David Coursey articulate the reasons:
1. The app provides functionality many businesses need, but isnt terribly different from one company to the next.
2. The service allows customization, but the SaaS model prevents clients from doing too much reinvention. This saves money and grief. It also encourages best practices.
3. The service brings together information from several sources and presents it to the user in a friendly, web-based interface.
4. Hosted services are easier to get running, partially because of the limited customization potential but also because theres no hardware to buy and no software to install.
5. Theres also no software to manage, fix, upgrade, etc. All that is the responsibility of the vendor. Customers get a semi-custom application without having to hire developers and people to keep it running.
6. SaaS costs are predictable and typically usage-based.
7. If the vendor doesnt meet your needs, there usually is no long-term commitment and its easy to switch. This keeps SaaS vendors responsive.