IaaS vs PaaS vs SaaS: What’s the Difference?

If you are planning to take your business to the cloud (or are already halfway there), you might have probably come across the terms IaaS, PaaS, and SaaS. These are the three primary types of cloud computing service models.

They might sound technical at first (especially if you are new to the world of cloud computing), but understanding the difference between IaaS, PaaS, and SaaS is actually pretty simple, if explained in the right way.

That’s where we come in. With the help of our expert software consultants, we have written this blog to walk you through everything you need to know about these three service models, how they differ from each other and which model would be the perfect fit for your business.

What are cloud computing service models?

To put it simply, cloud computing means storing and accessing computing resources (like storage, software, and servers) over the internet, instead of owning or maintaining them yourself. This way, you don’t need a lot of resources or a large team to handle them. It is like renting an apartment instead of building and maintaining a house.

Fast-forward a few years later, with the popularity of cloud computing on the rise, the concept of “as-a-service” models was introduced, where cloud providers offer different layers of IT infrastructure and services on demand. Each of these models offers different levels of control, flexibility, and management responsibility.

The three most common models are:

• IaaS: Infrastructure as a Service

• PaaS: Platform as a Service

• SaaS: Software as a Service

Explore more on cloud computing in our blog: Types of Cloud Computing.

More about IaaS, PaaS, and SaaS

Before we discuss the differences between these three models, let’s first understand what they are.

1.    Infrastructure as a Service (IaaS)

IaaS gives you access to raw computing resources over the internet, like virtual machines (VMs), networking, and storage. You can think of it as renting only the hardware and basic setup that you need for your business, without having to buy any physical servers.

It offers maximum flexibility and control as you are responsible for installing and managing the operating systems, applications, runtime and everything else. So, if you are looking for a model that gives you complete control over your infrastructure and resources, then IaaS would be the best fit. It is especially ideal for startups and enterprises that have an expert and strong in-house IT team.

What is included in IaaS?

• Virtual machines or cloud-based computers (Linux/Windows)

• Cloud storage with automatic backup options

• Networking resources (like load balancers, firewalls)

• Basic security features

2.    Platform as a Service (PaaS)

Unlike IaaS, this model provides you with a ready-made platform to build, test, and deploy software applications, without having to worry about installing or managing the infrastructure underneath.

PaaS is the best option if you only want to focus on the coding aspect to build your custom app. The cloud provider will manage the rest.

What is included in PaaS?

• All IaaS components (like virtual machines, storage)

• Development frameworks and tools (like pre-built environments and libraries, e.g., Node.js, .NET)

• Databases and DevOps tools (like MySQL, MongoDB, CI/CD, etc.)

• Built-in scalability and security

3.    Software as a Service (SaaS)

SaaS is the most hands-off model out of the three. You simply have to subscribe to a software that is ready to use via a web browser; no installation, no updates and no maintenance required on your end.

Everything, from the infrastructure to the platform and app, is managed by the cloud provider. This model is perfect for those who need a quick, scalable solution for tasks like CRM, email, collaboration, or accounting.

What is included in SaaS?

• Fully managed applications (e.g., Google Workspace, Dropbox, or Zoom)

• Data hosting and backups

• Built-in support, automatic updates and bug fixes

IaaS vs. PaaS vs. SaaS

So, now that we know what each of these models is, let’s take a deeper dive into the key differences between IaaS, PaaS and Saas.

Curious how Heroku compares with other platforms like AWS? You can check out our blog on: Heroku vs AWS.

We have briefly discussed the key differences between the three models in the table above. Now, we will elaborate on each of them below.

Advantages and disadvantages of each model

While all three models offer cloud-based solutions, the right choice depends heavily on your business needs, technical capabilities, and long-term goals. Below, we have broken down the key benefits and limitations of each model.

IaaS

Advantages:

• Full control and flexibility: As we mentioned above, you have complete authority over your environment, including the OS, applications, runtime, and data, making it ideal for businesses with specific infrastructure needs.

• Scalable: You can scale your resources like computing power or storage up or down based on demand, which is great for growing businesses or those with fluctuating workloads.

• Pay-as-you-go model: You only pay for the resources you are actually using, which can be cost-effective if managed properly.

Disadvantages:

• Requires proficient technical know-how: Since you are managing most of the stack yourself, it is important to have a skilled DevOps or IT team.

• You manage OS updates, patches, and backups: This means that you will be responsible for keeping everything up to date and ensuring data security.

PaaS

Advantages:

• Speeds up development: Your development team can focus solely on coding and deploying applications.

• Reduces infrastructure headaches: The cloud provider will handle things like server provisioning, OS management, and load balancing on your behalf.

• Built-in tools, security, and scalability: Most PaaS offerings come with ready-to-use dev tools, CI/CD pipelines, built-in security protocols, and auto-scaling features to support your app as it grows.

Disadvantages:

• Limited backend control: You don’t have access to the full environment, which can be restrictive if you want to build a highly customised or complex application.

• Potential vendor lock-in: It might be problematic to switch providers due to platform-specific configurations and tools.

SaaS

Advantages:

• Quick to deploy: With everything pre-built and managed, SaaS apps can be up and running in minutes.

• No hardware or installation needed: You don’t have to worry about infrastructure, updates, or maintenance.

• Cost-effective for small teams: This model offers subscription-based pricing, which means that you can avoid large upfront costs and pay only for what you need.

Disadvantages:

• Minimal customisation: Since the software is pre-built, there is limited room to customise features or workflows to fit your exact business requirements or processes.

• Data privacy can be a concern: You rely on a third-party cloud provider to host and protect your data, which may not be ideal for businesses with strict compliance or security requirements.

Use cases for each cloud model

Here are a few ways in which the three models are used:

IaaS

• Hosting websites and web apps

• Data storage and disaster recovery

• High-performance computing (HPC)

• Custom virtual machines for enterprise IT

PaaS

• Developing cloud-native web or mobile apps

• API and microservices deployment

• Continuous Integration/Continuous Delivery (CI/CD) pipelines

SaaS

• CRM (e.g. Salesforce)

• Email (e.g. Gmail, Outlook)

• Project management (e.g. Asana, Trello)

• Cloud storage (e.g. Dropbox, OneDrive)

You can also check out how these models can be used to enhance user experience in our guide on Improving Customer Experience Through Digital Transformation.

How much does each of the three models cost?

Cloud services often promise lower upfront costs and improved efficiency. However, the pricing structures can vary widely depending on the model you choose. Here is a breakdown of the cost implications for IaaS vs. PaaS vs. SaaS.

Infrastructure as a Service

IaaS follows a usage-based pricing model, meaning you are charged based on how much computing power, storage, and bandwidth you consume. This includes costs like CPU hours, RAM allocation, GBs of data storage, and network traffic.

On the surface, IaaS can seem cost-effective, especially for businesses that want to avoid large capital expenditures on physical hardware. However, if not carefully monitored, the costs can quickly add up. For example, idle virtual machines (VMs), unnecessary storage, or peak-time user traffic can drive up your costs significantly.

Estimated Cost (per month):

Small-scale app: £300 – £1,000

Mid-size app: £2,000 – £4,000

Platform as a Service

PaaS also uses a pay-as-you-go model, but the costs are generally easier to estimate than with IaaS. You are typically charged based on metrics like app run time, number of API calls, active users, and database queries. Since the platform is managed by the provider, you don’t need to worry about costs related to infrastructure maintenance or OS updates.

Estimated cost (per month):

Small projects: £100 – £500

Mid-sized apps (using scalable backend services and databases): £1,000 – £2,000

Software as a Service

Most SaaS platforms operate on a monthly or yearly subscription basis, often tiered by the number of users or the level of access required. There is little to no overhead (beyond the subscription) cost, as maintenance, updates, and support are all included. While it may seem more expensive upfront compared to other models, the time saved and its easy-to-use features make the model worth choosing.

Estimated cost (per month):

Basic tools like CRMs, project management, or collaboration software: £5 – £20 / user

Larger teams or enterprise versions: £1,000 – £5,000

Expert tip: If you are comparing these models, don’t just look at the price tags. Consider the Total Cost of Ownership (TCO), which includes direct expenses, costs of maintenance, support, downtime, scalability, and the internal resources required to manage each model. An option you thought was cheaper might become costlier in the long run if it demands more hands-on management or leads to inefficient scaling.

Scalability and flexibility

Startups or SMEs often opt to smart small, as they have limited resources and time. However, as the businesses grow, the model will also need to be scaled to cater to a wider user base. The good news is that all three models offer scalability – but differently.

If you are planning a large-scale digital transformation, don’t miss our blog on Digital Transformation Challenges.

Security and compliance considerations

Security and compliance are an integral part of cloud computing, especially if your business deals with sensitive customer data (like in the healthcare or finance industry). Data breaches, misconfigurations, unauthorised access, and loss of control over customer data are some general security concerns that you will have to address before moving your application to the cloud.

In IaaS, you have the most control here, but also the most responsibility. You will need a capable in-house security team to configure and manage firewalls, access controls, encryption, and updates.

PaaS offers an option of shared security between you and the provider. The latter secures everything related to the platform and infrastructure, while you are still responsible for securing your code, user data, and app configuration.

Choosing the SaaS model means that the cloud provider will handle most of the security for you, including infrastructure, platform, and app-level protections. However, you are still responsible for data privacy, managing user access, and ensuring regulatory compliance based on the industry your company operates in.

Across all three models, you need to ensure that your cloud usage aligns with global standards like:

• GDPR (especially for UK/EU businesses)

• HIPAA (for healthcare apps)

• SOC2 (for data-sensitive apps)

Also read: Legacy Systems, which delves deeper into what these software are and how security plays a role when modernising them.

A few popular examples

We have talked a great deal about IaaS, PaaS and SaaS. Now, let’s take a look at some real-world examples of companies that offer each cloud service model:

Which model is right for your business?

• Do you have in-house IT resources to manage infrastructure? Go for IaaS

• Are you building a custom app but want to skip hardware headaches? Choose PaaS

• Need software that works out-of-the-box with minimal setup? Pick SaaS

There are a few other factors that you would also need to consider when choosing the right model, like:

• Your industry’s security and compliance requirements

• Future scalability goals

• Your team’s technical capabilities

Final thoughts

To sum it up, IaaS, PaaS, and SaaS each offer unique benefits, but choosing the right model isn’t just a tech decision; it is a strategic one that affects your agility, cost, and innovation potential. So, don’t just pick what is popular, pick what aligns with your goals.

Need help choosing or implementing the right cloud strategy?

FAQs

Can I use more than one model at once?

Yes, many businesses use a hybrid approach. For example, you might use IaaS for hosting your core app, PaaS for developing microservices, and SaaS for managing HR or CRM. This two-or-three-in-one strategy allows you to optimise each part of your operations using the best-fit cloud model in the most cost-effective and efficient way possible.

Can I move from SaaS to PaaS or IaaS later?

It depends on your product. Moving from SaaS to PaaS or IaaS usually means rebuilding parts of your app from scratch since SaaS tools aren’t exactly built for a transition. If flexibility and future customisation are your priorities, you need to consider this before locking into using the SaaS model.

What role do APIs play in these cloud service models?

APIs are an important part of all three models. In SaaS, they allow integration with other tools (e.g., connecting a CRM with email). In PaaS, APIs support service planning and app development. With IaaS, APIs help automate infrastructure provisioning and scaling.

What are other types of cloud service models?

Besides the three most popular models that we discussed in the blog, here are four other models:

• BaaS (Backend as a Service): Focuses on ready-to-use backend services like user authentication, databases, and cloud functions, which are great for mobile or web apps.

• FaaS (Function as a Service): Also called serverless computing, it lets you run individual functions in response to events, without managing servers.

• DaaS (Desktop as a Service): Provides cloud-hosted virtual desktops for remote work environments.

• DBaaS (Database as a Service): Offers managed database solutions, saving you from handling updates, backups, and scaling.