SaaS

Also called Software as a service, Cloud software, Subscription software

Software you rent and access over the internet rather than buy and install.

What it means

Software as a service is delivered over the internet and paid for periodically, usually per user per month. The supplier hosts it, maintains it and updates it.

The alternative — buying a licence and running it on your own hardware — is now the exception for most business software.

Why it matters

It moves software from a capital purchase to an operating cost, which changes the cash profile and the tax treatment.

It also changes what you own. You are renting access, and if you stop paying, you stop having it — including, potentially, access to your own data.

What it looks like in practice

Before committing, check three things: how you get your data out, what happens if you stop paying, and where the data is stored.

Audit your subscriptions annually. Costs accumulate invisibly at £20 a month, and most businesses are paying for seats nobody uses.

Per-user pricing means the cost grows with headcount. Model it at the size you expect to be.

What to watch out for

Annual contracts that auto-renew with a short cancellation window.

Data export that is technically possible and practically useless — a format nothing else can read.

Price rises at renewal, which are normal and negotiable more often than people try.

Where to get proper advice

Ask other businesses of your size in your sector. Vendor references are selected; peers are not.