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SaaS vs Cloud. What's the Difference?


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Praise Iwuh

April 28, 2023

SaaS vs Cloud. What's the Difference?


SaaS and Cloud Computing are often used interchangeably, but do you know there are differences between these terms? For instance, all SaaS applications are cloud-based. However, not all cloud-based software are SaaS applications.

This article, therefore, aims to explain both terms, their features, and key points that can help you distinguish between SaaS and Cloud. In addition, understanding these terms will help to impact how you engage with the various types of technology you use daily.


  • What is SaaS?
  • What are the Features of SaaS?
  • What is Cloud Computing?
  • SaaS vs Cloud. What's the Difference?
  • Benefits of Cloud Computing and SaaS
  • Limitations of Cloud Computing and SaaS

What is SaaS?   

Software as a Service, or SaaS, is a program delivery model in which a third-party provider hosts software apps and makes them accessible to customers online. Customers in this approach can use a web browser or a specific mobile app to access the software applications, and they can pay for the saas based services via a subscription or usage-based pricing.

The main idea behind SaaS is that customers do not have to buy or manage their software or hardware due to its use of online computing services. Instead, the program is hosted, pre-configured, and delivered instantly to you.

Also, you are paying for a service, so the software you purchase is not yours to keep. It usually pertains to a subscription model, occasionally with a free tier (freemium), where you pay for the service monthly or annually.

 What are the Features of SaaS?

1. Multi-tenancy model

The Multi-tenancy model is an essential architecture model for SaaS-based software applications that make it possible to provide saas based services to numerous customers using one software deployment.

The model's name itself denotes what it is about. Each customer is called a "Tenant". Hence, multi-tenant implies multiple customers.

Each tenant can customise some parts of the application to their preference. However, these applications are often made so that each tenant's storage area is segregated by having a separate database. This leads to a different set of schemas inside a single database or the same database with discriminators.

2. High availability

High availability in SaaS means such applications or software must be globally accessible to people everywhere. This is because SaaS operates based on the multi-tenant feature, so it is expected to be available to numerous people.

As a result, the Software as a Service app should offer its users a high level of Service Level Agreement (SLA).

Also, applications need to be constantly accessible and must expose management and monitoring API to allow for continuous availability and health checks.

3. Security (Data and application)

Since web-hosted software offers SaaS-based services to numerous customers worldwide, there must be a provision to protect the service or data from attacks and unauthorised entry. Information for a particular tenant must be encrypted so other tenants cannot access it.

Hence, there is a need for the provision of a strong Key Management Framework or the capacity to interface with and incorporate external Key Management.

Regarding application security, all SaaS-based applications must be secured from OWASP/SAN-reported vulnerability.

SaaS applications should also have a solid identity and access management controls activated. The following additional features round up the security of the Software as a Service application: prevention of buffer overflow assaults, open integration points with CASB, strong execution of duty separation, enhanced authentication methods like passcode lockout, multiple-factor verification, recognising illegal sessions, and preventing multi-session usage.

4. Single Sign on

Single sign-on is a login feature that allows users to verify their identity and use a system. This requires a simple integration with several identity management systems.

This crucial component is typically enabled by Software-as-a-Service apps using SAML or OpenID impersonations. In addition, since SaaS-based apps are multi-tenant, each tenant would want to authenticate using their own identity & access management system.

Essentially, all SaaS applications must have a single page where users can enter their login data and access all of the Software as a Service apps provided to them.

5. Subscription-based billing

Pricing for SaaS apps does not include complicated license costs, upgrade costs, etc. Rather, most Software as a Service (SaaS) applications are subscription-based, allowing users to purchase them as required and cancel their subscriptions whenever they want.

SaaS applications typically use a seat-based charging model, in which the quantity bought determines the price.

It can have different pricing structures and invoicing cycles, such as monthly, quarterly, half-yearly, and annual fixed. Unfortunately, only a few present-day SaaS apps allow for usage-based billing.

What is Cloud Computing?  

Cloud / Utility or Cloud Computing is the transmission of —hardware, storage, databases, networking, and software—on demand to organisations and people through the internet.

It can otherwise be called on-demand computing.

The main idea behind utility computing is that clients can access and maintain their data without managing their physical devices or IT infrastructure because all data is stored in the cloud.

This cloud can be public (information and data sent over the internet that can be shared with a wide range of businesses and people), private (data and other information only available to users within your company), and hybrid cloud (a synthesis of the two. There are both public and private clouds in this setting).

On-demand-based computing allows businesses to access and manage resources and applications wherever there is an internet connection, much like how you can check your email inbox online through a web browser.

Additionally, since cloud-based services are frequently managed and maintained by a third-party service provider, IT teams can quickly adjust computing and storage capacity without incurring up-front infrastructure costs or setting up and keeping different systems and applications.

There are three main categories of cloud computing. They include IaaS, PaaS, and SaaS.

Software as a Service (SaaS)- a cloud-based product delivery simulation where the cloud provider creates and manages online application software, offers automated software updates and makes the software accessible to its clients over the internet on a subscription basis.  

Infrastructure as a Service (IaaS) - an online computing method that provides internet-based pay-as-you-go access to IT infrastructure like computing, storage, and network resources. For instance, you can use IaaS to request and set up the resources or data you need to operate your IT systems and applications.  

Platform as a Service (PaaS)- a full-featured cloud development and deployment environment with the resources you need to execute anything from essential cloud-based products to complex enterprise applications.


SaaS vs Cloud. What's the Difference?  

The significant difference between cloud computing and SaaS is that a user can access, control and customise any software program on a server that a third party remotely hosts through cloud computing. In contrast, you pay a subscription fee in SaaS computing to use an internet-based, pre-built cloud-based software program. The software is not necessary for you to maintain, and you do not have complete control over the management and customisation of the software.

Also, SaaS is a subset of cloud computing. This means that SaaS is just an aspect of cloud computing and does not cover all its features or functionalities. Other on-demand computing aspects include Infrastructure as a Service (IaaS) and Platform as a Service (PaaS).

Furthermore, in SaaS, the user has no control over the servers; they can be shut down at any moment without the user's permission, whereas in utility computing, the user has complete control because they are the owners of the servers and nothing can be done to them without their consent.

Check out this article on SaaS vs IaaS vs PaaS: How to Differentiate Between Them, where we explained these terms in detail.

Benefits of Cloud Computing and SaaS  

On-demand computing and SaaS offer similar benefits to their users. Here are some of the major benefits:

1. There is no need for extended setups

No drivers are required when everything is online, and changes can be made immediately. Furthermore, since the Cloud is frequently hosted rather than owned, it is the third party's responsibility to ensure everything is up to current and running smoothly so you can experience minimal downtime from their end.

2. Utility Computing and SaaS encourage better collaboration

This is because using cloud storage allows you to make data accessible whenever you need it, from anywhere. Provided they have an internet connection, people can view data from anywhere in the world using any device rather than being restricted to a particular place or device.

3. On-demand computing and SaaS reduce data loss by providing backup and recovery features that prevent loss in emergencies, such as hardware failure, malicious threats, or even fundamental human error.

Limitations of On-demand Computing and SaaS  

1. Cloud-based products lead to Vendor- lock-in

A company might become excessively dependent on the software provider. For instance, a company that stores its entire database in the old application may be reluctant to leave the software since switching to a new one is time- and money-consuming.

2. All cloud-based software requires the use of an internet connection

Conventional computing requires a hardwired link to access data from servers or storage devices. A poor connection could prevent you from using on-demand computing to obtain the required data or programs.

Even the best cloud-based services companies occasionally encounter outages brought on by natural disasters or performance issues brought on by unforeseen technical problems that might affect connectivity. As a result, cloud-based services may also be barred from you until the issue is fixed.


What does IaaS, PaaS, SaaS mean?

IaaS, PaaS, and SaaS are acronyms that stand for Infrastructure as a Service, Platform as a Service, and Software as a Service. To understand how they fit into the realm of cloud computing, consider reading the comprehensive article on SaaS vs IaaS vs PaaS: How to Differentiate Between Them.

What is a hybrid cloud in simple terms?

A hybrid cloud is a fusion of at least two computing environments that exchange information and run a standardised set of apps for a company or organisation.


You can see how closely related but distinct the words cloud computing and SaaS are. However, whether you refer to it as SaaS or on-demand computing, the industry is expanding exponentially. It has a stronghold over virtually all market sectors, each with a sizable user base.


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