In the past few years, the cloud computing model has turned the traditional in-house IT provision on its head. Software as a Service (SaaS) has become a buzz word, and everyone is talking about how businesses are "moving to the cloud". But what does it actually mean?

Aren't cloud and SaaS the same thing?

Although they're often used interchangeably, Software as a Service (SaaS) and the cloud are two distinct things, even if marketing sometimes blurs the line between them.

To start, let's take a look at what we really mean when we talk about SaaS.

Access Software, Don't Build It

The SaaS model is often compared to a bank where each customer makes use of the same financial systems, but personal account details are kept private. With SaaS, each user pays a license fee for web access to the software programs on a vendor's server. Meanwhile, their data is kept separate and secure in a private account.

True SaaS applications are always multi-tenant, meaning a single version of the program runs on the vendor's server, and all users access it via the web. It's not SaaS if each user hosts a separate copy of the application on their own in house server.

Why do businesses like SaaS?

What's great about SaaS is that it helps businesses access the software they need on-demand. Gone are the days of purchasing and installing individual copies of the software and having your IT team manage patches and upgrades. Today you just login and don't worry about the rest.

Here's what you get with SaaS:

  • Lower costs—Because the software is run and maintained by the vendor, businesses don't have to invest in servers or maintenance costs.
  • More innovation and faster updates
    Because vendors only have one live version of the program at any one time, they don't need to spend time supporting legacy programs. Instead, they can focus their efforts on innovation. Vendors are also responsible for pushing updates and patches (often with customer receiving multiple upgrades throughout the year), so users get instant access to the latest improvements and functionality.
  • Scalability and customization
    Users can grow their use of the application according to need. The vendor is set up to allow multiple users, with storage space and computing capacity to meet growing demand. They're usually pretty customizable too, so you can make changes to suit your needs.
  • Easier access
    Because SaaS applications are accessed via the web, employees can work at any time from any device and location.
  • Better security
    This is a concern for users, and SaaS vendors know it. Researching and developing better data security is a priority for SaaS providers because their business success relies on it, often more than for other businesses. Vendors also have dedicated teams with processes and procedures in place to ensure data security and prevent malicious attacks.

Get Your Head in the Cloud

As we've seen, SaaS is a way for vendors to deliver multi-tenant applications via the web. The cloud, on the other hand, is all about the infrastructure that allows you to access those SaaS programs. You can think of the cloud as something similar to the electricity grid, where lots of households pull down power from the same place without ever visiting or having any ownership of the individual generators or power lines.

How does it work?

Essentially, computing in the cloud means that you pay to use the storage and data provided by another company.

Cloud computing providers, such as Amazon or Rackspace, own large numbers of servers in grids or clusters. They offer businesses access to the capacity and networking capability of these servers on a virtual basis. Users pay based on the amount of server space or networking capacity they need to host websites, software programs and applications, or for massive amounts of storage.

Why do businesses like the cloud?

Who wouldn't want more flexibility, customization and security at a lower cost? What's especially exciting about cloud computing is that it can free up resources, such as IT personnel, to focus on growing their business, rather than on maintenance and management. No more worrying about maintaining physical hardware, or the security of your information, or whether you have enough IT infrastructure to support growth. It's all right there whenever you need it.

These are some of the big wins with cloud computing:

  • Lower costs—Businesses don't need to invest in their own hardware or pay the bills for maintaining and upgrading servers.
  • Easier Scalability—Start small and grow server and network capacity when you need it. It's a much less risky approach than trying to estimate how much physical hardware your growing company might need and having to front the money for those investments.
  • Security—You don't need to have your own team to ensure compliance, that's all covered by a team of experts that focus exclusively on this.
  • More reliable disaster recovery—When data is in the cloud, and can be accessed from any machine or device, it's much simpler to access backups and get people working again.

Two Steps in the Same Journey

So, while the cloud and SaaS are not the same thing, they are part of the same internet- based trends that are revolutionizing business computing. Both are exciting developments that allow businesses to break away from traditional in-house computing provision and opt for a more customizable, flexible, on-demand environment.

Learn more about the benefits of cloud computing.