Cloud vs. SaaS: What’s the Difference?

The cloud vs. SaaS choice might seem confusing since the two terms are used interchangeably in many cases. It’s common for many services to just use the broader term of “cloud computing” instead of clarifying the type of cloud service. While the two are closely related, they’re not quite the same and it’s important to understand the differences and how they impact your business.

Drifting Into the Cloud

By definition, cloud computing refers to any hosted services delivered over the Internet. It’s a broad term that’s used to encompass many types of services. More specifically, the cloud is actually a stack. The three types of services that make up the stack include:

  1. Software as a service – software applications.
  2. Platform as a service – tools and services used to deploy cloud applications.
  3. Infrastructure as a service – hardware and software used to power cloud applications.

Infrastructure makes up the foundation of cloud computing. All three components are essential for creating what everyone knows as the cloud. The confusion sets in when separating the components. While the cloud refers to a way of efficiently delivering services and applications online or over a network, each portion of the stack refers to a distinct part of the cloud.

A few things that make the cloud so beneficial include:

  • On-demand services
  • Anywhere access on all types of devices
  • Easy to scale based on demand
  • Only pay for what you use
  • Resource light, at least for the customer

While many of the services you use daily are considered cloud computing, such as backing up your personal files to Dropbox, the cloud isn’t always available to everyone. Businesses can create their own private cloud environment, which is completely contained by the business. The entire cloud stack is created and maintained by the business.

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SaaS Tops the Stack

SaaS sits atop the cloud computing stack. You might think there’s some cloud vs. SaaS decision to make for deploying applications in your business. This isn’t true. SaaS is the part of cloud computing that end-users interact with daily. While most users never see the PaaS or IaaS portions, they interact with the applications delivered via the cloud each day.

Software is created to deliver services from the cloud to end-users. Without this part of the stack, no one would ever be able to actually use any of the services available on the cloud. Think of the cloud as the computer and SaaS as the interfaces of the software on the computer.

SaaS is different than traditional software because it doesn’t require business to buy individual licenses or the software itself. Instead, the software is rented and delivered via a web-based interface. Another difference is the data users input and create is stored remotely in the cloud versus on the user’s local hard drive.

Some SaaS applications can be installed on-premises, such as a custom SaaS solution. Users can still access a web-based interface to interact with the software wherever they are and no matter what device they’re using.

Businesses mainly opt for SaaS applications to avoid the need to purchase the software outright, deal with licenses, install the software on individual devices, and manage updates.

Cloud vs. SaaS Isn’t a Competition

While you might hear SaaS and cloud used to say the same thing, it’s not exactly the same. There also isn’t some cloud vs. SaaS competition. SaaS is a crucial part of cloud computing. The reason you’ll often hear vendors refer to their products as cloud software is it’s often easier for end-users to understand. It sounds a little less technical than software as a service.

However, a cloud service provider can offer hardware, a development platform, and/or software. All are delivered as a service. For instance, one cloud service provider may only offer hardware resources for data storage, while another may provide the tools to create your own software remotely.

The important thing to remember is SaaS is the actual software, while the cloud refers to the way the software is delivered.

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Choosing to Work in the Cloud

Cloud computing is a constantly growing industry. It’s expected that public cloud service spending could double between 2015 and 2019 from $70 billion to $141 billion. Despite the popularity of SaaS, experts anticipate the biggest growth will be in the IaaS and PaaS areas of cloud computing.

The main reason for the larger growth is because those areas aren’t quite as saturated as the SaaS market. The larger scale infrastructure and platform services, such as Microsoft Azure and Amazon AWS, have far less competition, though that could change.

Private cloud services are also on the rise, though it’s mainly with larger enterprises who prefer to keep their data on-premises. Hybrid cloud models are also becoming increasingly popular with adoption rates rising from 58% to 71%. Small and medium-sized businesses are more likely to opt for public or hybrid cloud services due to lower IT budgets.

By 2018, many IT departments will need to have cloud expertise to manage the department effectively. It’s expected that cloud computing will result in only 40% of a business’s apps and platforms actually being on-site.

The main things slowing the growth of cloud computing and SaaS are data storage and security concerns. This is even with businesses using private cloud models. The convenience of cloud computing is outweighing the concerns as more and more businesses adopt this computing model.

Another issue businesses of all sizes are facing is finding the right IT talent to manage a cloud computing environment. From choosing the right vendors to managing a private cloud model, expertise in this area is vital.

As you take your business into the cloud in some form, make certain you understand the differences between cloud services. The most popular by far is SaaS and you’re likely already using some business SaaS solution right now. Many businesses start with just one or two cloud-based applications to see how the cloud benefits them.

When jumping into cloud services, it’s not cloud vs. SaaS. It’s SaaS as a part of cloud computing.

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