We all use SaaS hosted applications every day, such as Gmail, Office365, Dropbox and Google Drive.
At its most basic level, SaaS (Software as a Service) can be described as being a provision of services (rather than a licence to use something), allowing a supplier to deliver a cloud-based service package, usually by a subscription model / pay-per-user basis.
Rather than the end-user downloading the major components of the software, they will reside with the supplier, rather than on-site with the end-user, and are accessed online, usually via a web browser.
There are some significant user benefits to accessing software in the cloud rather than downloading a particular version. End-users are able to automatically receive the latest updates and patches and the supplier takes care of data management and security.
In addition, the end-user can avoid an up-front cost and simply pay a monthly subscription or even just pay-per-use, making SaaS a very cost effective way to streamline their business operations.