IaaS vs. PaaS: What's the Difference?

You’ve undoubtedly heard of IaaS and PaaS, but what do these terms refer to and how can they help your business? This guide breaks down the basics and helps you decide between them.

We may receive compensation from partners and advertisers whose products appear here. Compensation may impact where products are placed on our site, but editorial opinions, scores, and reviews are independent from, and never influenced by, any advertiser or partner.

Cloud computing has completely revolutionized the business world. The United States led the world in cloud computing spending in 2019 at $124.6 billion, and the average yearly cloud budget for an organization was $2.2 million in 2018, according to statistics. It's big business.

Two major cloud computing services are Infrastructure as a Service (IaaS) and Platform as a Service (PaaS). You've probably heard about both, but you may have never used one and wonder what they can do for you.

In this guide, we'll take a dive into what both terms mean, what kind of advantages they offer, and how to know which you should choose for your business.


What is IaaS?

Infrastructure as a Service (IaaS) refers to the services companies offer to businesses that allow them to conduct basic business activities. For example, an IaaS cloud company may offer network infrastructure so the client can operate computers and phone systems in the cloud, or offer cloud computing infrastructure so important documents and files can be accessed from anywhere.

These types of services are highly scalable and often automated. Companies that offer IaaS services allow businesses to purchase resources based on demand, which means these businesses don’t have to buy their own hardware or maintain these services, which can significantly reduce operating expenses.


What is PaaS?

Platform as a Service (PaaS), also known as application platform as a service (aPaaS), is when a company provides a platform under a software license that allows clients to develop and manage applications without having to build their own platform, which they normally would have to do if they wanted to build an app or a program. It’s a cloud computing service mainly used for software applications.

The PaaS provider manages all platform components, but clients keep control of what they develop on the platform. This differentiates it from a Software as a Service (SaaS) platform, which provides everything — tools, features, and all — to the end-user. A SaaS company doesn’t allow applications development.


IaaS vs. PaaS: What's the difference?

IaaS and PaaS cloud service models may seem similar at the surface level, but they have key differences in several areas and are meant for different types of clients.

1. Control

IaaS providers have control of the operating system infrastructure, and client managers can control the applications, data, runtime, middleware, and operating system. Products such as Amazon Web Services are a good example of this. In contrast, PaaS only allows the provider to control applications and data.

2. Flexibility

Users have more flexibility with a PaaS system, as the user can create custom features. The Google App Engine is a good example of this, where users are able to build custom apps through an API (application programming interface) delivered through the cloud. Also, developers don’t need to host the apps.

3. Ease of operations

Generally, PaaS is easier to navigate and offers greater speed to clients looking to offer software-based products and services. On the other hand, IaaS builds a framework for a cloud-based technological application and helps build content, software, or a website on the cloud, usually to sell a physical good.


4 benefits of using IaaS

IaaS has four primary user benefits, mostly centered around its efficiency and scalability.

1. Scalability

With IaaS, companies can get resources on demand. These IaaS systems are already set up to serve large numbers of users at a moment’s notice, and a client doesn’t experience inefficiencies when expanding capacity. There’s no wasted capacity, and a client can react to changing business situations with greater speed.

2. Greater cost savings

IaaS users save money because they pay based on usage, which is in turn based on demand. As a result, they pay for resources actually used, and don’t waste money on unused capacity. Clients also save time because they don’t have to install physical hardware, thus incurring lower up-front investment. Overall, they experience a greater return on investment (ROI) compared to other setups.

3. Enhanced time efficiency

Because service remains consistent and resources can be scaled up or down based on demand, organizations save time because they don’t need to constantly make time-consuming adjustments to operations. Products can be introduced to the market faster, and they can respond quicker to changing market conditions. This gives business leaders more time to focus on expanding the business.

4. Remote work ability

Team members can access projects and information from anywhere with an IaaS, allowing a company to implement remote work. Employees also have more ability to respond to opportunities in the market, and they can access clients no matter where they are. A company that uses IaaS can therefore reduce office space — a big cost savings.


4 benefits of using PaaS

Despite the benefits, an IaaS is not always the right move. Here are four reasons to choose a PaaS cloud-based system instead.

1. Speed

With a PaaS, a company can quickly develop a cloud-based application. There’s less back-end infrastructure needed, and clients can instantly access the full software landscape. Pre-built applications and sample code provide further benefits to developers, who can make alterations quickly based on market response.

2. Reduced resource burden

PaaS eliminates the need to hire staff with platform development expertise. As a result, clients don’t need to outsource functions, and they can reduce overall overhead. The provider/vendor assumes the control and maintenance of the software, and the client only has to worry about the late-stage development work. This leads to greater profitability overall for the client.

3. Efficient development

PaaS speeds up the software development process because the client doesn’t reinvent the wheel. This results in fast prototyping and a simplified process that gets products to market quicker. PaaS providers typically give the client access to templates, tools, and code to further speed development. PaaS is ideal for companies that don’t deal in physical goods and operate with limited resources.

4. Range of platforms

PaaS providers help companies develop applications that not only work well, but work across a range of platforms. The client is able to make an interface that works for mobile, computers, and tablets. This allows the client to better engage with customers when they’re shopping for software, and helps them grab greater market share.


IaaS vs. PaaS: When should you use each?

So which is right for your company — IaaS or PaaS? The answer depends on how you function as a company and what you’re trying to accomplish.

When IaaS is the best choice

Here are three examples where IaaS is the best choice:

  • Selling a physical product: Companies like Amazon that sell physical products would benefit most from IaaS — although undoubtedly Amazon has their own in-house infrastructure. But if you operate similarly, IaaS will help you.
  • Lack the time and resources: Most small businesses and startups don’t have the time or resources to devote to building a complicated infrastructure, so reaching out to an IaaS is the best bet.
  • Want to purchase only what you use: If you’re concerned with spending efficiency, an IaaS ensures you only spend money on what you’re actually using, eliminating costly unused, excess capacity.

When PaaS is the best choice

Here are three examples where PaaS is the best choice:

  • Need flexibility: PaaS provides flexibility to companies who must make constant changes to their approach to marketing or software development.
  • Customization a must: Companies that develop highly customized software applications should use PaaS, as PaaS will provide them with the foundation to build new features and tools.
  • Reduce capital investment risk: PaaS cuts the overall cost burden and reduces the risk of investment.

Choose which one is right for you and forge a path forward

Before buying software, you must know what you need. Now that you understand the differences between IaaS and PaaS, you have a good idea of which one your business needs (if either). Armed with this knowledge, you should quickly take some next steps.

If you choose IaaS, investigate some IaaS companies and discuss your needs with a representative who can tell you what they can do for you. Interview a few of them to settle on one that appears to be the right fit — not all IaaS companies are the same or offer the same kind of services, so don’t just settle on the first one you talk to.

If you choose PaaS, it’s also wise to try out a few options and give your team a crack at trying to develop some software to see if they like the tools the PaaS provider offers. Once you settle on an option, draft a software implementation plan to get everyone in your company on board.

The Ultimate Guide to Building Virtual Teams

Knowing how to build a strong virtual team is more important today than ever -- and there are six critical things you must do to succeed. That's why we've created this ultra-timely 19-page report on what you should be doing now to set your virtual team up to win.

Enter your email below to access our (no-strings-attached) free report, "The Ultimate SMB Guide to Building High-Performing Virtual Teams."

The Motley Fool has a Disclosure Policy. The Author and/or The Motley Fool may have an interest in companies mentioned.