Software as a service used to be known mainly as the Application Service Provider or the On-Demand service- and yes, it is actually a service because customers pay to get to use a web-native software application (as opposed to purchasing the software outright for their personal use.) Software as a service is now more commonly known though as just Saas throughout the industry.
To get to use the web-native software application, the customer has to rely on a source code interface called an API (or application programming interface.) An example of an API that the public might be familiar with is the Play Station 2 official API from the Sony company which helped Sony to maintain control over whoever could access the official API. Sony restricted use of its official API to just licensed developers of the Play Station 2 gadget which in turn allowed Sony to determine who could write games for the Play Station 2. Not only does this allow Sony to impose quality control policies on both the Play Station 2 and Play Station 2 games, but Sony can monitor any opportunities to license new technologies based on its own product.
On the other hand, the API of Microsoft is generally accessible by the public to allow new software to be developed based on the Windows OS platform. This is the more open type of publishing policy when it comes to the API source code interface.
Other widely-used samples of API are those that belong to MediaWiki API, YouTube API, Google Maps API, Simple DirectMedia Layer (SDL), DirectX for Microsoft Windows, the OpenGL cross-platform 3D graphics API, the Macintosh OS Carbon, the Macintosh OS Cocoa, the ASPI employed for SCSI device interfacing, the Java Platform for the Standard Edition API and for the Enterprise Edition API, the SUS or Single Unix Specification Windows API, and the PC BIOS call interface.