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

"As a service" refers to the way IT assets are consumed with cloud-based products, highlighting the essential difference between cloud computing and traditional IT. In traditional IT, businesses consume IT assets by purchasing, installing, managing and maintaining them in on-premises data centers. With cloud computing, the cloud service provider owns, manages and maintains the assets. The customer consumes them using an internet connection and pays for them on a subscription or pay-as-you-go basis.

IaaS is a form of cloud computing that delivers on-demand access to cloud-hosted compute, storage and networking—the backend IT infrastructure for running applications and workloads in the cloud. It enables businesses to scale resources as needed, and reduces the need for significant upfront capital expenditures or complex on-premises infrastructure configurations. 

Businesses often rely on IaaS tools to manage their high-performance workloads, especially in the case of "spiky" workloads that are prone to sudden surges of user activity.

PaaS is a cloud computing model that provides a complete on-demand cloud platform (hardware, software and infrastructure) for developing, running, maintaining and managing applications. The PaaS provider hosts everything—including servers, networks, data storage, operating system (OS) software, databases and development tools—at their data center.

PaaS enables businesses to build, test, deploy, run, update and scale applications faster and cheaper than they would with an internally developed and managed, on-premises platform.

SaaS is cloud-hosted application software delivered over the internet to compatible computing devices. SaaS providers operate, manage and maintain the software and the infrastructure on which it runs. Instead of buying application software and installing on a local device, SaaS users simply create an account, subscribe to the application and get to work.

IaaS, PaaS and SaaS are not mutually exclusive—many enterprises use all three—as each one provides developers accessible, scalable IT capabilities with a more predictable cost structure.

IaaS offers a cloud-based alternative to on-premises computing infrastructure, delivering physical and virtual computing resources (hosted in data centers by IaaS providers) to users.   

With IaaS, providers supply the foundation for IT operations (the infrastructure, including maintenance, patches, upgrades and troubleshooting), so customers can focus on software and strategy rather than managing physical hardware. Customers access IT resources and services over a wide area network—typically the internet—and use the cloud provider’s platform to manage the rest of the application stack.

IaaS tools rely on virtualization technology, which enables multiple virtual machines (VMs) to run on a single physical server. Each VM operates independently—with its own operating system, applications, and memory and storage specifications—and the provider manages hypervisors (also called virtual machine monitors or VMMs) that keep the VMs isolated. Hypervisors also allocate computing power, memory and storage to each instance, enabling customers to create, configure and scale virtual instances to match their needs.

Depending on business needs, IaaS can be paired with automated services such as auto scaling, load balancing, disaster recovery and performance monitoring to help optimize application availability and workload management. IaaS platforms can also help businesses take advantage of AI and machine learning (ML) technologies. Developers can, for example, use the computing power offered through IaaS to create foundation models for building and scaling generative AI applications.

Flexible, usage-based (pay-as-you-go) models are the most common for IaaS. But for more predictable workloads and longer-term commitments, companies can opt for reserved instances or subscription-based billing (such as monthly billing). Many providers offer discounts for these commitments. 

IaaS delivers a range of virtualized computing resources that users can access and control over the internet. They include:

IaaS compute engines consist of central processing units (CPUs) for web processing and application execution, and GPUs for high-performance workloads and system memory (RAM). Users can request computing resources in the form of virtual machines or dedicated bare metal servers.

Bare metal servers are physical machines that are usually dedicated to a single customer. They give customers full control over the hardware, and enable customers to create customized workloads. This capability can be especially useful for workloads that require high performance, strict compliance or minimal latency. Traditional bare metal servers lack preinstalled hypervisors, but users can add one if necessary.

Virtual servers are software-defined servers that enable multiple VMs to share a single bare metal server. They’re ideal for flexible, short-term workloads like development, testing and data backup. They can help businesses optimize resource use, cut costs and quickly provision IT resources.

Enterprises often use a combination of virtual and bare metal servers to balance performance, customization and scalability.

Networking in IaaS is powered by software-defined networking (SDN), which uses application programming interfaces (APIs) to deliver virtualized routers, switches, firewalls, subnets, VPN gateways and load balancers to users. Conversely, customers can use network APIs to securely connect their virtual infrastructure to the internet and manage communication between different network resources.

IaaS platforms offer several cloud storage options. Block storage, for instance, stores data in volumes on storage area networks (SANs) or in cloud-based storage environments. This makes block storage well-suited for use cases that require fast, reliable data transfer.

File storage enables file sharing between multiple users by storing data in the cloud and providing access through the internet.

IaaS environments can also support containerization, which packages applications into lightweight, portable containers with all the necessary OS libraries and dependencies. Containers are more efficient than VMs because they can be deployed, managed and scaled using orchestration tools such as Docker and Kubernetes.  

Security in IaaS is based on a shared responsibility model. The provider is responsible for securing the physical infrastructure, including data center facilities and underlying hardware. Typically, they offer tools for data encryption, access controls and network security, which help customers safeguard sensitive information and reduce the risk of cyberattacks. Customers, in turn, are responsible for securing their own applications, workloads and data within the cloud.

IaaS models offer general-purpose compute resources across a range of use cases, including:

Compared to traditional IT infrastructures, IaaS platforms give customers more flexibility to quickly scale computing resources up or down to match traffic spikes or slowdowns. IaaS helps businesses address the rightsizing dilemma: they don’t need to purchase excess on-premises capacity to accommodate spikes or risk outages and suboptimal performance when demand exceeds available resources.

However, vendor lock-in can be a concern with IaaS providers. Lock-in can make it difficult for businesses to change providers after their IaaS platform is fully configured, so decision makers should carefully consider their long-term IT goals and needs.

Investing in an advanced IaaS solution has numerous benefits, including:

• Greater availability. With IaaS, businesses can create redundant servers in geographically dispersed locations to help ensure high system availability, even during local service outages or disruptions.

• Lower latency, improved performance. Because IaaS providers typically operate data centers in multiple locations, businesses using IaaS can often run apps and services closer to users to minimize latency and maximize performance.

• Improved responsiveness. IaaS enables IT teams to dynamically provision resources to match demand in a matter of minutes. It also enables them to accelerate the testing and deployment of new ideas.

• Faster access to cutting-edge technology. With a cloud-based infrastructure, businesses can take advantage of the latest technologies sooner—and at a lower cost—than they could with on-premises infrastructure.

PaaS provides a cloud-based platform for developing, running, managing applications. The cloud services provider hosts, manages and maintains all the hardware and software included in the platform—servers (for development, testing and deployment), operating system (OS) software, storage, networking, databases, middleware, runtimes, frameworks and development tools—as well as related services for security, operating system and software upgrades, backups and more.

Users access the PaaS through a graphical user interface (GUI), where development or DevOps teams can collaborate on all their work across the entire application lifecycle including coding, integration, testing, delivery, deployment and feedback.

With PaaS, the customer can pay a fixed fee for a set amount of resources and a specific number of users, or like IaaS customers, they can choose pay-as-you-go pricing and pay only for the resources they use.

PaaS solutions typically consist of three main components:

Cloud infrastructure is the backbone of any PaaS system. It includes VMs, OSs, storage and security features, such as firewalls and encryption.

PaaS provides tools for creating, launching and managing software products. In PaaS environments, applications are often created using middleware that streamlines workflows and enables multiple development and operations teams to work on the same project at once.

GUIs are user-friendly dashboards where development or DevOps teams can manage their work throughout the application lifecycle. They serve as the main point of interaction between developers and a PaaS environment.

With PaaS, all standard development tools are available through a GUI, enabling developers to log in from anywhere, collaborate on projects, test new applications and release finished products.

PaaS provides an integrated, ready-to-use platform that offloads infrastructure management to the cloud providers so that development teams can focus on software innovation and improving the user experience. It can also help businesses advance a range of IT initiatives.

Examples of PaaS use cases include:

Like IaaS, vendor lock-in can be an issue with PaaS services, especially when teams attempt to move large, complex applications to another provider. PaaS also requires businesses to rely on the vendor’s infrastructure and development platforms. If the vendor experiences a security issue or modifies the platform (by discontinuing support for certain services, for example) the changes can negatively affect app performance.  

Nonetheless, PaaS offers enterprises a balance of control and convenience that can help DevOps teams boost productivity and accelerate development cycles.

PaaS tools can also help businesses:

• Accelerate time to market. PaaS enables enterprises to access a cloud service provider's hardware and software and begin to provision resources and develop software immediately.

• Streamline scalability. With on-premises platforms, businesses often must purchase excess IT resources to manage traffic fluctuations, which can be both wasteful and expensive. During low- and normal-traffic periods, the excess resources sit idle (and remain a drain on financial resources). PaaS platforms enable enterprises to automatically scale resources as needed and to use those resources immediately.

• Afford a wider range of IT resources. PaaS platforms offer access to a wide range of resources that many organizations can’t afford to purchase and maintain themselves.

• Get more freedom with less risk. PaaS enables developers to try and test new operating systems, languages and other tools without making substantial investments in them or the infrastructure required to run them.

• Enhanced security. PaaS providers invest heavily in security technologies, including built-in tools like threat modeling and access control, which can help organizations enhance their overall security approach.

Sometimes called cloud application services, SaaS offers complete, provider-managed software solutions delivered over the internet.

SaaS leverages cloud computing and economies of scale to offer customers a more efficient way to access, use and pay for software. Cloud providers host SaaS applications on their servers and manage the availability, security and overall performance of applications, including any software updates or feature enhancements. Users typically subscribe to SaaS applications on a monthly or annual basis and access them using a web browser or mobile apps.

Some SaaS providers offer usage-based pricing, but in many cases, customers can choose a flat-rate pricing model. Flat-rate pricing is a “one plan, one price” approach, where users can access all app features for a single, fixed price, like a streaming service subscription. The user pays a monthly or annual fee for unlimited use, regardless of how much they use the application. Many SaaS providers offer tiered packages based on the number of users that will need access to the app.

Today, SaaS is the most widely used public cloud computing service and the dominant software delivery model. Many of the applications that workforces use are delivered through a SaaS model. Examples of SaaS apps include everyday tools—such as Salesforce (for customer relationship management), Dropbox (for file storage and sharing), and Hubspot (for product marketing)—as well as core enterprise resource planning (ERP), human resources and workforce optimization platforms.

Despite the diversity of SaaS applications, most share the following features:

SaaS applications are designed to run in the cloud. Vendors can host these applications on their own infrastructure or use established cloud providers, but relying on established providers enables SaaS developers to maximize app scalability and extend the app’s reach to a broader customer base.

SaaS applications are available to any user with an internet connection and a compatible device—whether it's a computer, smartphone or tablet. Most SaaS solutions run in web browsers, though some require users to install dedicated mobile apps or lightweight clients on their devices.

SaaS apps run on a multitenant architecture, where a single instance of the application serves multiple customers. To help ensure security and privacy, each customer’s data and configurations are kept separate from the others.

With SaaS, customers don’t have to worry about managing or maintaining the underlying infrastructure because the cloud provider delivers all the critical services.

Many providers offer APIs that enable customers to integrate SaaS solutions with other cloud-based web applications or on-premises software systems (connecting an e-commerce site with a "buy now, pay later" platform, for instance).

Much of the software that today’s workforces use is delivered through the SaaS model, including:

• Everyday tools, such as Slack (for messaging) and Dropbox (for file storage and sharing).

• Core business applications, such as enterprise resource planning (ERP), human resources management systems (HRMSs) and customer relationship management applications.

• Workforce optimization platforms, such as Workday (for financial management and workforce planning) and Jira (for project management and workflow automation).

SaaS provides numerous benefits, but there are potential challenges that deserve consideration. Because SaaS apps are easy to access and deploy, they can proliferate across an organization without the IT staff’s knowledge. This phenomenon—known as SaaS sprawl—can cause wasteful spending, inefficient workflows, data silos and security risks.

SaaS applications also come with their own lock-in challenges. Proprietary technologies, complex integrations (using vendor-specific APIs, for example) and other factors can create application dependencies that make it complicated and expensive to change SaaS providers.

Risks aside, SaaS platforms can enable:

• Faster adoption. Customers can purchase and start using SaaS applications immediately, sometimes in minutes, for a minimal upfront cost (typically, the cost of the first month’s subscription).

• Faster upgrades and updates. SaaS applications give users access to new features and versions as soon as they’re available. Providers often upgrade features and add functions several times weekly, often without customers noticing.

• On-demand scalability. Users can scale SaaS applications up and down as needed, by simply upgrading or downgrading tiers or purchasing more capacity.

• Predictable costs and lower overhead. With SaaS, there’s no need to budget for the infrastructure software runs on, periodic software upgrades or for in-house IT staff to install, upgrade and maintain the software. Nearly all associated expenses go directly to software use.

Though many enterprises opt to use all three cloud service models, each model is designed for different customer needs and assigns varying levels of IT responsibility to the provider.

IaaS gives businesses control over their IT infrastructure while providing a flexible, scalable data center solution that can expand or contract as business needs evolve. However, IaaS is the most hands-on of the three models; it supplies only the fundamental infrastructure.

IT teams are still responsible for managing operating systems, applications, middleware and runtime environments. Compared to the other models, IaaS provides fewer preconfigured components. Even skilled IT teams can find the workload and associated costs extensive if they aren’t equipped to handle the additional management responsibilities.

Let’s say that an organization wants to deliver a customer relationship management (CRM) application to consumers. Using IaaS, developers can configure the backend IT infrastructure on the cloud and then build a development platform (and applications) using this customized infrastructure. The IT team retains full control over OSs and server configurations, but they also bear the burden of managing and maintaining them, along with the development platform and applications. 

Similar to other as-a-service solutions, IaaS can be appealing to companies that want to offload the management on-premises hardware. IaaS’s pay-as-you-go pricing model (currently the most popular pricing model for IaaS) can accommodate organizations with a range of budgets. For businesses with unpredictable workloads or startups undergoing rapid growth, the customizability of IaaS services is often beneficial, especially if their IT departments lack the resources for major infrastructure investments.

PaaS acts as the middle layer in the cloud computing stack, bridging the gap between IaaS and SaaS. It combines the flexibility and customization options of IaaS with the streamlined workflows and rapid deployment benefits of SaaS, making it an efficient and cost-effective option for developers building custom applications.

PaaS builds upon the IaaS model by not only providing the basic infrastructure but also offering managed OSs, middleware and runtime environments. These resources make it easier for developers to deploy applications and build CI/CD pipelines, but they also limit customization options and control over the environment.

Continuing with the CRM example, developers can use PaaS to build a custom CRM application. In this case, the company offloads infrastructure and development resource management to the service provider, and the business retains control over application features. The business also assumes responsibility for managing the application and its associated data.

PaaS platforms are often essential for managing enterprise-level software development practices. They can simplify routine tasks such as code integration and database management, and still enable innovation and app customization—a level of flexibility not available with SaaS.

Generally, PaaS is best suited for companies seeking a comprehensive development environment and for geographically dispersed teams operating across platforms and regions. It can also be helpful for businesses working with limited IT budgets, since PaaS provides teams with an environment to build apps without the significant costs that can come with creating in-house development platforms.

With SaaS, the cloud provider handles everything from application development to infrastructure provisioning and maintenance. Users simply access the application using a web browser, without needing to install or maintain anything and without restrictions on device type or location. While the user can configure certain settings and manage permissions, the SaaS provider handles all aspects of maintenance, security and updates. SaaS applications are best suited for businesses seeking ready-to-use software applications that are reliable and require minimal setup.

Take a calendar application. Users want the ability to add events, meetings and appointments without the hassle of configuring settings or worrying about keeping the software updated. If a server fails due to a misconfiguration or a security breach, users expect the SaaS provider to promptly address the issue and restore their access to the application (ideally without service disruptions).

However, the convenience of SaaS comes with tradeoffs. Users have little to no administrative control or ability to customize the software, and integration options can be limited. Using SaaS also means that the user doesn’t own the software. The provider retains control over the platform and your data, which limits user oversight.

Let’s revisit the CRM example. In this case, the business would select a ready-made SaaS CRM solution, offloading all day-to-day IT management but relinquishing control (over features and functionality, data storage, user access and security) to the cloud provider.

If a business requires greater control or customization, PaaS or IaaS paired with proprietary software might be better options. But because SaaS apps are easy to deploy and require no minimal setup, they remain a favorite for many enterprises and use cases.

While cloud adoption is widespread, dissatisfaction—particularly around costs—is also on the rise. Only 40% of businesses feel their cloud spending is in line with their expectations.¹ Naturally, cloud spending includes services beyond just IaaS, PaaS and SaaS, but that still means that more than half (60%) of businesses are spending more than they want to on cloud products.

To address this issue, some IT departments are turning to AI tools and ML algorithms. Teams can use AI to analyze cloud usage patterns, identify cloud waste and automate cost reduction processes (such as workload right-sizing). It’s true that AI technologies might increase cloud expenditure, but they can also help businesses optimize cloud budgets and increase overall satisfaction with cloud services through more efficient spending.

Businesses are also investing in "anything as a service" (XaaS) platforms. XaaS platforms include IaaS, PaaS and SaaS, disaster recovery as a service (DRaaS), database as a service (DBaaS), and other cloud-based services.

As enterprises try to keep pace with data processing demands—driven by trends like 5G networking, edge computing, AI and IoT—XaaS is helping IT teams rise to the challenge. XaaS makes it easier to connect and integrate data across different environments and accelerate digital transformation initiatives. It also offers businesses the flexibility to choose where to run critical services, whether in public clouds, private clouds, on-premises data centers or a combination of the three.

Adopting a XaaS approach can help companies streamline both traditional development processes and newer practices, such as AIOps, big data processing and hybrid cloud management.

Additionally, enterprises are increasingly adopting multicloud and hybrid cloud strategies, blending public and private cloud resources to take advantage of the benefits that each provides. Gartner predicts that by the end of 2025, more than 85% of organizations will have adopted hybrid or multicloud approaches.² And today, 78% of businesses use multiple cloud providers.³

Hybrid and multicloud environments enable IT teams to distribute workloads across on-premises infrastructure and public cloud platforms and to leverage the strengths of multiple providers (which helps prevent vendor lock-in). Hybrid and multicloud strategies can also increase the flexibility, resilience and scalability of IT environments, and help businesses remain agile as technologies and customer needs change.