Microsoft Office 365 is a SAAS offering by none other than Microsoft. Microsoft has invested billions of dollars building state-of-the-art data centers all over the world. These data centers are staffed by Microsoft employees whose entire responsibility is managing the Microsoft products offered in the Office 365 product.
When it comes time to roll out software, you have a number of options. You can pay someone to develop software from scratch, which is known as custom development. You can buy software, install it, and manage it yourself. Or, you can sign up to use software that is installed and managed by someone else.
This third option is called Software as a Service (SAAS). You sign up to use the software and pay for it as a service on a monthly basis.
Because Microsoft is making the service available on a monthly basis, you have the greatest flexibility of all. You sign up for the service and begin using it. No need to go through a deployment phase. Exchange Online is already deployed and ready to go.
The Office 365 product is actually a bundle of products. The products include Office Professional Plus, SharePoint Online, Exchange Online, and Lync Online.
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Source:http://www.dummies.com/how-to/content/deployment-flexibility-with-exchange-online-from-o.html
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