Industry Insights

Breaking Down the Differences Between SaaS, IaaS, and PaaS

By Ideas @ AppDirect / September 18, 2016

The cloud has changed how we think about IT infrastructure and technology resources. The days of needing to set up data centers with servers, switches, load balancers, and other components are long gone. The same goes for needing to code and host application frameworks from scratch, or install software on site on physical hardware. Today, IT professionals use faster, nimbler “as a service” computing resources. In fact, 74 percent of businesses have adopted Software-as-a-Service (SaaS), while just over half of companies, 56 percent, are using Infrastructure-as-a-Service (IaaS), and 41 percent are using Platform-as-a-Service (PaaS) solutions.

Clearly, an increasing number of businesses are entrusting cloud-based services with their mission-critical data as they work to collaborate and communicate with greater efficiency. As with any technology, however, misconceptions and misunderstandings about “as a service” solutions are common. Read on to learn more about what each of these cloud categories entail, as well as how businesses are using “as a service” models to drive results.

A Cloud Services Breakdown

Today, you often hear software divided into two main categories: on-premise or cloud-based. With on-premise solutions, software is installed—you guessed it—on site at a company’s physical office location (or locations). On-premise (or “on-prem,” as it is often abbreviated) platform solutions are treated like on-prem software and hosted locally, while on-prem infrastructure refers to servers, routers, and other hardware that is also built on site at a company’s location.

In contrast, cloud-based software is often hosted by a solutions provider on infrastructure that may or may not be on-premise at the provider’s location. Similarly, cloud-based infrastructure is usually hosted by a third-party provider at an off-site location. In the cloud-based model, maintenance, system upgrades, and software updates are the responsibility of the cloud-provider.

We’ll dive into more detail in a minute, but here’s a quick, high-level view of the differences.

Software-as-a-Service. SaaS is software that runs over the Internet and can be used by businesses of all sizes in all industries. For example, CRM solution provider Salesforce.com is cloud-based, where users can log-in from anywhere and use the solution.

Platform-as-a-Service. PaaS is a set of tools and services that make coding and deploying applications faster and more efficient. Some are built with simplicity in mind (for the less tech-savvy user) and utilize simple point-and-click features, while others are more complex and require advanced coding skills. A few examples of PaaS include Cloud Foundry, Microsoft Azure, and IBM Bluemix.

Infrastructure-as-a-Service. Finally, there’s IaaS, which is the virtualized hardware that powers it all, from servers to storage, networks to operating systems. For example, Amazon Web Services (AWS) is a secure cloud services platform that offers database storage, content delivery, and other functionality to assist businesses with scaling and growing.

These cloud-based services can deliver greater efficiency and cost savings for any size businesses in any sector. Here are more details about SaaS, PaaS, and IaaS and the value they provide.

Software-as-a-Service (SaaS)

Previously, companies purchasing new software needed to make a significant upfront investment. With the high cost of software licenses, many stakeholders across an organization often needed to be involved in the purchasing decision. This would make the process more time-consuming, and for larger companies, it could hold the purchase up for months. SaaS can help to break the logjam, since it often has lower startup costs, a relatively lower monthly cost, and carries less risk as companies migrate to new solutions.

Popular SaaS offerings include email, customer relationship management (CRM) and collaboration-based software. Because of the web-based delivery model, SaaS reduces the need to run applications on individual computers, streamlining maintenance and support. For example, most SaaS offerings generally include:

• Remote access. The software is available through Internet login access to the software application, which allows users to work anytime and from anywhere.
• Ongoing maintenance. Software upgrades and patches are typically completed by the SaaS provider instead of the user.

For businesses, SaaS solutions can help customers to solve their challenges with greater efficiency and better results. For example, Groupon was growing very quickly and had employees spread out around the globe, from the United States to Africa. The nature of what the company does—offer deals on local products, services, and experiences—requires strong customer service. In fact, when the company started, even the company’s director of customer service was spending 10 percent of his time responding to customer requests. As the company grew, the model became unsustainable.

Groupon needed a ticketing solution that would scale to support rapid growth. The company selected a web-based SaaS solution that could easily handle rising ticketing volume with greater flexibility. Today Groupon employs over 150 customer support service agents and handles over 15,000 tickets daily. Had the company not used a SaaS solution, scaling their business to meet demand would have been cost prohibitive.

DSG International is another organization that opted to use a SaaS offering to better serve their customers. They subscribed to Citrix Online to provide support to customers who were having difficulty using the company’s products, specifically GoToAssist, which is an online remote assistance application that helps customers get assistance via email or phone within seconds, grant permission for a tech to access their PC remotely and resolve problems faster.

The company reported one that of the strongest benefits of making the switch to a SaaS solution was the ability to scale up or down based on customer demand. They could be flexible, agile, and serve customers with greater speed and efficiency.

SaaS examples: Citrix’s GoToMeeting, Salesforce’s CRM, and ADP’s online payroll services.

Common SaaS uses: Replaces traditional on-premise software with services that are easier to manage and are more cost effective

Platform-as-a-Service (PaaS)

Through the PaaS model, developers use a cloud-based environment to build their applications and services. PaaS can deliver greater flexibility while lowering the time and cost of application development. Developers gain a framework they can build on to develop and customize applications faster. For example, most SaaS offerings include:

• The ability to develop, test, and deploy applications
• Host and maintain secure applications
• The ability to scale software

Similar to most cloud offerings, PaaS is typically a subscription-based service, and there are a variety of solutions based on the user’s skill set—from simple point-and-click frameworks (with no client hosting expertise required) to more advanced infrastructure options for development.

For example, Menumate is a provider of sales hardware and software to the hospitality industry in Australia. The company wanted to take advantage of PaaS to migrate some of the legacy applications they were using, but they needed to centralize their existing in-house software toolkit.

Using a PaaS solution, the company was able to migrate legacy applications and, as a result, create new applications that were much faster than before. Accomplishing this without using PaaS would have made the development of these faster applications too expensive for the company.

In another example, JPMorgan boosted infrastructure utilization by 300 percent when adopting PaaS. They migrated their .NET and Java application portfolios to the cloud. The company used a private PaaS, which today hosts over 2,000 applications and has saved the company significant amounts of time and money. They experienced a 700 percent boost in developer productivity for application deployment and improved their average application time to market by 50 days.

PaaS examples: Windows Azure, Pivotal Cloud Foundry.

Common PaaS uses: Developers use PaaS to increase productivity and utilization rates while decreasing the amount of time it takes to bring an application to market.

We’ve taken a deep dive into the details about SaaS and PaaS, both of which help customers maximize their resources with greater efficiency. The last piece of the cloud stack is Infrastructure-as-a-Service.

Infrastructure-as-a-Service

With IaaS, customers purchase computing resources from a third-party provider. These resources could include virtual server space, network connections, bandwidth, or IP addresses. Instead of purchasing hardware upfront, companies can instead purchase IaaS from a third-party based on consumption, similar to a homeowner purchasing electricity from a power company. For example, most IaaS offerings include:

• The ability to deliver servers, storage and network hardware
• The power to scale computing resources faster
• A flexible pricing model based on usage

Businesses of all sizes can use IaaS to create flexible, cost-effective IT solutions, without the high price tag and headaches associated with purchasing, deploying, and integrating hardware on premise. As a result, they can scale up or down with greater ease.

For example, BeyondDiet.com, a nutrition and diet business had an interactive community site for their program, but the company was rapidly growing. Daily site visits numbered 300,000 but were spiking up to one million users in a single day. The company’s existing site couldn’t handle the volume and would crash. To solve the problem, the company needed extra computing power when traffic was high, and fewer resources when traffic was more normal. The company opted for an IaaS solution, which provided the required resources and quickly scaled. As a result, they minimized that previous “downtime” caused by having large volumes of visitors to the company’s website.

In another example, Preferred Hotels migrated 25 servers to an IaaS-based solution, which supported its online reservations system and disaster recovery protocols. The IaaS solution they used sells blocks of computing capacity, which are billed by processor megahertz, with allowances for RAM and storage. After making the switch, the hotel reported far greater flexibility and less downtime. Prior to adoption, they experienced one hour of downtime per month using a physical data center, an unacceptably high number. Today, they have experienced only one small outage in 18 months.

IaaS examples: Microsoft, Amazon, and Rackspace are a few well-known examples of companies providing this type of service.

Common IaaS uses: Some companies use IaaS to temporary handle increased workloads. For example, they may purchase additional data center infrastructure to handle demands during the holiday season.

Adapting for the Future

Businesses of all sizes are undergoing a DNA change as they start thinking differently about IT. They are seeking solutions that not only maximize their existing resources, but also provide greater flexibility and agility to compete in today’s marketplace. SaaS, Paas, and IaaS offer specific features and functionalities that help businesses meet rising business demands and excel in the future.

If you’re ready to take the next step and start selling SaaS, IaaS or PaaS, click here to learn more.

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