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SaaS vs PaaS vs IaaS: What’s the Difference?

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What is the difference between SaaS, PaaS, and IaaS?
The difference between SaaS, PaaS, and IaaS lies mainly in their purpose across the spectrum of providing cloud computing services. SaaS refers to the cloud-hosted software targeted at end-users, PaaS is the cloud platform that developers use to build apps, and IaaS is the infrastructure for creating cloud-based services and technologies.

Many small businesses probably know enough of Software-as-a-Service (SaaS) and they may even be subscribed to some of those cloud-hosted SaaS tools for small business solutions to run their operation. Bigger companies or tech companies, on the other hand, might be using Platform-as-a-Service (PaaS) and even Infrastructure-as-a-Service (IaaS), aside from SaaS, to help them build their I.T. infrastructure. So what’s the difference between PaaS vs Saas, Iaas vs SaaS, and PaaS vs IaaS? It can be quite confusing with all these acronyms but we’re here to clear things out.

All three are cloud computing services and are designed to address specific requirements of different B2B companies. You, for example, need those cloud business and productivity solutions offered by vendors as SaaS to keep your young company running from day to day and helping it grow. Other companies such as those that develop software may require a cloud-based platform that they can use to create custom apps. There’s PaaS for this. Others still may need whole cloud infrastructure resources for building and managing their network, servers, apps, operating systems, and storing data. IaaS answers this particular need.

The definitions above are just scratching the surface in this big wide world of cloud computing which has spawned other services such as FaaS (functions), DaaS (desktop), CaaS (communication), and MaaS (monitoring). In this article, however, we’ll focus on the many aspects of the three major cloud service models, what they are for, their pros and cons, examples of each type of service, and how they make up your cloud computing stack. These will help you get a clearer understanding of the difference between SaaS, PaaS, and IaaS.

paas saas iaas

The SaaS market is expected to grow by double digits with a CAGR of 21% and will be valued at $117 billion by end of 2022. The market is driven by advancements in cloud technology as well as benefits derived from cloud solutions such as accessibility, scalability, and customization. Prices have also become more affordable with SaaS, giving SMBs a level playing field to compete with larger enterprises. The IaaS and PaaS markets are likewise experiencing remarkable growth with projected CAGR of 33.7% and 29.8%, respectively. All in all, these public cloud services and infrastructure will be worth around $370 billion in 2022. Below are the sectors that are currently the biggest spenders for cloud services.

Top Industries With Biggest Cloud Services Spending in 2019

Based on 2019 Market Share

Professional Services (12.2%) Retail (7.2%) Discrete Manufacturing (11.8%) Banking (10.6%) Process Manufacturing (7.6%) Other (50.7%)

Source: IDC Worldwide Semiannual Public Cloud Services Spending Guide, 2018H1

Designed by

In our presentation, we’ll tackle the three cloud services in the following order – IaaS, PaaS, and SaaS for the reasons of their scope as distinguished from on-premise systems. You’ll learn that with these cloud services in the order of IaaS, PaaS, and SaaS you get diminishing levels of control over the computing environment and the system. This has its advantages and downsides as you’ll learn in this article on the difference between IaaS, PaaS, and SaaS.

To start off, the chart below shows you the areas you manage and what the vendor manages with each of the cloud computing services compared to an on-premise setup. We can now examine each service more closely.

Key Differences: SaaS vs. PaaS vs. IaaS

saas vs iaas vs paas

What is IaaS? The Foundation

So, what is IaaS? It’s a pay-as-you-go service that gives you resources for a cloud-based infrastructure that you can use for virtualization, networking, and data storage. Instead of putting up your own on-premise/on-site infrastructure which is labor-intensive and expensive (with all the hardware and maintenance), you get a cloud alternative where all the tools and resources you need are delivered through the internet.

Consider IaaS as the foundation to future-proof your business. IaaS solutions are designed to be highly scalable and flexible, meaning you can buy additional resources and features you need as your operations expand. Compare this to having to buy more physical hardware and hiring more IT professionals for maintenance as your business grows and you require more storage and servers.

One good analogy for IaaS is that of a leased car. Say you are in the delivery service and business booms. You don’t need to buy a new delivery vehicle but simply lease another car to keep up with the growing requirements of your business. As demand continuously goes into an upswing, you just lease another vehicle and so on until the economic equation justifies investment in a new car. Buy a new car at the onset then suddenly business drops and you end up with an unwarranted expense.

saas vs iaaas vs paas

Pros & Cons of IaaS

The main advantage of IaaS for organizations is that it provides you the greatest level of management and control over the infrastructure. IaaS is extremely scalable and considered the most flexible cloud computing model. The resources you need are offered as a service and can be purchased as needed or per consumption which is often the basis for pricing as a pay-as-you-use model. Also, IaaS normally allows multiple users for a single piece of hardware.

The downsides of IaaS are typical concerns over security and the incompatibility of legacy apps with cloud infrastructure. Remember that the customer has full control over apps, data, OS, and middleware and thus has the responsibility to ensure that these are all secure and working properly because failure in any of those could affect company processes and operations.

Examples of IaaS

The following are some of the better known IaaS examples:

  1. AWS EC2. Amazon Web Service’s Elastic Compute Cloud gives you scalable computing capacity for faster app development and deployment without having to invest in hardware. It lets you launch as many virtual servers as you need, manage storage, and configure security and networking. It also enables you to scale up or down depending on your requirements. AWS EC2 offers several plans including a free one for up to 750 hours. Other plans are price based on spot or on-demand instances when you have to request for additional computing capacity.
  2. Google Compute Engine (GCE). The IaaS component of Google’s Cloud Platform is built on the global infrastructure that powers Google products and services. GCE enables you to operate high-performance and scalable virtual machines on demand, running on Google’s worldwide data centers and fiber network. It provides support for scaling from single instances to global cloud computing. There are no up-front costs; you just pay-as-you-go for the services you need such as storage, data migration, networking, and management tools.
  3. DigitalOcean. A product from an American cloud infrastructure provider, DigitalOcean provides cloud services like computing capabilities, databases, storage, and other tools to help developers deploy and scale apps. DigitalOcean offers virtual servers called “droplets” that can be managed through a web interface and available in multiple configurations of CPU, memory, and SSD. Pricing is based on the number and size of the virtual machines according to their configuration.
  4. Rackspace. This U.S. Company provides managed services across all the major public and private cloud technologies. Its IaaS product allows you to deploy a single or hundreds of cloud servers/virtual machines instantly and build high-availability architectures like that of AWS EC2. What this means is you get to eliminate the cost of running your own in-house data center while having the level of security and control over your cloud computing environment. Pricing is quote-based depending on the infrastructure resources you need.
  5. Joyent. California-based software and services company Joyent, Inc. was founded in 2004 and was acquired by Samsung in 2016. Its hosting unit Triton provides IaaS and PaaS solutions for large companies including a unified management of containers and virtual machines with features for storage, networking, monitoring, and security. The cost for computing and storage services vary depending on the plan – managed private cloud, managed hardware cloud, and on-premise.

What is PaaS? The Platform

PaaS gives you a cloud platform complete with components and working framework upon which you can build custom applications. The required storage, server, network, runtime, middleware, virtualization, and OS is provided for and managed by the vendor while you get to maintain and control your apps and data. What is PaaS but much like SaaS as they both deliver service through the internet except that unlike delivering the software which SaaS does, PaaS instead delivers or makes available a platform for you to create your apps.

As such, it is the ideal service for developers who don’t have to worry about infrastructure, servers, data storage, operating systems, and other special components that are built into the service. Imagine having to start from scratch and purchase all the components you need to write extensive code and create custom apps. These will require a lot of your time aside from a hefty investment.

Another analogy, this time that of “pizza as a service” which shows the role of PaaS. It’s essentially the kitchen complete with all the needed components like gas and oven as well as the basic ingredient – pizza dough. Now you’re able to cook the pizza with your special toppings and other concoctions. The kitchen may not be yours. It is just made available for rent when there are occasions or catering events that require it. Now you rented it in order for you to create new pizza flavors without having to build a whole new kitchen complex.

saas vs iaaas vs paas

Pros & Cons of PaaS

PaaS lets developers concentrate on the task at hand – creating unique and custom apps and testing and deploying them – without being bogged down with peripheral matters like security patches and updates. It is designed around the technology of virtualization and built to be easy and simple to use even to those without background on systems administration. PaaS is also quite scalable, allowing you to pick from different tiers of components and resources you need to match the scope of your project. All these make PaaS a time and cost-saving cloud computing solution.

While you have much control over the platform upon which software and apps are built, the drawback is that control is confined to what’s being built on the platform. This means that if there are issues such as malfunction or failure in the OS or hardware (and other PaaS components provided by the vendor) that support the platform, your software and data could be affected.

Examples of PaaS

PaaS examples that are widely-used include:

  1. Microsoft Azure. Formerly known as Windows Azure, this is Microsoft’s public cloud computing platform used by both small companies and large businesses (95% of Fortune 500 corporations utilize the platform). Over a dozen cloud services are offered by Azure including those for app development, computing, networking, data storage, Internet of Things, security, and analytics. As with most PaaS, Azure’s pricing is pay-as-you-go based on the platform’s usage.
  2. Google App Engine. Part of Google’s range of cloud services, this PaaS solution is for web app developers and companies with access to Google’s scalable hosting and tier 1 internet service. GAE requires that apps be written in Python or Java and utilize Google’s query language. For usage of resources up to a certain amount, GAE is free. You start paying when you exceed the per-minute or per-day usage rate of storage, CPU and other resources.
  3. AWS Elastic Beanstalk. This Amazon Web Service is intended for deploying, and scaling web apps and services built with Java, Python, Go, Ruby, .NET, PHP, and Docker on servers like Apache, IIS, Passenger, and Nginx. It is designed for ease of use – you just upload your code and the PaaS automatically undertakes capacity provisioning, auto-scaling, load balancing, and app health monitoring. You only pay the resources used to run and store your apps.
  4. OpenShift. A product of U.S. software company Red Hat, OpenShift is a free and open source PaaS that lets developers create, run, test, and deploy their applications to the cloud. It supports popular programming languages and allows manual or automatic allocation of resources when demand increases without affecting application performance.
  5. Heroku. This PaaS was introduced in 2007, making it one of the pioneering cloud platforms, and was acquired by Salesforce in 2010. It is a polyglot platform that offers features for developers to create, run, and scale apps in a similar manner across multiple languages. Heroku has a free version and three paid editions that come with advanced features such as runtime metrics and autoscaling.

What is SaaS? The Software

Now you know why we followed a hierarchy – IaaS lets businesses outsource the network equipment and servers they need from cloud service providers while PaaS enables businesses to have a secure and collaborative platform to develop, test, and deploy applications. So, what is Saas?

SaaS is the end result, allowing businesses to deliver software on demand to customers. With SaaS, vendors are able to provide software via the internet to users and customers. A connected device and browser are all users need to access and use the software.

Also referred to as cloud application services, SaaS is the most popular option for B2B companies in the cloud computing market because of its many benefits. With the software hosted and running in the cloud, you don’t need to go through any downloads and installations. Set up (if any) and implementation is easy and quick. You’ll be up and running and using the software in no time without the need of IT experience or IT experts. The vendor manages all the technical side – security, storage, servers, middleware and more. Our last analogy “travel as a service” likens SaaS to an all-inclusive vacation where the essentials – booking, accommodation, transport, food, etc. – are all taken care of.

paas vs saas vs iaas

You can clearly see the many advantages of SaaS compared to an on-premise solution. Maintenance and security patches and updates are handled by the vendor and done automatically with no downtime. Mobile versions of the app usually come as part of the software package, allowing you to use the software anytime and anywhere you go. Several tiered pricing plans are also made available to fit company budget and requirement whether yours is an SMB or a large enterprise. Becoming a de facto offering by vendors are free SaaS tools for small business to help jumpstart your company.

Pros & Cons of SaaS

Convenience, affordability, ease of use, automation, integration with other apps, customization, and scalability are some of the distinguishing characteristics of SaaS. Offering powerful features and capabilities and leveraging current technologies, SaaS is revolutionizing online business. SaaS tools are also designed to zero in on particular business functions. There are SaaS solutions for just about every business task, process, project, workflow, and office and productivity requirements.

Ever since cloud technology picked up a few years back, there have been concerns about SaaS number one of which is the complete lack of control on your part. That’s how SaaS is designed – control is in the hands of the vendor when it comes to software appearance, updates, versions as well as data and even governance. Of course, you can configure the software to fit your workflows and processes but you may also have to introduce user-end security for your data and even redefine governance procedures to match the functionality of the SaaS solution.

Speaking of security, it has been a great issue for companies who store critical data on the cloud especially in the light of large scale data breaches and security hacks in recent years. It is important that you are aware of reported SaaS concerns and security risks and go only with reliable and leading SaaS providers such as those that we recommend here at FinancesOnline. This way you can be guaranteed not only of robust security, zero downtimes, and optimal software performance but also of quality customer support and assistance.

Examples of SaaS

Some of the most commonly used SaaS examples are tools for key business functions such as CRM, accounting, HR, project management, and ERP. Below are the top SaaS solutions for major software categories:

  1. Wrike. The award-winning online project management solution is built to improve work efficiency by simplifying planning, enabling collaboration, streamlining workflows, and providing full visibility over project details and stages. Wrike provides enterprise-grade reporting, powerful analytics, time tracking tools, task management features, and project templates. It can integrate with dozens of external apps and is offered in four affordable paid packages. It also has a feature-rich free plan for a small team of up to five members. Experience project management on a whole new level.
  2. HubSpot CRM. The popular cloud-based CRM platform for growing sales teams is offered completely free. You get all the needed basic features to help your team simplify sales processes. It helps you manage contacts, company records, meetings, deals, tasks, tickets, documents, and forms. You’ll be able to quickly create, schedule and track emails, and collaborate with colleagues through team email, conversation inbox, and built-in live chat. HubSpot CRM has huge integration capability, making it compatible with any software ecosystem.
  3. NetSuite ERP. A complete, scalable cloud ERP solution for high-growth businesses, NetSuite ERP offers features for managing finances, inventory, workflows, payments, planning, order fulfillment, purchasing and vendors, resources, billing, payroll, and human resources, among others. The comprehensive online platform is available through custom pricing depending on the package of features and modules tailored to your company’s needs.
  4. FreshBooks. A best-in-class, cloud-hosted accounting tool for small business, FreshBooks simplifies financial tasks and processes including invoicing, estimates, sales tax, time tracking, expense monitoring, and reporting. It is able to automate recurring payments, process data and generate custom financial reports, and even provide project management functionalities such as due dates, file sharing, collaboration, and project overviews. The software is offered via three budget-friendly subscription plans.
  5. BambooHR. An end-to-end online solution for human resource management equipped with hiring and onboarding features, role-based access to information, performance administration, benefits management, reporting tools, and applicant tracking add-on. It offers integration with several external apps and is available through quote-based pricing depending on the number of employees and additional features needed. Take the software for a test drive.

What Cloud Service Do You Choose to Power Your Business?

The answer to the title question depends largely on your organization’s specific needs. For large or tech companies that develop and deploy their own applications, operate several websites, and manage their own digital content while overseeing the in-house business and operational processes, a complete stack of IaaS, PaaS, and SaaS services and software would obviously be required.

For startups and small companies whose priority is effectively running everyday tasks and growing their B2B business, SaaS tools are more than enough to fill the needs especially in the critical area of getting more contacts and customers. And to complement those tools, there are even proven SaaS lead generation best practices and techniques to broaden your prospects and contact base. It has been said that startups make do with around half a dozen SaaS apps, most likely the essential ones to kickstart a business such as CRM, marketing, accounting, and office tools. The reality is far greater.

According to a 2018 SaaS growth trend report posted at the Cloud Software Association website, SMBs utilize on average over 30 free SaaS apps and more than 20 paid SaaS software for a monthly spend exceeding $20K. That is a long stack of SaaS technology and business apps to power small and medium businesses. Adoption of and investment in cloud services is widespread. But it is of no surprise since one survey found out that almost a third of organizations say that 80% of their apps will be SaaS by 2020.

The point to all these is that cloud technology and cloud services such as SaaS, PaaS, and IaaS are on the rise. Hence, it would do well for you to determine your needs and get the most suitable cloud service from so many choices available in the market. Choose well and choose right. Every other business is availing of said cloud services because of the advantages and competitive edge they bring. You should too.

By Louie Andre

B2B & SaaS market analyst and senior writer for FinancesOnline. He is most interested in project management solutions, believing all businesses are a work in progress. No stranger to small business hiccups and drama, having been involved in a few internet startups. Prior to his for-profit ventures, he has had managed corporate communications for a Kansas City-based Children International unit.

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