Technological advances such as the creation of bandwidth, modular applications and cloud computing have enabled the creation of a distributed collaborative sourcing model named Software as a Service (SaaS). SaaS presents the embodiment of a new service delivery model in which a service provider is delivering its electronic services over the web to many users on a pay per use or period basis. SaaS is still unexplored in the public sector context and its use has been limited. Based on interviews and a group session the main challenges for adopting SaaS are explored from the government perspective. It was found that SaaS could provide many benefits which are related to the outsourcing of the local control, installation and development of software which could result in potential cost-savings and better cost control. Disadvantages and risks are related to the more difficult control of the IT function. Several items were mentioned as both a benefit and disadvantage, as this will be dependent on the organizational arrangements. There are also many challenges that need to be addressed including ensuring the quality, privacy, security and business continuity which require the implementation of organizational changes and governance mechanisms for public sector organizations that are considering SaaS.