SaaS vs. Cloud - What Exactly is the Difference?

September 29, 2022

Software as a service (SaaS) and cloud solutions offer the most advantages for businesses and have become the go-to models for companies. However, there is still confusion about their different operations and areas of use.

It is easy to confuse SaaS and cloud applications. Almost all SaaS applications are cloud-based; however, most cloud-based services are not necessarily SaaS-based. SaaS is a subset of cloud computing. In addition to software as a service, it includes Infrastructure as a Service (IaaS) and Platform as a Service (PaaS).

In this article, you will find what SaaS or Cloud-based is and list their differences.

Let's begin, shall we?

What Is SaaS?

SaaS, or Software as a Service, is a software delivery model based on monthly or annual subscriptions. Users pay to get access to an already developed cloud-based software application via an internet connection, which eliminates the need to install and maintain the application locally.

SaaS is considered to be a part of cloud computing (or cloud model) which comprises infrastructure as a service (IaaS) and platform as a service (PaaS). SaaS has become the go-to delivery modal for most enterprise software companies, including office software, gamification, customer relationship management (CRM), human resource management (HRM) and more over the years.

After the Internet boom during the 1990s, application service providers (ASP) took the stage with a storm. ASPs allowed businesses to reduce costs and gain expertise in a business application by hosting and managing these applications. SaaS became its extended model and surpassed the areas ASPs covered.

For instance, most SaaS companies can develop and manage their own software today. While ASPs depended on installing of a software on an individual's computer, SaaS does not require any installation at all. In fact, only a browser with a connection is sufficient to run the software. SaaS can also provide value for multiple businesses and users while managing their data accordingly.

Examples of SaaS

SaaS is used by companies and users worldwide on a day-to-day basis. If you have ever used Slack or Gmail, you have definitely worked with a SaaS product.

SaaS products are ready-to-use services hosted in the cloud service, which is different from traditional software where you have to install the application on your computer. In addition, SaaS provides subscription-based access to software that is easy to cancel or renew, whereas traditional software requires purchase. Having a one-time purchase under your belt might seem like a good idea. However, software evolves over time, and that one-time purchase would be useless because of the innovations and developments in the industry.

Because SaaS is hosted in the cloud and easily accessed via the internet, you do not need to worry about updating your software to get the latest features and tools. On the other hand, with traditional software, you need to keep track of updates and maintenance.

What Is Cloud-Based?

Cloud computing services and cloud solutions use and deliver hardware or software via the internet. Users can access their data without physically storing them on their hardware. Although cloud-based data is easier to store and use online, you still need a network connection in order to retrieve data.

Cloud-based applications and services are used widely as they include SaaS, IaaS, and PaaS as well. Pay-as-you-go systems, emails, Google Docs, and other similar services are examples of cloud computing. 

Private cloud, public cloud, hybrid cloud and community cloud are different types of cloud deployment. Private clouds can be operated by an organization, a third party, or both. Hybrid clouds use both public and private clouds while community cloud is managed by community members, a third party, or a mixture of both. Public clouds, on the other hand, are owned by third-party providers over the internet.

Examples of Cloud-Based

Similar to the differences between SaaS and traditional software, the differences between cloud computing and traditional software lie in their delivery method. While cloud-based applications rely on the internet and remote servers to store and manage data, traditional software requires local servers and physical hard drives.

Data accessibility is also a point of discussion. While you can access your data anywhere at anytime on cloud-based systems, traditional software gives access only to the system in which data is stored.

In addition, cloud computing is more cost-effective in terms of operation and maintenance because it reduces the cost by using multiple third-parties. On the other hand, traditional software comes with the burden of purchasing expensive equipment to maintain the server.

SaaS vs. Cloud-Based - Listing the Differences

1- Accessibility

The main difference between SaaS and cloud computing is accessibility. Because SaaS-based applications work on a subscription basis, they are only available as long as you pay for them. While this reduces maintenance costs, it does not give you full access once you unsubscribe. On the other hand, cloud computing infrastructure allows you to retain the entire application and carry it to another virtual server.

In that sense, a cloud environment offers additional services like removing data and uploading it to your local servers while SaaS, as a subset of cloud computing, has less room to store and manage the software.

2- Maintenance 

A SaaS based application is already developed and ready to use over the internet. Through a subscription model, you can access software without any responsibility to maintain the service. One of the key differences between cloud platforms and software as a service is the minimum software maintenance that SaaS brings into your business model.

Even though cloud service providers give more creative freedom to customize and manage software applications, SaaS eliminates the need to update and upgrade the business software you already have. There is minimal management effort if you use SaaS. However, as we mentioned, compared to the delivery of computing services of cloud-based platforms, SaaS lack complete control when it comes to optimizing and customizing the application

3- Usability

Another difference between cloud computing and software as a service is their areas of use. SaaS software utilizes the existing resources, whereas cloud application services specifically build the infrastructure needed for the basis of software development which shortens the period of time needed for adoption.

In addition, cloud servers are designed to help customers (B2C) and other businesses (B2B) to build their businesses and user-oriented applications. While some SaaS applications fulfill the same role, most SaaS software providers do not lean into the development of cloud servers and frameworks.

Advantages of SaaS and Cloud-Based Services

Despite having some key differences, both SaaS and cloud-based services have advantages that stand out and surpass the traditional software system.

Here are the most prominent benefits of SaaS and cloud software:

1- Cost-efficiency

The core benefit SaaS and cloud computing share is their cost-efficiency. Storing data on cloud servers instead of using physical hardware allows you to manage data easier, faster, and cheaper. Unlike traditional software that requires upfront costs for physical servers and teams, SaaS and cloud-based applications cut the amount of money spent on purchasing technical equipment and hiring a large IT team.

As a type of cloud computing, SaaS eliminates upfront costs like purchasing hardware thanks to cloud providers taking care of maintenance and troubleshooting. You can access the data you need any time and anywhere which lowers the cost of deployment.

In addition, SaaS applications guarantee to run the latest version of software with no necessary software upgrades or updates, so you do not need to worry about maintaining the infrastructure or installations.

2- Security

Using a combination of public and private clouds adds to the security measures. In addition, cloud computing and SaaS come with built-in security measurements like encryptions and layered authentications. Therefore, these models provide better security than any other traditional software.

3- Time-efficiency

SaaS works based on user subscription with a ready-to-use design and cloud-based software algorithms aim to improve the user experience by collecting data. SaaS and cloud computing software applications can be synchronized in real time, reducing the lengthy installation, upgrade and data sharing processes. 

In addition, the fact that SaaS and cloud-based software is available through any virtual network allows employees and business owners to connect with company data and stay in the loop without spending hours maintaining the system manually.

Final Words

All in all, cloud computing and software as a service offer flexible benefits that decrease the time and cost spent to keep the whole application working. On the other hand, SaaS and cloud applications work in different areas, which require different setups and resources.

SaaS and cloud-based software also differ in their mode of accessibility. While you can easily store and move the data you collected with the cloud model, SaaS does not give full access once you are done with your subscription. There is less maintenance involved with SaaS. However, you also have less control over customizing the application.