What Is SaaS? Software as a Service, Explained

SaaS (software as a service) is software you access over the internet and pay for by subscription, instead of installing and maintaining it yourself. The vendor runs it on their servers, handles updates, and you log in through a browser.

Before SaaS, buying software meant buying a license, installing it on your own machines, and paying someone to keep it running. SaaS flips that. Salesforce, Shopify, Slack, and Google Workspace all work this way: you sign up, you pay monthly or yearly, and the software is just there.

The appeal is that someone else owns the plumbing. No servers to patch, no version to upgrade, no backup to schedule. The trade-off is that you rent rather than own, your data lives on someone else's infrastructure, and you adapt to how the product works rather than the other way round.

An example from our verticals: a small distributor runs its accounting in a SaaS package and its orders in an ecommerce SaaS. Both are fine on their own. The gap shows up between them. The order data and the accounting data never meet, so someone rekeys invoices by hand every morning.

Why it matters for custom software

SaaS covers the common needs well, and we tell most clients to buy it where it fits. Custom software earns its place in the gaps: the workflow no product on the market handles, or the integration that makes two SaaS tools finally share data. Custom software for small business is usually that connective layer, not a replacement for the SaaS a company already relies on.