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What's the difference between SaaS and Cloud Computing?

Server Virtualization
Corinne Boyd

By Corinne Boyd Digital Marketing Manager, Updated 17 May 2017

Software as a Service (SaaS) and Cloud Computing are two terms that are often used interchangeably. Though they are related, with lots of similarities and shared benefits between the two, there are significant differences. This article will explain the difference between SaaS and Cloud Computing, and the benefits of both.

What’s the Difference Between SaaS and Cloud Computing?

Put simply, the distinction is that SaaS can refer to any software application that you run that isn’t located on your premises. It is a full-blown application as opposed to being a component of something else. Instead of running the application on servers and data storage in your data centre like an on-premise solution, it runs in the vendor’s data centre.

SaaS applications are licenced differently to on-premise applications. Instead of buying a licence to use an application, and then paying ongoing costs to maintain and update it, the software is ‘rented’ over a period of time, usually on a monthly or annual basis. The vendor runs the application on their infrastructure, avoiding the need to buy and install infrastructure and then paying for software maintenance. The cost of the SaaS application covers the cost of both the software itself and its associated ongoing costs.

When running a SaaS application, you tend to log into your vendor’s website to gain access. SaaS applications run ‘in the Cloud’, but SaaS is not the same as the Cloud itself.

Cloud Computing provides computing resources that aren’t bound to any specific location. It consists of infrastructure and services that you can rent such as virtual computers/servers, data storage capacity, communications and messaging capacity, network capacity and development environments. Unlike SaaS, which comprises fully formed applications for the general public to use, Cloud Computing refers to rented infrastructure and services, most commonly used by software developers, application vendors, savvy computer users and corporate IT departments. If you don’t work directly with your organisation’s servers, then you probably won’t work directly with Cloud Computing. However, it may be the infrastructure that you run applications or store data on, or SaaS applications that you use might have been built with Cloud services.

SaaS, perhaps surprisingly, originated in the 1960s, when it was called a ‘time-sharing system’. The centralised hosting of business applications was achieved by connecting several ‘dumb’ terminals consisting of keyboards and monitors without CPUs to a mainframe or mini-computer hosting applications and data. As the cost of desktop computers dropped over the following few decades, workers had their own PCs that hosted applications locally, whilst critical data was still hosted on the central server. However, bandwidth costs decreased, which allowed SaaS to be a cost-effective solution once again, and its popularity resumed.

SaaS could be said to have resulted in the development of Cloud Computing, which is now the larger platform on which SaaS is situated. Whilst SaaS is just software delivered to an end user from a Cloud environment, Cloud Computing can also offer services other than SaaS.

With SaaS, all of the data is stored by your service provider. Unless there is a specific agreement not too, your service provider has the right to do whatever they wish with your data. However, Cloud Computing offers more control over your data. Though the servers aren’t local, you still manage the software and data, and can make backups. You’re able to move data out of the Cloud into your own storage as you wish. It’s likely that high value applications will transition to Cloud software because customers tend to want control, whilst SaaS will keep dealing with free or low-cost applications or services.

What are the benefits of Cloud Services?

It’s understandable that SaaS and Cloud Computing are frequently confused. Both are delivered over the internet, and bother offer users with similar benefits. By not residing on the user’s computer or device, or the company’s server, SaaS and Cloud Computing remove the need for complex installations and continuous maintenance. You don’t have to worry about updating your software or making sure that you have the latest patches for your applications, as the vendor is responsible for the system’s maintenance. This frees up your business’s workload by offering an alternative to maintaining and updating software for each one of your employees. This allows your team to focus their attention on other matters, which is ideal if your IT team also engage in performing research and development or critical support functions.

SaaS and Cloud Computing are also both provided on a subscription basis. Transitioning costs to a recurring operating expense allows for the budgets of organisations to be made more effective and predictable. It’s also easy to cancel the subscription at any time if the costs need to be stopped.

SaaS and Cloud Computing can be accessed anywhere instantly as long as there is a connection to the internet. This is convenient if members of your team have to work remotely, such as senior management who frequently need to attend business meetings away from your office.

Cloud services can deliver high scalability to meet your business needs. If a user decides they need more, or fewer, services, storage or features on demand, then they can access these without having to install new hardware. You only pay for what you use, so when starting up, costs are substantially lower than on-premise solutions, which are associated with high upfront costs. Cloud services also allow for more flexibility to integrate with existing software interfaces. For example, a business can write its own software tools and use a SaaS provider’s APIs to integrate those tools with their SaaS application.

Cloud services are fast becoming the norm for any modern business. However, there are so many solutions available that spending time finding the right system for you can cost your business a significant amount of time and money, and runs the risk of you implementing a solution that isn’t ideal.

Software Advisory Service can help you find the right cloud service for your needs. We offer expert, non-chargeable buying advice to help find the right system for you, and can provide a shortlist of potential vendors depending on your specific requirements. Complete the form here so that we can find the solution you need today!

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