Software as a Service, SaaS is a software delivery method that provides access to software and its functions remotely as a Web-based service.  Software as a Service may also be referred to as simply hosted applications. Software as a Service allows organizations to access business functionality at a cost typically less than paying for licensed applications since SaaS pricing is based on a monthly fee. Software as a Service removes the need for organizations to handle the installation, set-up and often daily upkeep and maintenance. Also, because the software is hosted remotely, users don't need to invest in additional hardware. 

In other words, SAAS is a software delivery model in which software and its associated data are hosted centrally (typically in the Internet cloud) and are typically accessed by users using a thin client, normally using a web browser over the Internet.