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SaaS, PaaS, IaaS: what do they mean for business people?

Cumuus cloud

Steve is the MD of a small (25 people) recruitment business. Most of the time, they operate from a single office, but they often want to work from home, or at a client’s office. They get all their email and document management from a single server running Microsoft’s Small Business Server product and they have a mix of PCs, laptops, smartphones and tablets running Microsoft Office and a variety of mobile apps. Getting remote access to email is easy, but access to documents is not so easy and causes their IT support person a bit of a headache sometimes.

Steve’s server is reaching its capacity and needs either upgrading or replacing. He’s heard of Cloud Computing, but doesn’t really understand what the term means, or whether he should be interested.

This post is for all the Steve’s out there.


Cloud Computing, or The Cloud as it is often referred to, is a fairly new approach to delivering computing services. In this post I hope to burn off some of the fog that surrounds the Cloud (sorry about the mixed metaphor) and highlight why every business, small or large, should be looking closely at moving some or all of their computing services into the Cloud. It won’t be for everybody, but for some it’s the ideal move.

I’ll start off by defining some of the terms that get bandied about so that they make more sense. A lot of gobbledygook is spoken about Cloud Computing and much of it only serves to obscure what is a fairly simple concept. Hopefully, by the end of this post you’ll be able to see this.

I’ll then move on to highlight the opportunities that businesses can gain by exploiting Cloud Computing. I’ll also discuss some of the potential pitfalls that could ensnare the unwary.

By the end of this post, I hope that you will have a better understanding of what Cloud Computing is and how your business might benefit from taking a closer look.

Future posts will go into greater detail on this topic. To be sure you don’t miss them, you can subscribe to receive posts by email when they are published.


Let’s start by looking at some of the terms that are used to describe the various pieces that make up Cloud Computing.

Cloud Computing

The term Cloud Computing itself is an umbrella term for all the hosted services that are delivered over the Internet. By hosted, I mean that the software that delivers the service (email, payroll, word processing, etc) is running on somebody else’s computer rather than your own. The term “Cloud” is commonly thought to refer to the use of a cloud as the symbol for the Internet on computer network diagrams.

Infrastructure as a Service (IaaS)

Infrastructure as a Service is a provision model in which an organization outsources the equipment used to support operations, including storage, hardware, servers and networking components. The service provider owns the equipment and is responsible for housing, running and maintaining it. The client typically pays on a per-use basis. Techtarget

IaaS is the most basic form of service that can be provided. Rather than a business having its own servers, and the attendant costs, IaaS allows a business to get rid of its locally installed servers and instead use so-called “Virtual Machines” in somebody else’s computer room. The end result is the same: the users get the service they require but the business doesn’t need the space, power or hardware investment. Instead, a larger computer, owned and supported by somebody else, is simulating your computer, along with many others.

Software as a Service (SaaS)

Software as a Service (SaaS) is a software distribution model in which applications are hosted by a vendor or service provider and made available to customers over a network, typically the Internet. Techtarget

Broadly speaking, this means using a Cloud Service Provider‘s infrastructure and software to receive a service rather than delivering it yourself on your own hardware. A very broad range of services are available: including email, document management, inventory control, financial accounts. In fact, just about everything you can deliver locally using standard packaged software can also be delivered using SaaS.

SaaS providers fall into two groups: those who deliver straight analogues of existing desktop applications, and those who have developed new ways of delivering the same services. Examples of the former are Microsoft with it’s Office 365 SaaS offering, and Intuit with its quickbooks Online service. Examples of the latter are Google with Google Apps for Business, and Freshbooks with its online financial accounting service.

Platform as a Service (PaaS)

Platform as a Service (PaaS) is a way to rent hardware, operating systems, storage and network capacity over the Internet. The service delivery model allows the customer to rent virtualized servers and associated services for running existing applications or developing and testing new ones. Techtarget

PaaS builds on IaaS by providing a pre-defined operating system, storage and development tools to allow a customer to develop new applications to run on the provider’s infrastructure. Where you need to run a custom piece of software, you can choose to redevelop it to run on a provider’s PaaS infrastructure.

A word of caution however: there are currently no standards for PaaS tools and code, so you run the risk of being locked into a single vendor.

What can be outsourced to the cloud?

In principle at least, just about all IT services can be outsourced to the Cloud. Certainly all the personal and group productivity tools (word processing, spreadsheets, presentations, document management and sharing, email and calendaring) are available as SaaS offerings. Also, many line of business services like financial accounts, payroll, CRM and ERP are available.

Your own custom applications can be delivered on an IaaS platform, or re-developed to take advantage of a provider’s PaaS platform.

You may recall when telephone companies delivered a service known as CENTREX. With this, the company PBX was provided as a virtualised service by the Public Telecomm provider. This was a form of Cloud Computing. CENTREX style services are still available, using VOIP, from Telecomm Service Providers.

The usual exclusion from virtualised services are applications that require tight coupling with external equipment: production control and instrumentation are the prime examples. Just about everything else can be hosted.

What’s all the fuss about?

The world of work is changing

The Internet is now beginning to have a profound effect on the way business is transacted. Everything is happening faster; the workforce is becoming more mobile; and product life cycles are becoming shorter.

This is having an impact on IT. Technology refresh cycles are having to become shorter as an increasing proportion of work is being computerised and applications are becoming more capable and complex. This is resulting in a need for more computing resources: CPU power, memory and data storage.

Also, the number of computing devices in use is rising dramatically. It used to be just PCs and servers. Now, IT departments need to deal with laptops, tablets and smartphones. The result is increased complexity and support costs.

Despite all this, the pressure for businesses to evolve is unrelenting. Failure to respond to these pressures risks a business becoming less competitive and losing market share. And all at a time when budgets are being cut and capital investment is a no-no.

There are barriers to change that The Cloud can overcome

  • The cost of change

For organisations that buy their own servers and software, the cost of change can be high. There may also be space, power and cooling constraints that limit the amount of change that can be accommodated.

  • The depreciated value of assets

Where servers and software are purchased, they will probably be classified as fixed assets and depreciated according to pre-defined rules. Where the depreciation period is greater than the useful lifetime of the asset, an organisation can be left with a rump of useless assets on their balance sheet.

How does Cloud Computing change this?

It’s a fundamentally different way of delivering business services

A different cost model

John Paul Getty had the dictum,

If it appreciates, buy it. If it depreciates, lease it.

I can look back to a time when we all used to rent our television sets. This was done because the capital cost of a new TV was high and the technology was evolving rapidly. Businesses used to do the same with computer hardware. For some time now though, businesses have tended to purchase PCs and servers, and the software that runs on them. SaaS offers the opportunity to move back to a leasing-style model where services are rented, and the software and server costs are avoided altogether.

Cloud Computing charges are usually levied on a per user per month basis. There’s no capital hit and no need to pay for software maintenance or upgrades. It’s a pure pay as you go model.

There will be startup charges as you migrate your existing information from local storage to cloud storage, but after that there’s only the monthly charge. This allows expenditure to be moved from capital budgets to revenue budgets with a resultant benefit to the Balance Sheet.

IaaS offers the potential to go further

  • Virtualised Desktops

Desktop Virtualisation moves IaaS out of the computer room and on to the desktop. Rather than having a complex, and expensive, PC on their desk, the user has a simple computer running Thin Client software that connects over the network to a Virtual PC running in the Cloud Service Provider’s data centre. This is not a new concept: services like Citrix have been around for years. The difference is that the complexity surrounding the delivery of virtualised desktops has been removed from the user’s domain.

Thin client computers are cheaper to buy or lease; need less space and power; and allow for longer technology refresh cycles (removing the problem of useless assets on the balance sheet). They also result in lower support costs as there is less to go wrong and it is viable to hold a local spare that can be deployed, so that the problem client can be repaired off-line or sent back to the supplier.

  • Potential to use other devices as thin clients

An added benefit of using a simple thin client to access a virtual desktop is that access can be from anywhere. Thin client software can run on just about anything: a client’s computer, from home, from an Internet cafe.

  • Security is increased

Using a virtual desktop is more secure as well. Company data never leaves the security perimeter; only screen images.

  • Pay per minute for occasionally used services

Many organisations have computer services that are only used occasionally. Payroll is a good example. Rather than having the computer that runs the payroll switched on all the time, IaaS enables the payroll application to be installed on a virtual machine that is only switched on once a month.

Cloud Computing is an enabler for different ways of working

  • IT is now a utility service that can be scaled up and down as demand changes.

There’s no need to predict in advance what the computing needs are going to be for the next n years.

  • Users can access from anywhere

For SaaS, all they need is a device that supports a browser for them to be productive.

  • Mobile device support is improved

Because access is often through a browser, some functionality can be delivered to even a limited mobile device. Some services also deliver specific functionality to some mobile devices

  • More flexible workforce

All of the above allows a business to be a lot more flexible with their workforce. No longer does the employee engagement process need to imply the purchase of a PC, laptop or whatever and the associated software licenses. All they need is a browser enabled device. IT costs are directly proportional to the size of the workforce.

Business resilience is improved

Cloud computing can have a significant impact on the resilience of a business.

  • Somebody else is being paid to protect your data

No longer does the business need to set up and keep tabs on a backup regime. The service provider does it automatically.

  • Service availability approaches 100%

All Cloud Services are delivered from high availability computing centres with redundant power and cooling; multiple Internet access circuits; and high levels of physical security. The effect is to improve service availability to levels beyond what a typical business can deliver using its own resources. You won’t get 100%, but you will get a higher level of service than if you did it yourself.

  • No dependence on availability of your premises or staff

By using services provided from the provider’s facilities, there is no dependence on your own computing facilities or your own support staff. No longer are your business’s IT services at risk from localised threats. Yes, they are still at risk from threats to the service provider’s facilities, but many are duplicated (at least).

Potentially, no need to retrain users

There’s not even necessarily a need to retrain your users. By moving to a SaaS that uses the same applications, your users need not be aware that their services are being delivered from outside of your organisation.

Potential downsides of moving to The Cloud

Unfortunately, it’s not all rosy; at least not for everybody. There are implications that can be problematic.

Increased dependence on Internet access

The most obvious one is that your business is now dependent on the availability and performance of its Internet connection(s).
This may be a problem for rural areas, where speeds can be limited and availability is variable.

Also, your Internet access now needs to be resilient. No longer is acceptable to have just a single Internet access line with no backup. Ideally, you need at least two, diversely routed, access lines to different ISPs. At the very least, you need to have something like ISDN or 3G backup. Whether the extra costs outweigh the benefits will influence your decision to move.

Vendor lock in

There is the chance that you can become locked in to a specific supplier; particularly with PaaS but also with any SaaS that requires you to retrain users or convert data.


The nature of most Cloud Service Providers (CSP) is that their services are provided internationally. If your business is subject to any form of compliance regime; you need to check where it is acceptable to store the data.
If applicable, you need to ensure that the CSP has data centres located within the EU.

You need to be sure the vendor will stick around

Moving to the Cloud should not be done on a whim. It needs to be a strategic decision. You need to be sure that the CSP, and the SaaS, PaaS and IaaS services will be around for as long as you are likely to need them. If they disappear, so do your IT services.

Integration problems between systems

In some cases, businesses have tightly integrated their business processes into their existing IT systems; taking advantage of integration points to deliver custom services. You need to be sure that these integration points exist in the Cloud Services.


  • The Cloud is here to stay
  • The Cloud provides opportunities for significant changes to the way businesses operate
  • Expenditure can be transferred from capital to revenue budgets
  • IT services can be delivered more flexibly and cheaper without always requiring user retraining

Next Actions

I’ll be expanding on some of these topics, so watch out for further posts. To be sure you don’t miss anything, you can subscribe to receive future postings.

If you are interested in moving your IT services to the cloud, contact me to discuss your needs and see how I can help.

Lastly, if anything is not clear in the above, or you have a different view, please let me know via the comments. I look forward to hearing from you.

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