The cloud is an invaluable resource upon which modern businesses are invariably reliant. My career is built on the cloud. I want to help you get the most out of it. You’re here at SaaS Academy because you want to learn how to scale your business using every tool at your disposal. You may have heard that my programs have helped previous SaaS Academy learners more than double their MRR. Speaking of doubling; the global cloud computing market is forecasted to do just that between 2022 and 2027. Cloud computing is used by SaaS, PaaS, and IaaS providers to help founders like you run effective businesses. Now, businesses can access the services they need through the Internet at their convenience and with the click of a button. Databases, software, servers, apps, data storage, and more are available through cloud computing. Understanding your options is your first step to deciding which direction to take your ideas. Let’s take a closer look: What are the differences between these models? SaaS, PaaS, and IaaS all exist to meet specific needs within a business. Choosing the right one requires a full understanding of the customer needs you want to meet. Each has unique benefits (and challenges – more on that later) that are important pieces of the puzzle when deciding which option to go with. SaaS PaaS IaaS Examples Dropbox, Salesforce, DocuSign Heroku, Apache Stratos, Google App Engine Rackspace, Amazon Web Services, Linode Ideal Customer Small e-commerce businesses without a large IT department, applications that aren’t used frequently, short-term projects Collaborative workflows between developers and vendors, customizing applications Startups that wish to use web-based systems instead of buying their own hardware/software, businesses needing scalability as they grow Delivery Model Fully web based Central platform delivered online Virtualization technology Now that you’re familiar with the basics, let’s dive into each of your options for a close-up view. Software-as-a-service providers give access to software on the Internet to businesses and consumers in need of services that are maintained by the vendor. This business model creates long-term recurring revenue as it provides a product that has ongoing use.SaaS vs PaaS vs IaaS: Differences and Use Cases with Examples
Key Differences Between SaaS, PaaS, and IaaS
Software-as-a-Service (SaaS)
Definition and Overview
SaaS applications are accessible from a web browser and do not require downloads or installations.
Examples and Use Cases of SaaS
Some businesses using the SaaS model are:
- Netflix
- Dropbox
- DocuSign
- Shopify
To get a better understanding of how SaaS works, let’s zoom in on a couple of these examples.
Netflix is one of the more common household examples of SaaS. To access it, users just navigate to Netflix’s website, choose a monthly plan based on their needs, subscribe, and dive into its offerings.
Any technical issues with the software are completely handled at Netflix’s level, and consumers get what they pay for – no more, no less. Each subscription level comes with its own set of features at tiered pricing.
Consider DocuSign, a leading SaaS provider of e-signatures for business and personal use. Like Netflix, all of the software and its technology is handled by the company. DocuSign provides subscription plans to meet the needs of consumers from individuals to large businesses.
Some SaaS startups, like Salesforce and Monday.com, offer a CRM (customer relationship management) system, which handles the customer-based needs and processes of a business.
B2B SaaS and B2C SaaS
SaaS products may focus on B2B or B2C markets. B2B means business-to-business. In this case, the SaaS provider services a business, which uses the SaaS as needed to run.
A law firm might use DocuSign for all of its e-signature needs between partners, administrative staff, and clients. Most SaaS startups work within the B2B market.
B2C means business-to-consumer. Netflix is a B2C SaaS in that it provides its product directly to the end-user.
Pros and Cons of SaaS
SaaS isn’t the right fit for all businesses, and some limitations to consider with SaaS are data security risks, time-intensive workflows, and ease of use in the different types of cloud computing. Some startups will thrive under the SaaS business model, while others might need to look at options that provide more flexibility to their customers.
Pros | Cons |
Does not have to be overly customized for each client | Security risks due to data exchange in the public cloud vs the private cloud |
Great option for bringing in recurring income | Up-front costs and fees for management of large data workloads may turn off customers |
Less consumer involvement means more streamlined onboarding | Requires extensive involvement; more hands-on than other models |
SaaS IoT platforms can provide a ready-made holistic system | Limited customization options and functionality for the consumer |
Limitations and Concerns
As attractive as the SaaS model is, there are some caveats. You may find that it is too hands-on for your liking. SaaS is a “what you see is what you get” platform.
Server management is a major concern. With any server outage, all of your clients will experience the fallout, which can create customer service (and even retention) issues.
Ensuring that you have the staff and resources to handle client support, software updates, server infrastructure, and day-to-day operations is paramount to your success.
Platform-as-a-Service (PaaS)
Definition and Overview
PaaS, or Platform-as-a-Service, may also be referred to as cloud platform services. These are generally used for applications and are a great option for developers who want to own the app management on their own while not being responsible for servers or storage.
Unlike SaaS, PaaS delivers a platform instead of the software itself. This way, software developers can create their software themselves. Meanwhile, the operating systems and infrastructure are handled by the PaaS provider.
Examples and Use Cases of PaaS
Some examples of PaaS include:
- Heroku
- Microsoft Azure
- Amazon Web Services
- Google App Engine
As a PaaS provider, you could serve folks who want to build an app, but don’t have the resources or desire to host or scale it. PaaS solutions like Heroku allow consumers to create, build, and deploy their ideas with a platform that does the bulk of the backend work for them.
Heroku’s runtime environment handles much of the technical aspect of app delivery, including security. This gives developers complete control over the creative and building processes but relieves them of the pains of hosting their applications.
Amazon Web Services, a cloud computing service, can provide either IaaS or PaaS. For PaaS, it handles infrastructure management and sets its clients up with development tools so they can focus on building and customization.
Pros and Cons of PaaS
You may want to offer a platform as a service if you’re interested in supporting collaborative and creative businesses. It’s a valuable tool for developers looking to build their apps without any of the backend responsibilities.
But it may not be the best option for you if you’re looking to cater to a very diverse set of programmers with many coding language needs.
Pros | Cons |
Integrates with the hybrid cloud | Middleware can pose a security risk |
Scalable | Difficult to offer all programming languages which could limit client base |
Offerings can include communications and messaging options; desirable in a remote-heavy market | Users do not maintain complete control over operations; limited automation options |
Limitations and Concerns
User-friendly interfaces are highly important for PaaS startups. You’re creating an environment for developers to work within, and it needs to be easy to use or it won’t be effective.
Additionally, it is difficult to integrate data onsite with an off-site server, and your offerings might be limited as a result. You also need a great customer service team that can help your clients through the headaches that come with limited control over backend processes.
Infrastructure-as-a-Service (IaaS)
Definition and Overview
IaaS providers (cloud infrastructure services) use virtual machines to deliver everything from servers and operating systems to data storage and entire networks. Simply put, all cloud computing infrastructure is made available to the consumer via IaaS.
An API (application programming interface) is often used within an IaaS model as a liaison between applications to make data transfers seamless. APIs can also help give clients control over every aspect of their product.
Examples and Use Cases of IaaS
Some examples of IaaS are:
- DigitalOcean
- Google Compute Engine
- Amazon Web Services
- Rackspace
Businesses may find themselves struggling to run apps with a lot of graphics and moving parts. IaaS and its computing infrastructure speed up those apps and provide the support needed to keep them running.
Scaling is a breeze with IaaS. Breaking down, rebuilding, and making changes to platforms for testing and expanding is made easy for the client.
Pros and Cons of IaaS (Including Limitations and Concerns)
If you want to support businesses that are looking to build their own infrastructure from the ground up, you might consider the IaaS model for your startup. This option is great for founders looking to give their customers complete control over their infrastructure.
Pros | Cons |
User gets control over their entire operation; less time-intensive for you | Security threats from VMs |
Fully scalable; you can serve clients at the beginning, middle, or exit stages of their startups giving you a wide range of customers | Requires resources for training and ensuring the client is equipped to run their infrastructure |
Empowers you to build the infrastructure you know is efficient and effective to support your clients | Moving to an off-premises data center can be a difficult migration |
Pay-per-use model is budget-friendly and cost-effective for most clients | Legacy systems may not be able to integrate |
Limitations and Concerns
IaaS is often not equipped to handle legacy apps in the same way as it can handle new ones. Upgrades may be necessary before integration, which can leave you vulnerable to security issues.
After switching from an on-premises model, your client’s workforce may not be trained in managing the infrastructure in the cloud, in which case you’ll have to expend resources to get them up to speed.
SaaS vs PaaS vs IaaS: How to Choose?
Deciding what kind of service and hands-on availability you want to offer can help you decide which model to pursue. Ask yourself a few questions:
- How much flexibility and customization capability do you want to provide?
- How much infrastructure management do you want to do yourself?
- What are your plans for scaling your business?
To keep it simple:
If you’re interested in providing: | Then go with: |
Ready-to-use software that addresses specific needs | SaaS |
Freedom and a place to focus on developing apps | PaaS |
Access to and control over every aspect of infrastructure | IaaS |
Conclusion
You know what you have to offer, and I hope this crash course helps you decide which direction to go. Each comes with challenges and benefits that you can work in your favor. Decide what needs you want to meet so you can figure out whether SaaS, PaaS, or IaaS works best to help you meet them.
