Saas, IaaS, and other Acronyms: What kind of tech are you actually paying for?

In the world of business technologies, it's often difficult to understand exactly what an organization is paying for. Sure, it's easy enough to grasp the concepts involved with buying a piece of hardware, and most business owners are at least somewhat familiar with software licenses, but when it comes to other more nebulous technology offerings like website and email hosting and database services, it's easy to get confused as to what a business owner or IT department is actually paying for.

In decades past, it was quite commonplace for organizations to have all of their technology located inside their office(s) or branch locations. It used to be quite common, even for smaller businesses, to have several servers lcoated on-premises. Web servers for a businesses' public-facing website, email/exchange servers for sending and receiving emails, database servers for managing customer data, and file servers for storing files and documents all used live inside an organization's building, with all of that hardware being owned and maintained by that organizations IT staff (or sometimes, outside contractors/vendors).

These days, thanks to the advent and widespread availability of high bandwidth internet connections, it's far more common for an organization to use cloud services. Cloud services, are ranges of services which are hosted on some form of third-party infrastructure. For instance, rather than a business relying primarily on a file server which resides inside the businesses' network closet, many businesses opt for a cloud storage service such as Microsoft's OneDrive, Amazon's S3, or Google's Google Drive. These cloud services offer the advantages of not requiring the organization to pay an up-front cost to buy any hardware, paying the electricity cost associated with keeping the machine running, and less worry about the device (and the data on it) being stolen or damaged. These benefits come at the cost of a recurring fee, of course.

Now, nearly all of the IT services a business needs can be offered through some form of a cloud service hosted by any number of cloud service providers. The confusing part for many business owners is knowing exactly what they're paying for. For example, if a business gets rid of their email server and replaces it with a Microsoft 365 subscription, they're obviously not responsible for maintaining the hardware anymore, but what exactly is that business responsible for? What are the obligations of the provider and what are the responsibility of the business owner?

Cloud services can generally be classified into serveral different models.

Software-as-a-Service (SaaS): SaaS services are services in which the vendor provides license to use a piece of software, with the software vendor responsible for everything associated with making that software useable to the customer (aside from the hardware on which the user will use it, of course). The license to use the software is usually sold via a monthly/annual fee. Popular pieces of SaaS software include Microsoft's 365 Office Suite, Google Workspaces (formerly G-Suite), and Salesforce CRM. Under the SaaS model the business owner doesn't need to concern themselves with updating underlying infrastructure, middleware, or hardware that makes the software function, nor do they need to concern themselves with ensuring that the data created by the organization is kept secure.

Platform-as-a-Service (PaaS): PaaS service is a cloud service in which the cloud service provider makes some form of technology platform available to the organization. With PaaS, the business is responsible for maintaining their application(s) and the data, but not the underlying technology nor the hardware. PaaS offers the advantage of more control over the functionality, since the applications are managed by the organization, rather than the vendor.