SaaS revenue comes from a utility computing environment in which unrelated customers share a common application and infrastructure managed by an independent software vendor or a third-party service provider that typically owns the code or intellectual property. The model provides access to and consumption of software and application functionality built specifically for network delivery and accessed by users over the Internet.
SaaS revenues do not include software deployed internally by the customer or any packaged software for which a license fee and a maintenance fee are paid. The myriad ‘as a service’ (APPaaS, PaaS, IaaS) offerings—including business application services, databases, software development tools, high-level storage services (backup
and archiving), testing as a service, and security as a service—are all included in the category of SaaS.
A company might come to market with something it broadly calls SaaS, when in reality one business unit is doing SaaS and the other is doing PaaS. But each model functions differently. With SaaS, prices typically don’t go down but vendors keep offering premium features that add value and cost extra. With PaaS, however, prices do usually drop over time as more customers come onto the platform.
Most companies today don’t seem to be taking that into consideration. More details in the Global 100 Software Leaders report.