The Differences Between Cloud Software Service Types

With the advent of cloud computing, even the smallest of companies can have the infrastructure of Fortune 500 companies. There is usually minimal investment required because no hardware is needed to run cloud programs and they allow small businesses to scale at their own pace. Some software, like cloud accounting software, can even automate certain processes to make them more efficient and profitable. But, of the three main types of cloud products, SaaS, PaaS, and IaaS, which one is right for your needs? The answer is, it depends, but before you can decide, you have to know the differences between the three.


SaaS or Software as a Service is software that has been created by a company that is intended to perform a specific function and is made available (usually for sale on a subscription basis, but can also be offered for a one-time fee) to the public. It is accessed over the Internet, so there is no software to download onto a computer. Companies use SaaS products to manage and conduct their various business functions, including accounting, video conferencing, document storage, prospecting, and emailing. 

These products are usually perfect for small businesses because these companies often do not have the technical resources to build their own software products. As a result, SaaS products may not have all the features a business wants or needs. They may have to use several software products to fully cover all their business functions. While this can be inconvenient at times, it’s usually cheaper for small businesses to use other companies’ software rather than pay to create their own.


PaaS is short for Platform as a Service and is what SaaS is built upon. PaaS products offer software developers the resources and tools they need to build custom applications and software that they can then offer to the public as SaaS or use for their own purposes. Developers like PaaS products because they only have to worry about building the software. They don’t have to concern themselves with data storage or management because the platform does that for them.

As an example, Zoom is an SaaS that the public pays for, but the developers of Zoom pay a PaaS to host their product on the Internet. In other words, most SaaS products build their software on a PaaS and include their subscription to the platform in your SaaS subscription. If a business has the technical capabilities to create software, they can host their own product on a platform and just pay for PaaS.


IaaS stands for Innovation or Infrastructure as a Service and is the hub where PaaS platforms exist on the Internet. IaaS is made up of physical servers that host and manage data for PaaS companies. PaaS providers pay IaaS providers a fee for the space they use to host software that is often SaaS. 


In most cases, SaaS will be the type of cloud computing you do, especially if you’re a small business without the IT resources available to create your own software. However, if you have the technical capabilities within your company, using PaaS is a possibility as well, since you can use that service to create your own software. Small businesses usually do not subscribe directly to IaaS providers unless they intend to offer PaaS or Saas products for sale.