Understanding the antecedents and consequences of a firm’s agility in cloud software applications is important. This papers draws on the competitive dynamics perspective to develop a model that explains the relationships between collaboration with vendors, agility, and competitive performance in software-as-a-service (SaaS) context. Collaboration reflects a firm’s ability to leverage interfirm resources, characterized as knowledge sharing and process alignment. Agility is measured by a firm’s strategy-oriented agility and service-oriented agility. This study also investigates the moderating effect of environmental turbulence. The proposed hypotheses are supported by the empirical data. The results show that competitive performance is affected by ability, which, in turn, is impacted by collaboration. Environmental turbulence positively moderates the relationship between agility and performance. Finally, we discuss the implications of our results.