Software plus Services combines hosted services with locally running software in a variation on cloud computing

Cloud computing

Cloud computing is the delivery of computing as a service rather than a product, whereby shared resources, software, and information are provided to computers and other devices as a utility over a network ....

. Such composite applications combine traditional software with remote services to provide a consistent user experience across devices and form factors.

There are various reasons for this to be the right approach when compared to moving everything to cloud or software as a Service

Software as a Service

Software as a service , sometimes referred to as "on-demand software," is a software delivery model in which software and its associated data are hosted centrally and are typically accessed by users using a thin client, normally using a web browser over the Internet.SaaS has become a common...

 models.

• Rich User Experience—Functional limitations prevent current web browser technology from providing a rich user experience. Using local software as the client leverages the Internet
  Internet
  The Internet is a global system of interconnected computer networks that use the standard Internet protocol suite to serve billions of users worldwide...
  
   provides the best of both worlds.
• Offline Capability—S+S allows a user to work offline, and then automatically synchronize with the cloud, perhaps for access by others or as a backup. This provides a workable and sustainable model for mobile and remote knowledge workers, such as sales representatives and home workers, who may have disconnected or occasionally connected software, and who don’t or can’t always remain connected.
• Privacy—If an organisation publishes all data to the cloud then they relinquish primary control over that data, and increase the risk of the information being compromised. With S+S a vendor can provide an option to move non-private information to the cloud and keep more sensitive data locally, without losing any capability.
• Powerful Devices—In line with Moore's Law
  Moore's Law
  Moore's law describes a long-term trend in the history of computing hardware: the number of transistors that can be placed inexpensively on an integrated circuit doubles approximately every two years....
  
  , as local computing devices continue to get more powerful, greater efficiency can be achieved by offloading server processing.
• Architecture Options—Software developers can now architect software solutions by composing local and remote services.
• IT Flexibility—Vendors can deploy software in various configurations—on premise, hosted or mixed.