Managing the Intangible: Software as a Service

Abstract: The traditional model of software distribution in which software is purchased and then installed on computers requires more complex management and technical resources. This approach of software distribution is demanding on financial resources, especially for start-up companies due to increased costs on IT infrastructure deployment. Some companies in order to decrease these costs use illegal software, which may lead to legal prosecutions, and some companies use other alternatives such open source software. Cloud computing has brought 
new possibilities in software distribution and outsourcing of IT services. The new distribution model – Software as a Service brought more flexibility and, more importantly, costly effective solutions without legal obligations regarding software copyrights. In the new model, the applications are hosted by a service provider and made available to  customers over the Internet. The study compares two approaches to software distribution by using Total Cost of Ownership analysis.