Hey internal IT, you're a SaaS provider too

If you don't provide service to external users are you still a "Software as a Service" (SaaS) provider?

As the term SaaS becomes increasingly popular, I hear this question more and more. Here is my $0.02:

Yes. Saas is about the relationship between the service provider and the service consumer. The physical characteristics of service delivery are almost inconsequential.

In any SaaS relationship there is a service provider and a service consumer. In my opinion, the defining feature of SaaS is that the business contract between the two parties is the sole recourse the service consumer has to manage the service (aside from in-application config options). The service consumer has no hand in running or maintaining the service other than what they request via the contract.

Over the past few years there has been a major push inside enterprises towards being "service-oriented" (and ensuring clear lines of demarcation between business units and IT units). The end goal has always been for business users to be able to establish a business contract on which IT delivers a service. From the both the internal IT and end user point of view, SaaS is just another acronym on this service-oriented path on which they have already been traveling.

So internal IT, congratulations you're a SaaS provider too. In defining a SaaS world, focus on the relationships... physical characteristics of service delivery and who signs who's paycheck are just distractions.