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Software as a service (SaaS) — sometimes referred to as "on-demand software" — is a software delivery model in which software and its associated data are hosted centrally (on the cloud, for example) and are typically accessed by users using a thin client, normally using a web browser over the Internet. The customer subscribes to this "service" rather than requiring a software license, and the software doesn't require an implementation on customer premises.

A SaaS solution is typically a "multi-tenant solution," meaning more than one entity is sharing the server and database resource(s) hosted by the vendor, though in the process potentially limiting customer customization. With this model, a single version of the application with a single configuration (hardware, network, operating system, etc.) is used for all customers. To support scalability, the application is installed on multiple machines. In some cases, a second version of the application may be set up to offer a select group of customers a separate instance of the software environment, better enabling customers to customize their configuration. (This could be accomplished with platform as a service (PaaS), for example. This is contrasted with traditional software, where multiple physical copies of the software — each potentially of a different version, with a potentially different configuration, and often customized — are installed across various customer sites. (Full article...)

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