What is SaaS?
Kahu team·Updated 2 Oct 2026·5 min read
SaaS stands for software as a service: software you use over the internet and pay for by subscription, instead of buying and installing it. Gmail, Xero, Canva and most CRMs are SaaS. The provider runs the servers, updates and backups, and you log in from any device.
SaaS in plain English
With traditional software you bought a licence, installed it on a computer and were responsible for updating it. With SaaS you open a website or an app, log in and use it. The software runs on the provider’s servers, your data is stored there, and you pay a monthly or yearly fee for as long as you use it.
How it differs from installed software
| SaaS | Installed software | |
|---|---|---|
| How you pay | Subscription, monthly or yearly | One-off licence, plus upgrades |
| Where it runs | The provider’s servers | Your own computer or server |
| Updates | Automatic | You install them |
| Access | Any device with internet | The machine it is installed on |
| Your data | Stored by the provider | Stored by you |
Why small businesses use it
- Low start-up cost: no servers and no large licence fee.
- Always up to date, with security fixes applied for you.
- Works from the office, home or a phone on site.
- Easy to add or remove users as the team changes.
What to check before you sign up
- 1The real costPrice per user, what each tier includes, and what happens to the price after any introductory offer.
- 2Your dataWhere it is stored, who can access it, and whether you can export everything if you leave.
- 3SecurityTwo-factor authentication, admin controls and how the provider handles incidents.
- 4ConnectionsWhether it works with the tools you already use, such as email, accounting and your website.
Frequently asked questions
Is SaaS the same as cloud software?
Nearly. Cloud software is any software that runs on remote servers. SaaS is cloud software sold as a subscription service.
What happens to my data if I stop paying?
It depends on the provider. Check the export options and how long they keep your data before you need them.
Is SaaS secure?
Reputable providers usually secure their systems better than a small business could alone, but your account is still only as safe as your passwords and two-factor settings.
