Software as a Service(SaaS) is brought into general public attention by cloud computing, although, the idea and practice of SaaS predates to it. In the past most of the products offered under SaaS paradigm were aimed at very sepcific markets, usally business enterprises. However, with the advent of cloud computing, SaaS has entered everyday business parlance and practice and is longer the province of CRM, ERP and other products. Some of SaaS products are aimed at home users too.
Non-SaaS software or normal software is installed locally "on premise' ( office, college, factory) either on a desktop machinhe or on a server on the organization network ( LAN etc). For this, the concerned company or organization buys a license given each user right to use it.
However, with SaaS, there is a paradigm shift. In this mode, instead of local installaction, either the whole software or atleast some parts of it are accessed from the remote location. And instead of buying a license to gain right to use it indefinitely, user pays a subscrition that provides access for a specific period. As a consequence software is consumed as a "utility" in manner like electricity or water. In this way user pays for " what he uses" and not for the right to use.
What comes under SaaS umbrella depends on whom you ask. A wider definition includes services such as email servers (Gmail), Google Apps, calender and even docs under Saas category. Some specialist services such as accountancy software such as SageLive and Kashflow are available online versions where you pay a monthly fee to avail them
