To understand the difference between SaaS (Software as a Service) and PaaS (Platform as a Service), envision a pizzeria. According to the SaaS model, if you want a pizza, you pay a recurring fee and get a predetermined amount of pizzas from a set menu. Your pizza, whether it be cheese, pepperoni, or veggie, is then served to you whenever you want it. With the PaaS model, you’re given the cookbook, the ingredients, and the oven, and ultimately you have the freedom to cook and serve the pizza however you want. You bring your team of chefs and your own special ingredients, like pineapple, pancetta, or pesto, and the oven is always on and maintained for you. From there, you can even monetize the pizza and resell it to someone else. Of course, the differences are much more complex than that, but the pizzeria metaphor is a good place to start.
The SaaS Model
SaaS is a software distribution model that offers a reliable, accessible, and cost-effective solution for companies. It allows companies to streamline their business models by cutting months to years of research and development out of the equation. It also doesn’t require highly specialized knowledge or any kind of installation—as long as you are equipped with an internet connection, the software is readily available for you to operate. Finally, SaaS is cost-effective: the recurring revenue model offers flexibility and ensures that you pay for what you get. These factors make SaaS an attractive option for “small-medium enterprises that wish to carry out their digital transformation while avoiding the download and installation of different software.”
SaaS has been popular for years—products like Google Docs, Dropbox, and Hotmail have made it extremely prevalent in everyday business. It’s not done growing either, and according to Gartner, the service-based cloud application industry will be worth $143.7 billion by 2022.
The PaaS Model
Like SaaS, PaaS is appealing for businesses because it cuts costs and time to market. Instead of providing select point solutions, PaaS supports businesses by supplying the data, tools, guidance, and privacy-focused development environment required for you to start building your custom solution immediately. Equipped with your own “special ingredients,” or your first-party data, you have more freedom to innovate and focus on what makes your company unique. Therefore, the PaaS model is great for companies that have deeper specialized needs. And the “enhanced features, functionality, and ability to customize will enhance overall business agility,” giving you the time and creative space to focus on developing and monetizing your core commercial initiatives.
There has been a recent shift toward PaaS because of this increased flexibility and opportunity for innovation. That’s why we created Spectus, a platform that provides location expertise and a variety of datasets that make it possible to innovate and develop specialized analytics. Learn more about Spectus’ capabilities here.