February 08, 2023

Cloud-based vs. SaaS-based services

Rodion Salnik

CTO and Co-founder, Brocoders

8 min

In 2023, cloud computing continues to gain momentum, with more than 60% of the world’s corporate data stored in the cloud. This technology represents the delivery of different computing resources, like applications, data storage, servers (both physical and virtual), networking capabilities, and development tools via the internet. The cloud service provider makes these resources available for a monthly subscription or pay-as-you-go model.

Cloud computing enables you to save data to a remote database and retrieve it on demand without needing to keep them on a proprietary hard drive or local storage device. As long as your electronic device has access to the internet, it has access to data and programs to run it.

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Source: https://www.zippia.com/

The popularity of cloud computing keeps growing due to the numerous benefits this option provides for people and businesses. In our article, we’ve reviewed the main components of cloud computing, its advantages, and its difference from traditional IT to help you choose the most suitable option for your business.

What is a cloud-based product?

Cloud-based software is mainstream today, and most people use it regularly whether they know it or not. A cloud-based product or service includes anything running on the cloud. The cloud-based apps can range from organizational software (Slack, Trello) to ERPs (NetSuite) and email providers (Mailchimp). Cloud-based computing has three main components:

  • Software as a Service (SaaS). This model provides software available over the internet, connecting users via the web or API. SaaS is used by the end-user.
  • Infrastructure as a Service (IaaS). IaaS providers offer an infrastructure service to manage business resources via the cloud. The model includes components such as servers, software data center space, and network equipment and is used by network architects.
  • Platform as a Service (PaaS). PaaS offers a platform on which businesses and developers can create and deploy apps. The model is used by developers.

A cloud-based product can include SaaS, PaaS, or IaaS-based applications. Generally, if you require an Internet connection for a service to function properly, it is likely cloud-based. The cloud is designed as a way to share data faster and more efficiently, allowing users to host entire servers and storage off-premise.

Cloud computing and traditional IT. What’s the difference?

From an IT perspective, cloud computing has become a game changer. To date, companies don’t need their own hardware on-premise or computer servers to use software apps. With cloud computing, teams don’t need to set up, maintain, and secure their resources, which significantly saves costs and time.

Cloud computing is not only the future of computing, but the present and the entire past of computing

Larry Ellison

Larry Ellison

CTO And Founder, Oracle

In the case of cloud computing, you work with a cloud provider that hosts your software on remote servers located in data centers worldwide. The vendor is responsible for maintaining and sharing services across multiple organizations, allowing users to access cloud services via the internet regardless of their location. The table below demonstrates the main differences between cloud computing and traditional computing.

Computing typeCloud computingTraditional computing
Services deliveryDelivery of services via the internet on different serversDelivery of services on the local server
Resources localizationThird-party servers hosted by cloud services providerTakes place on website servers and physical hard disks
AccessibilityData can be accessed anywhere at any timeData can be accessed only on the system on which it is stored
Cost-effectivenessMore cost-effective than traditional IT as server operation and maintenance are shared between multiple partiesLess cost-effective than cloud computing as you need to buy expensive equipment for the operation and maintenance of the server
Ease of useMore user-friendly than traditional IT. Users can access data anytime, anywhere via the internetLess user-friendly than cloud computing. If the user needs to access data in another system, he needs to save it on external media.
Internet connectionRequires fast, stable, and reliable internet connectionDoesn’t require an internet connection
StorageProvides more storage space and computing powerProvides less storage space than cloud computing
Scalability and flexibilityProvides scalability and flexibility so that users can change storage capacity, server resources, and other features depending on the business needsDoesn’t provide scalability and flexibility
MaintainingIs maintained by the cloud service vendorRequires a team to monitor and maintain the system
Payment modelSoftware can be accessed through a subscriptionThe software is purchased individually for every user

Cloud-based software. Advantages and examples

There are many benefits of cloud computing that are the main drivers of the mass transition from on-premise solutions to the cloud. The most important of them for your business include:

  • Faster time to market. Cloud computing allows developers to accelerate development with quick deployments. It makes it easy to test new ideas and build new apps without hardware limitations.
  • Cost-savings. With cloud computing, everything is available as a service without needing to maintain your own infrastructure. You pay for the resources you use without overbuilding and overprovisioning your data center.
  • Scalability. Cloud computing allows you to scale resources and storage to meet your business needs without having to invest in physical infrastructure.
  • Resiliency. In the cloud architecture, information and apps are hosted on distributed servers that are all connected and work together as a unit. It eliminates single points of failure, making the data and apps in the cloud more resilient.
  • Management. In some types of cloud service offerings, the vendor manages infrastructure, maintains the hardware and software and follows security measures to keep everything running smoothly.

Among the examples of cloud-based software are:

  • Dropbox;
  • Gmail;
  • Hubspot;
  • AWS;
  • IBM Cloud;
  • Adobe Marketing Cloud.

What is a software as a service? SaaS-based applications

Software as a service, widely known as SaaS, is a software delivery model in which cloud-based apps are licensed to users. Most SaaS-based products run via a web browser and are hosted in the cloud. Similarly to cloud computing, with SaaS apps, users don’t have to install and maintain the software locally.

With the cloud, individuals and small businesses can snap their fingers and instantly set up enterprise-class services

Roy Stephan

Roy Stephan

Founder and CEO, PierceMatrix

Typically, SaaS solutions are licensed on a subscription basis. You pay a monthly fee depending on the level of service and the number of users. SaaS can improve the overall ROI because the expenses associated with deploying and maintaining SaaS-based applications are often lower. The cost-effectiveness of SaaS products remains one of its most significant benefits, reducing total cost of ownership (TCO) and increasing profits for B2B and B2C businesses.

Main advantages of SaaS-based services

Similarly to cloud computing, SaaS is a cost-effective way to get real-time software access regardless of your location. In the case of SaaS-based applications, the cloud service vendor manages all the infrastructure, including apps, runtime, middleware, O/S, virtualization, servers, storage, and networking, so that users don’t have to worry about the maintenance of these features. The top advantage of using this model include:

  • Lower costs. The SaaS model provides significant cost savings due to a shared multi-tenant environment where a single software instance and its supporting infrastructure serves multiple customers (tenants).
  • Reduced time to benefit. With SaaS, the software is already installed, configured, and ready to use. It significantly reduces installation and set-up time and eliminates issues hindering software deployment.
  • Scalability. SaaS solutions are scalable and have integrations with other software as a service offerings.
  • Upgrades. In the SaaS environment, the cloud service vendor upgrades the solution, and the new releases become available for all customers. It saves you costs, time, and effort associated with upgrades and new software releases.
  • Easy to use. SaaS solutions require providers to manage all the technical issues and are easily accessible. All you need is a browser and a stable and reliable internet connection.

Examples of popular SaaS-based solutions include:

  • Slack;
  • Zoom;
  • Salesforce;
  • Netflix;
  • Trello.

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Cloud vs. SaaS. Understanding the difference

Cloud computing and SaaS are closely related and offer users similar benefits, although they are still different terms. With cloud computing, you get access to software on a server hosted by a cloud vendor. You can access your data via the internet and customize and manage the app.

At the same time, with SaaS, you get access to already-developed software and aren’t responsible for its customization and maintenance. You pay a subscription fee and get a ready-to-use product but can lose some control over the app’s customization and management. SaaS is a subset of cloud computing, and the primary difference between them is the scale at which cloud computing can be used.

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Source: https://www.zenesys.com/

Which option fit your business goals best? Organizations use cloud computing, particularly IaaS and PaaS, when they want to build and customize their applications and maintain maximal control over the apps and data. At the same time, SaaS can help companies solve business processes by offering out-of-the-box solutions that don't require any customization and management.

If you want ease of use and don’t need much control and flexibility, SaaS will be a better choice saving you time and money. But if you’re not limited in budget, want complete control of your application and environment, and are ready to maintain infrastructure, cloud computing is what you need.

The future of cloud-based products

According to the cloud computing statistics for 2023, 200 ZB of data will be stored in the cloud by 2025, with almost $200 billion forecasted to be spent on SaaS this year. The benefits cloud computing provides, along with the global adoption of the cloud, keep growing exponentially. To date, in the information age, cloud products allow us to collect large amounts of data and use it within their software algorithms, reducing costs, improving the user experience, and accelerating software development. The continued growth of cloud computing and SaaS-based products, in particular, create the future and are believed to significantly impact software development and IT infrastructure in general.

Frequently asked questions

What is cloud computing?
What is a software as a service?
Is cloud better than SaaS?
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