Software plus Services describes the idea of combining hosted services with capabilities that are best achieved with locally running software. It describes composite applications created by combining traditional software with remote services to provide consistent and seamlessly integrated user experience across devices and form factors. Software plus Services is a concept that Software as a Service (SaaS) complements the traditional packaged software running on both client or server by services adding value.

Software plus Service is the paradigm that states that a software vendor can leverage the new world of cloud computing and complement the application software that runs on PC or any device to provide a better solution, rich experience to your users. There are various reasons for this to be the right approach when compared to moving everything to cloud or software as a Service model.

Rich User Experience - The browser is still unable to provide rich user experiences, so consuming your services using browser has feature limitations, if you blend client software to provide the richness in experience and leverage internet to deliver those experiences and data then you get the best of both worlds.
Offline Capability - The offline story, Software + Service paradigm allows you to work offline with your data and then automatically synchronizes it on the cloud. Disconnected or occasionally connected software which is the right solution for many road warriors and also for folks who work from home and not have the same kind of bandwidth and don’t/can’t be always connected.
Privacy Concerns - Control of data, privacy if you move every piece of your data on the cloud then you loose control. With Software + Service model a vendor can provide their customers options to move non private to the cloud and sensitive data can reside locally without losing any software capability.
Captivate Audience - The fluid nature of internet, no or minimal cost of switching is a new challenge that a software vendors faces. For vendors having a client software to compliment their services makes the solution more sticky and provide the experiences and value-add in ways that is not possible on cloud.
Monetization Opportunities - For Vendors the software plus services paradigm opens up new business models and new opportunities to monetize their solutions with different models like Advertisement, Transaction, and Subscription etc.
Powerful Devices - As the computing devices get more powerful, more efficiency can be achieved by having software running locally and syncing as and when needed.
Architecture Options - Software developers can now architect software solutions by composing services together brining a whole new meaning to the Service Oriented Architecture where the service can be any third party services or their in house services.
IT Flexibility - Vendors can offer software in various deployment models, on premise or hosted, giving their customers to have the right IT infrastructure, in house IT ( for on premise software) or outsource IT ( in hosted scenario).
The software plus services approach enables developers and IT professionals to easily develop and support applications that provide the kind of experiences that their users are looking for. With software plus services, it is much simpler to find the right balance between universal Web applications that are built to take advantage of the opportunity that the Internet provides to reach the broadest possible audience, and applications designed to take advantage of the rich experiences that are available when software runs on a PC or device. And software plus services provides organizations with the flexibility to extend the capabilities of server software and to find the right balance between on-premise and hosted solutions.