using yahoo/gmail; both are email programs running online and one just has to signup to them and start sending/receiving emails. You do not download gmail/yahoo to your system do you?
Now, why this whole noise about SaaS?
Earlier on, software used to be of the downloadable kind. Big bulky softwares that used to burn holes in your pocket since one had to regularly upgrade their Hard Disk size. And, how can one forget the bandwidth issues – to download a 6MB software, it used to take ages, the dial-up connection used to click only when it wanted to or God wanted to. Now, there is no need to do any of these acts.Things have improved on the bandwidth front, the speeds are faster, one is able to download software a lot faster but also at the same time, one does not want to maintain software on their own. So the shift is towards (re)using software that is already available and hosted somewhere. Now, hold on, Saas did not come up just yet.
Once people wanted to (re)use software developed by others, there came the time for the ASP or the Application Service Providers. These were something similar to middlemen in the sense that A would develop the software, B will host it for a set of users ie he will provide the infrastructure where he can install A and start it. B is now called as an Application Service Provider since he is providing access/Service to an Application. But hey, this sounds same as Saas, is n’t it? Smart! Yes, it does but the key difference is that B will have multiple installations of A running to cater to a wider audience (perhaps, B will have 20 customers/logins in a single installation of A. So when 100 customers are needed to be served, B will have installed 5 installations of A each serving 20 customers).
In a typical Saas setting, there is ONLY one instance of service running and that ALONE caters to all the customers. This concept is called multi-tenant architecture as each tenant is a set of users who belong to a particular company/entity. The data for each tenant is secure from the other. In the ASP model, sure the data is secure from the other but you needed to have multiple installations too remember? So scaling up was a problem. Saas was the evolved answer to the problem.
Hope that solves some queries at the least