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Software as a Service (SaaS) vs Cloud Computing | Difference & Comparison

SaaS (Software as a Service) and Cloud Computing are two terms that everyone hears all the time now. This is a reason why many businesses ...
SaaS (Software as a Service) and Cloud Computing are two terms that everyone hears all the time now. This is a reason why many businesses need to figure out what technology is the best choice for them. There are thousands of cloud-based and hosted platforms. For example, there are SaaS, PaaS, and IaaS applications. What are these terms and what do they mean?

In this article, we will consider SaaS and cloud applications so that you can understand how they differ and what features they have in common. The differences between these technologies also determine the way you interact with applications so we recommend that you familiarize yourself with the features of different models before choosing a solution for your company.

SaaS vs Cloud

What is Cloud Computing in Simple Terms?

SaaS and cloud computing both relate to the same idea. However, these two terms mean different things. Cloud computing refers to cloud-based software. This technology is nothing new, and it appeared as a disruptive approach that changed the way people develop and use applications.

Today, cloud computing is mainstream. There are many kinds of cloud-based business software like Slack and Trello. There is also enterprise management software, including CRMs and ERPs.

The worldwide public cloud market is worth $236 billion, and it continues to grow by about 22% every year. To understand what cloud computing is, let’s figure out what “cloud” means first. Simply put, the term “cloud” refers to the internet.

The traditional on-premise software should be installed on a user’s device, while cloud software operates on a server through the internet. No matter where you are, you can access the system whenever you want. All you need is a stable internet connection and a web browser to log into the system.

Cloud service providers are third-party organizations that host your software and process your data on remote servers. These servers are located in data centers around the world. Thanks to cloud computing, IT services can save costs because the provider does a lot of work for them, sharing services and systems across different organizations and maintaining these systems.

Types of Cloud Computing Models

There are several different types of cloud computing. The concept of cloud computing, in general, can be divided into cloud services and cloud locations. Here are the main types of cloud locations:

Private — can be used by one organization or customer;

Public — the cloud computing company that offers the solution is responsible for maintaining the infrastructure;

Hybrid — a combination of both public and private services;

Community Cloud — in this case, different organizations share the same infrastructure.

Types of Cloud Computing Services

There are also several types of cloud services:

Software as a Service (SaaS) — users rent application databases and software while cloud providers manage the platforms the applications run on and the infrastructure. We will consider SaaS in more detail further;

Platform as a Service (PaaS) — users rent servers and the system software for their own purposes;

Infrastructure as a Service (IaaS) — users rent servers and storage space.

Cloud-based Software Benefits

More and more businesses choose cloud solutions for their numerous benefits. Here are the main advantages of cloud computing.

Efficiency and Accessibility

One of the main benefits of the cloud is accessibility. You can access your data from any place in the world and from any device as long as you have an internet connection. When companies choose cloud solutions, partners, employees, and clients can update and access their information from anywhere, in real-time.

An opportunity to access information so quickly and easily creates a perfect environment for innovation and increases functionality. Besides, the data is safer because it’s stored in a secure data center. If you lose power in your server room, it won’t affect the cloud. Most cloud service providers maintain 99.9% uptime.

Reduced Costs

Cloud computing also reduces maintenance and operating costs significantly. Users need to pay for capacity only when they actually need it. In addition, installing your own server can cost a lot of money, and in this case, you should also maintain it. Utilizing servers that belong to another company also enables you to avoid hiring IT staff.

Easy Updates

A big advantage of cloud computing is that you can update your software easily. Cloud computing enables undisruptive and frequent software updates. Therefore, you don’t need to interrupt your workflow to use the latest features. There’s no need to wait until the installation is completed.


Thanks to cloud computing, you also don’t need to increase staff to increase the volume of your outputs. You can produce more due to a decreased cost per product or service. Besides, your company doesn’t need to invest in expensive software or hardware.

What is Software as a Service (SaaS) in Simple Terms?

The term Software as a Service (SaaS) refers to a software delivery and licensing model in which software is licensed to users. In this case, an application is accessed through the internet. There’s no need to install the software locally, and users also don’t need to maintain it.

All the SaaS applications run on SaaS providers’ servers. Therefore, SaaS providers are responsible for the maintenance, security, and performance of their applications on their servers.

Usually, users get a license to SaaS applications on a subscription basis. A provider might offer several levels of service that determine the monthly fee. “Just like cloud software, SaaS solutions are cost-effective, and they allow you to access software from anywhere and whenever you need, in real-time. Depending on the type and level of service, the same application may be accessed by different numbers of users,” explains Gayle Hayes, a software engineer from a writing service reviews website.

Benefits of Software as a Service (SaaS)

Here are the main benefits of Software as a Service.

Decreased Time to Benefit

Unlike traditional apps, SaaS solutions are installed and configured from the very beginning. Therefore, users don’t need to wait until their application will be ready to use. Besides, this approach helps reduce problems that could occur if the software was installed and adjusted manually.

Integration and Scalability

SaaS solutions are usually cloud-based. Some types of SaaS software can be integrated with other SaaS solutions and they are scalable. In contrast to the traditional solutions, users don’t have to buy additional software or servers, and the SaaS provider is responsible for server capacity planning.

Lower Costs

Given that SaaS solutions usually reside in a multitenant or shared environment, the software and hardware license costs are lower than those of the traditional software. The customer base can also be increased because small and medium businesses can use software that they wouldn’t otherwise afford. In addition, maintenance costs are also reduced because the SaaS provider owns the environment and splits it among numerous customers.

Easy to Use

SaaS solutions are usually easy to use because they come with the best samples and practices. SaaS solutions enable users to do the proof of concepts and try features of new releases in advance. Besides, users can do a smooth migration. No matter what the scale of the environment is, users are usually allowed to test SaaS offerings before purchasing a subscription.

Software as a Service (SaaS) vs Cloud Computing: Difference and Comparison

Simply put, the difference between SaaS and cloud is that SaaS apps run in the cloud but they are not the cloud itself. The term SaaS refers to any software that isn’t located on your servers. It’s a complete application. Users don’t need to run applications on their own servers and use their own data storage, as they would do with on-premise solutions. Instead, everything runs in the provider’s data center.

SaaS software also has different licenses than on-premise software. You don’t buy a license to be able to use an app and then pay for updates and maintenance, but you “rent” software over some time. Usually, users “rent” SaaS applications on an annual or monthly basis.

The vendor runs this app on its infrastructure so you don’t need to install your own infrastructure and pay for maintenance. When subscribing to a SaaS application, the cost of subscription includes both the cost of the software itself and all the associated costs.

When users run SaaS applications, they gain access by logging into the vendor’s website. SaaS applications run in the cloud but it doesn’t mean that the terms “cloud” and “SaaS” mean the same thing. The term “cloud computing” refers to computing resources that are not linked to a certain location. There is an infrastructure and a number of services, such as network capacity, data storage, development environments, and communications, that you can rent. Unlike SaaS, which implies renting a complete application, cloud computing implies renting services and infrastructure.

In this case, the clients might be either regular users or application vendors, software developers, or corporate IT departments. Most often, if users don’t work directly with the servers of their organizations, it means that they don’t interact directly with the cloud. Nevertheless, they might be dealing with the infrastructure used by applications or data storage. They may also be dealing with SaaS apps that use cloud services or cloud servers.

We’ve already mentioned that the concept of cloud computing has been around for quite a while. However, many people get surprised when they learn that SaaS also originated more than a few years ago. This concept was born in the 1960s, and back then, it was called a time-sharing system.

To achieve the centralized hosting of business apps, several simple terminals were connected. The terminals included keyboards and monitors. With time, the cost of desktops decreased so employees were able to use personal computers and run applications locally. However, the critical data was still stored on central servers.

With the increase of bandwidth costs, SaaS applications turned out to be cost-effective so this approach became popular again. It makes sense to consider SaaS applications a development of cloud computing.

In a word, cloud computing is a bigger platform that serves as the basis for SaaS. Users access SaaS applications by accessing a cloud environment, while this cloud environment might offer more services and be used not only for SaaS.

SaaS vs Cloud: Pros and Cons

All the data used by SaaS applications is stored by the vendor. The service provider also usually can operate this data in any way. The only exceptions are vendors that offer specific agreements regarding the data policy. Cloud computing gives users more control over their data.

Even though these servers are not local, users are still able to manage the data or software and to make backups. Therefore, users are able to remove their data from the cloud and store it locally, if needed. This is a reason why many high-value applications move to the cloud, while the SaaS industry mostly focuses on low-cost services and applications.

If you try to find the right answer to the SaaS vs cloud question, it will be hard to do if you don’t consider the drawbacks of both cloud computing and SaaS. For instance, cloud solutions might lack integrity because your project will become dependent on experience. When your team develops an app, keeping the software up and running is their responsibility.

In this context, SaaS is a good alternative because it offers a sort of quality warranty. However, let’s not forget that SaaS applications use cloud storage so a SaaS app will only run properly if there is a good team of developers behind the cloud.

It’s also important to know that not all SaaS solutions are cloud-based. SaaS applications can also be built on local terminals and then deployed to cloud-based servers. The main thing is that SaaS products can be accessed through a web browser.

Even though cloud options often cannot boast the same guarantees as SaaS solutions, they also have some advantages over SaaS. The main advantage of cloud solutions is that SaaS solutions cannot be so flexible. Any SaaS solution is a complete application so it’s much harder to configure.

However, the best SaaS providers try to address this issue in different ways. Quite often, they make sure to simplify the product-specific adjustments. Nevertheless, it may be not enough sometimes, so if you don’t want to change your business logic, you must make sure that you’re completely happy with the chosen solution.

SaaS products have some common characteristics. First of all, SaaS applications are served directly to the end-users. They are pre-configured and hosted on a server. This software is completely ready to use so you don’t have to install anything else, purchase additional hardware, or worry about backups.

This is the main reason why SaaS has a much lower entry barrier. Another distinctive feature of SaaS software is that the end-user doesn’t own it. Instead of selling the product itself, SaaS companies offer a subscription. Usually, SaaS solutions also include free premiums and trial periods.

Saas vs Cloud: What You Should Choose?

Now that you know the key difference between cloud computing and SaaS, let’s try to understand what model you should choose and what factors you should consider.

Consider Your Budget

First of all, you need to consider your budget. Quite often, SaaS solutions are more expensive because you can save money by developing your own app on a cloud.

Determine Your Flexibility Requirements

You should know which data you will need to access. SaaS solutions will be a good choice if you’re not going to add more datasets and don’t plan to scale.

Consider Your Time to Market

Modern IT companies need to launch their projects as soon as possible to stay relevant. Therefore, the time to market is important. SaaS solutions can serve as more than one software module so the chances to release sooner increase.


As you can see, cloud computing and SaaS are two different concepts that share a lot in common. These are two similar deployment approaches that also have a lot of differences. Even though most SaaS solutions are cloud-based, the cloud isn’t a synonym of SaaS.

When choosing a solution for your business, you should clearly understand your goals and priorities. For instance, if you want to develop your own software, cloud solutions will provide you with the necessary level of flexibility. However, SaaS will be a good solution for those who are looking for a ready-to-use solution that includes maintenance and provides certain guarantees.

Determine your objectives and make sure to consider different options before making your purchasing decision. There are many SaaS and cloud solutions that will be appreciated by one business while being unnecessary or unreliable for another.

It’s also important to consider the market. SaaS businesses can benefit from a predictable revenue because their revenue is recurring. In addition, many consumers can benefit from the affordability that SaaS offers.

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TechGlobeX: Software as a Service (SaaS) vs Cloud Computing | Difference & Comparison
Software as a Service (SaaS) vs Cloud Computing | Difference & Comparison
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