Software used to be sold as any other product: a box on a shelf (or a download equivalent) and either basic post-purchase support or paid support contracts. Users would have to wait for a new release to get new features.

Now software is available as a service: a constantly-updated, pay-to-use subscription which users opt into and use as long as they get value. Many Software as a Service (SaaS) systems are based on a freemium and/or ad-driven pricing model: an initial, basic, free version of the service is offered, with features regular users most want available in a paid version (such as increased storage capacity for documents in the system, better customization options, or enterprise-business-level functions).

SaaS changes the software game by taking the failure risk out of developing and releasing features in software, ensuring stabilization of ongoing revenue, and removing the necessity of managing user update processes. It also works well with cloud-based data storage models which allow users to access data across multiple devices without having to physically transport their own files or invest in setting up their own server-based storage.

Platform as a Service follows a similar model, providing enterprise software and hardware tools on an on-demand basis. Examples include information technology (IT) as a service, wherein a business can subscribe to a suite of services providing security, infrastructure, data storage and analytics to their end users while minimizing the risk of unforeseen development needs such as security patches or systems integration headaches.

Examples of SaaS/PaaS:

• Google Apps for Work
• Salesforce
• FreshBooks