AnnouncementWe've raised $200m to supercharge SaaS companies' global growth  Read more

SaaS vs PaaS vs IaaS: What's the difference?

You’re probably familiar with SaaS, but how much do you know about PaaS and IaaS?

As growing numbers of companies embark on all kinds of digital transformation, cloud computing services have become an important trend. We’re all busy building, creating, and storing data in the cloud these days.

Services offering this functionality are typically built using a pay-per-use model. It’s a popular model because it reduces the large investment you need when setting up and maintaining IT infrastructure. 

Read on to learn the differences between SaaS, PaaS, and IaaS, the pros and cons of each one, and their most suitable use cases.

SaaS vs PaaS vs IaaS

SaaS, PaaS and IaaS all have critical roles to play in the overall cloud computing ecosystem. But what exactly does each one do? Let’s take a look.

First up: SaaS

What is SaaS (Software as a Service)?

We’ll start with SaaS, the most common of the three core cloud-based computing services. SaaS providers make software available over the internet, connecting users via the web or via an API. 

Because the provider configures the hardware and software needed, third-party software applications can be run using the cloud and offered to end-users as a service. Users don’t need to worry about maintaining the infrastructure or even the underlying software.

Examples of SaaS companies include Dropbox, G Suite, and Paddle.

How is SaaS implemented?

SaaS has revolutionized the delivery and implementation of software, with SaaS providers delivering their products to end-users across borders via the internet. 

Users can access these tools via convenient web apps (like Google Docs for word processing) or download and install them on their devices (such as Adobe Creative Cloud for video and image editing). 

For large businesses, it means there’s no longer any need to manually install software on each employee’s laptop using a purchased license. Can we get a “hell yeah” from IT support teams around the world?

That’s why SaaS products typically save their end-users a great deal of time, money, and effort.

Five advantages of SaaS

  1. Easy set up: With PLG SaaS, you just create a username and password and you're good to go.
  2. No local hosting needed: You can do it either on servers or on your machine.
  3. No time for space invaders: You will save on server space and/or hard drive space.
  4. Time saver: You don't need to spend time managing the software, as the subscription fee covers this.
  5. A good selection: There is a wide range of SaaS products available for every possible use case.

Five disadvantages of SaaS

  1. Lack of control: You don't have control over the infrastructure that your SaaS product is running on, that’s all down to the provider. So, if the infrastructure goes down, so does your software.
  2. Security issues: SaaS applications running on the cloud have the potential to be hacked, leaving your data at risk. 
  3. Data portability issues: Potential high costs and complexity when you want to transfer your data from one SaaS application to another.
  4. Hard to customize:  Some business use cases may require custom adaptation of a SaaS product, but this can be difficult to achieve when compared to locally-hosted and managed software.  
  5. Lack of compatibility: You may find your SaaS product incompatible with other products used across your business.

When to use SaaS

Despite the popularity and flexibility of SaaS, it’s not a one-size-fits-all solution. That’s why you should be judicious in choosing when to use SaaS products in your business. 

Here are three of the most common business scenarios where it makes sense to use SaaS products:

  • Collaborative projects: Quickly get your team up and running with a convenient subscription-based model - Google Docs is a great example of this.
  • Fast and lean launches: SaaS makes it easy to launch a functional website without worrying about configuring your own server and managing software updates - WordPress and Shopify are excellent examples.
  • Mobile and web access: When it makes sense to have software that’s easily accessible both at your desk and on the move, such as accounting software or CRM systems - One example of this is QuickBooks. 

Who is SaaS a good fit for? 

  • Startups that lack time or resources to develop and manage software in-house 
  • Businesses that often work on collaborative projects 
  • Businesses that need mobile and web access 

Next up, we’re taking a closer look at the lesser-known PaaS – platform as a service.

Next up: PaaS

What is PaaS (platform as a service)?

PaaS products give businesses and developers the ability to create and deploy consumer-facing apps, all hosted in the cloud. 

Companies pay to use a platform on which to create, manage, distribute, and test applications, while developers can focus on their work without having to worry about software upgrades, operating systems, storage, or other infrastructure elements.

PaaS provides application runtime environments and deployment tools, as well as the infrastructure to install and access them via the network. PaaS provides a greater degree of service by facilitating information management and exchange between apps. 

Examples of PaaS companies include Heroku, Azure and Red Hat OpenShift.

How is PaaS implemented?

The central feature of PaaS products is that they provide a secure platform where your development team can build custom apps and software to use internally and/or sell to your customers. 

PaaS products are accessed over the web, in the same way as SaaS products. PaaS providers maintain and upgrade the platform on your behalf, freeing up your developers to focus purely on creating software. 

In fact, you can use a PaaS tool to develop new SaaS products too. 

Heroku is a popular example of a PaaS tool, used by many solo developers as well as large organizations.

Advantages of PaaS

  • More control: Your development team has total control over the applications that you are building.
  • Grow as you grow: Applications are scalable and you can easily customise them to suit your business needs. 
  • Easy peasy: Ease of collaboration with other developers, including those outside your organization. 
  • Quick set-up: PaaS tools are easy to sign up for, configure and start using. 
  • Save some dollar: No need to invest in expensive hardware and/or servers.
  • Happy developers: They can create and deploy new apps easily, quickly, and at minimal cost.

Disadvantages of PaaS 

  • Complex integrations: Potential difficulties in customizing your PaaS tool to work with legacy systems.
  • Lack of control over the infrastructure: You can only control the code in the apps that you build. 
  • Data control issues: Your PaaS provider has access to and control of all your data on their server which can create a security risk both for your business and for your end-users.
  • Server problems: If the PaaS provider’s server goes down, your service will be interrupted and you’ll be unable to fix it yourself.
  • Migration issues: Some PaaS providers make it difficult and complicated to migrate your data from their service to another one. This can cause unnecessary headaches if/when you decide to change your provider.
  • Runtime issues: – You may find that your PaaS provider doesn't support your chosen programming language, which can lead to runtime issues. It's critical to check compatibility before investing in a PaaS system. 

When to use PaaS?

PaaS works really well in situations where a team of developers is working together to build an app or where developers outside your organization are involved.

What’s more, PaaS tools are very useful if your development team is using agile methodology as they make for easy, fast development and iteration.

On top of that, using PaaS tools drastically cuts down on the cost of physical infrastructure, reducing overheads for your business. If you're a small business owner, that can bring significant advantages.

Who is PaaS a good fit for?

  • Web development agencies 
  • Startups building new software applications 
  • Enterprise organizations developing software in-house 

Last up: IaaS

IaaS

What is IaaS (Infrastructure as a Service)?

This is the part of cloud computing that’s closest to the hardware: IaaS, or infrastructure as a service. IaaS is the first piece of the cloud computing puzzle. It allows users to manage their business resources via the cloud. Typically, this can include components such as data storage units and servers. 

With IaaS, providers offer an infrastructure service in which customers only pay for what they use. This removes the need to have expensive physical infrastructure to store all of your data.

Examples of IaaS companies include Amazon Web Services (AWS), IBM Cloud, and Rackspace.

How is IaaS implemented?

IaaS providers offer an infrastructure service where you only pay for the capacity that you use. That means you don't need to invest in physical infrastructure, which can be extremely expensive in terms of setup and ongoing maintenance. 

IaaS tools can enable your company to grow and scale by building and managing its data in the cloud. Typically, IaaS providers use physical servers located around the world to handle their customers’ data.

IaaS companies provide various infrastructure-related resources, including virtual machines, physical machines, virtual LANs, and basic storage capabilities (hard drive space).

End users access these resources via virtual servers, either through the IaaS provider’s own dashboard or by using an API to integrate the provider with your company’s own dashboard. 

Advantages of IaaS

  • More control: IaaS tools on cloud infrastructure give companies significant control over their software and hardware.
  • Cost-effective: Simple pay-as-you-go pricing models mean you only pay for the resources that you use. 
  • Multiple users can access the resource: – great for large, enterprise-level teams. 
  • Save on resources: It removes the need to buy, install, and maintain a physical server.
  • Increased flexibility: You can easily scale or downsize your IaaS provider to reflect your changing business needs.

Disadvantages of IaaS

  • Potential security risks: Having your data and software hosted on a third-party server can bring security and privacy risks.
  • Integration issues: Potential difficulties in customizing your IaaS provider to work with legacy systems.
  • Big responsibilities: Depending on your IaaS provider, you’ll still have to handle your own data backups and security processes - If you lose any data, it's up to you to recover it.
  • More work for your team: IaaS tools may give you the most control, but they also require the highest level of hands-on work. You'll need your own developers to set up and configure everything – your IaaS provider only gives you the servers and its API.

When to use IaaS

IaaS is best suited to the following situations:

  • When you need complete control over your applications.
  • When you're still growing your business and are unsure about the hardware and software resources you’ll need going forward.
  • When you're running a lot of applications that need to be scaled up or down in response to different levels of demand – IaaS providers are typically very flexible, thanks to their dynamic scaling capability.

Who is IaaS a good fit for?

  • Enterprise organizations running high-performance applications that need ultimate control
  • Startups needing to conserve money and resources while building their own hardware and software 
  • Fast-growing companies that regularly adjust their computing resources to fit shifting needs 

Now that we've looked at each in turn, below you'll find a quick overview of key differences.

SaaS vs PaaS vs IaaS

What are the key differences?

SaaS, PaaS, and IaaS all have critical roles to play in the cloud computing ecosystem. But what are the key differences between them?

To understand the differences more clearly, it’s helpful to consider the three services in a logical order, starting from the one that’s closest to the hardware (IaaS), followed by the one in the middle (PaaS), then the one that’s closest to the end-user or consumer (SaaS). Let’s go.

IaaS vs PaaS

A good way to think about IaaS is as the foundation for creating a cloud-based service, such as software or an e-commerce website. IaaS is where the infrastructure is built. In contrast, PaaS is a platform that allows developers to build apps without having to host them. 

PaaS vs SaaS

IaaS is the underlying foundation and PaaS is the platform that hosts apps. SaaS is the software that helps businesses or consumers accomplish a wide range of tasks. With SaaS products, the provider manages all aspects of the product, from the applications to the data to the servers – so the end-user can focus simply on using the tool. 

In a nutshell, IaaS provides access to resources such as virtual machines and virtual storage, PaaS provides execution environments, application development, and deployment tools, and SaaS provides software as a service to end-users. Which one you choose depends entirely on the needs of your business. 

Subscribe to Revenue Delivered

Join 1000s of SaaS leaders already subscribed to our newsletter for SaaS insights

By subscribing, I agree to receive the Paddle newsletter. Unsubscribe at any time.

Related reading