What's the difference between IaaS, SaaS and PaaS? Credit: James Niccolai/IDGNS

What's the difference between IaaS, SaaS and PaaS?

Cloud computing gave birth to many acronyms, but none are more important than IaaS, PaaS and SaaS; the building blocks of modern computing.

For the uninitiated these are: infrastructure-as-a-service (IaaS), platform-as-a-service (PaaS) and software-as-a-service (SaaS). Here we break down all three for you, including examples of the companies that have come to dominate each category.

IaaS

Infrastructure-as-a-service (IaaS) is the simplest of the three categories to define, as it is broadly the same regardless of which vendor you choose. Simply put, IaaS is where a third party provides highly automated and scalable IT infrastructure - storage, hosting, compute, networking - and only charges for what you use.

So rather than owning assets like software licences or servers, companies can flexibly rent resources according to their needs.

Read next: AWS vs Azure vs Google: What's the best cloud platform for the enterprise?

This has fuelled a crowded market worth a total of $25 billion in 2016 according to Gartner's most recent statistics - set to soar to $45 billion by 2018.

AWS has dominated the market since it started offering cloud services in 2006. A Synergy Research report from February 2017 puts AWS' market share at 40 percent, with Microsoft, Google and IBM, which were grouped together, at 23 percent combined.

But despite AWS's dominance, Microsoft has quickly gained ground under the leadership of "cloud first" CEO Satya Nadella, building a huge global cloud network of its own. Then there is the internet giant Google, which has been busy building out its public cloud services and IaaS business under the Google Cloud Platform (GCP).

PaaS

Platform-as-a-service (PaaS) is possibly the hardest of the three cloud models to cleanly define. The idea is to provide all of the basics of IaaS, as well as the tools and capabilities needed to develop and deploy applications securely. That could be middleware, database management, analytics or an operating system.

A platform-as-a-service should provide a developer with everything they need to build and deploy an application without having to do any provisioning of the underlying infrastructure themselves.

PaaS vendors tend to be the biggest technology companies, who can offer a broad range of capabilities for their customers on a platform. Examples include Google App Engine, Oracle Cloud Platform, Pivotal's Cloud Foundry and the Salesforce-owned Heroku.

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The underlying infrastructure for different PaaS offerings varies, so Oracle and AWS would prefer you run on their own infrastructure, and others are more agnostic. For example the SAP Cloud Platform can be run on top of AWS, Azure or GCP cloud infrastructure. Red Hat's OpenShift is similarly cloud provider-agnostic.

SaaS

Software-as-a-service (SaaS) is where a piece of software is hosted by a third party and can be accessed over the web, normally just by logging in, and is generally charged on a subscription basis per user or 'seat'. This differs from the old model of buying and installing software on a machine or server manually.

SaaS is much more relevant for very specific applications, like email or customer relationship management (CRM) software. Anyone who has used a Google app like Gmail or Google Docs, or cloud file storage like Dropbox, will have used a piece of SaaS.

Read next: G Suite vs Office 365 - What's the best office suite for business?

Major SaaS vendors include Microsoft since it moved Office to the web-based Office 365, as well as enterprise software pioneers like Salesforce with its SaaS CRM solution, and Workday's cloud-based HR software.

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