Software as a Service, or SaaS, and traditional software solve the same basic problem — giving you a tool to do a job — but the way you access, pay for, and maintain them differs significantly.
Traditional software
Traditional software is typically purchased once, installed directly on your device, and run locally without needing an internet connection. You own a license to that specific version, and upgrading to a newer version usually means a separate purchase.
SaaS
SaaS is accessed over the internet, usually through a subscription, and runs on the provider's servers rather than your own device. Updates happen automatically on the provider's end, so you're always using the latest version without needing to manually install anything.
- Traditional: one-time cost, works offline, updates are manual and separate purchases
- SaaS: ongoing subscription, requires internet, updates are automatic and included
The right choice often comes down to whether predictable ongoing costs or a larger one-time investment fits a business's finances better.
Many businesses today use a mix of both, choosing based on what each specific tool is used for and how often it needs to be accessed remotely.
A real-world example
A growing team needed accounting software. With traditional, on-premise software, they'd have paid a large upfront license fee, installed it on office servers, and manually applied updates and security patches themselves. Instead, they chose a SaaS accounting platform: a monthly subscription, automatic updates, and access from anywhere without IT overhead. The tradeoff was ongoing dependency on the vendor's uptime and pricing — when the SaaS provider raised prices the following year, switching costs (retraining staff, migrating data) made it harder to simply walk away than it would have been with owned software.