IaaS or PaaS: What’s Best for Your SaaS Startup?


Jorge Sagastume

Senior editor

Parul Saxena

Chief editor

Last updated: February 12, 2021

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Software-as-a-service (SaaS) businesses are on the rise, with new startups being registered each and every year. In fact, the industry is growing at such a rate that it is expected that the value of the SaaS market will reach, or perhaps even exceed, $164.29 billion by 2022. However, in order for a new SaaS business to thrive within that market, they need to ensure they’re using the right cloud environment.

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Iaas or Paas?

For a SaaS business, there are two categories of cloud environment that can be beneficial: infrastructure-as-a-service (IaaS) and platform-as-a-service (PaaS). PaaS is the more basic, with the provider offering all the necessary tools to enable users to build applications and other services easily through their web browser. IaaS is more complex, with the provider overseeing only the infrastructure side, shifting software responsibility— installation, configuration, and management— to the user.

So which is the best option for SaaS startups? Some will argue for IaaS, which is more flexible, more customizable, and can be designed to completely meet the needs of the new business. Others will argue for PaaS for the simple reason that, while it lacks the benefits of IaaS, it is incredibly easy to use.

IaaS or PaaS

IaaS or PaaS

Reports show that both IaaS revenue and PaaS revenue in the United States grew rapidly between 2010 and 2016, so clearly, both types of cloud category are popular choices. But which is best for a new business? IaaS or PaaS? Well here’s a question to really add another layer of complexity: does it matter?

The Digital Convergence Trend

The idea of digital convergence is a hot topic right now, with experts claiming that convergence will disrupt existing markets within the next few years. We are certainly seeing the notion of convergence creeping into the SaaS world, and growing convergence between IaaS and PaaS holds the potential to completely eradicate the infamous IaaS or PaaS debate, making the ‘IaaS or PaaS’ question obsolete.

In fact, the convergence of IaaS and PaaS is listed as one of IBM’s Trends to Watch, and thanks to the growing interest in ‘consuming’ technology, it appears as if IaaS and PaaS are certainly not the two completely separate entities they once were. Major providers are already beginning to offer their clients a selection of hybrid options, such as AWS’s Elastic Beanstalk with PaaS functionality on top of standard IaaS, and Microsoft’s Windows Azure Virtual Machine, with IaaS functionality on top of standard PaaS.

Convergence: Good or Bad for SaaS Startups?

There are two ways of looking at IaaS/PaaS convergence. Firstly, the extension of the digital convergence trend into cloud computing is beneficial because SaaS businesses today have a number of options for a truly comprehensive, versatile service that brings together the ease of PaaS and the flexibility of IaaS into one single solution, without the need to spend time trying to choose between one service and the other.

On the other side of the coin, however, it can be argued that for startups especially, this convergence isn’t exactly the best way forward. That’s because, from a truly black and white standpoint, PaaS is arguably the ‘better’ option for startups because, quite simply, it’s the easier option of the two. It’s possible that an integrated PaaS option could mean that a number of young businesses are overlooking the true benefits of PaaS for startups in favor of the more advanced benefits that come with IaaS.  

It’s important to remember that startup needs are truly unique; they differ considerably from the needs of an established, growing business. PaaS allows young businesses to grow rapidly without needing to worry about infrastructure (which is, after all, one of the main reasons why cloud computing has experienced such an impressive adoption rate; it enables more focus on core business, rather than on just the IT side of things). IaaS perhaps comes into its own more as businesses further grow and develop, and as they begin to form more niche requirements that can’t be met via ‘off the rack’ solutions.

What to Look for as a Startup?

Given the somewhat transient state of the IaaS/PaaS industry right now, it may be more beneficial for SaaS startups to place more focus on choosing a provider than choosing a particular service. Selecting the right service provider may prove to be more valuable than trying to decide between IaaS and PaaS.

Here are some questions to ask when choosing an IaaS or PaaS provider:

  1. Can the provider meet my business needs?

It’s worth noting down exactly what your SaaS businesses expect from IaaS or PaaS and checking that the provider can meet these needs. Also consider if you want to be linked to a particular cloud, like AWS.

2. What security measures does the provider take to ensure a safe working environment?

Cloud computing is becoming much safer, yet there are still risks with this way of working. It’s a good idea to delve into a provider’s commitment to security and see if they’re taking appropriate measures.

3. What contingency plans does the provider have?  Are they able to support business continuity services such as SaaS Escrows?

Regardless of whether you choose IaaS or PaaS, anything that comes ‘as a service’ holds more risk should the provider go out of business. There are ways you can protect yourself, such as software escrow.

4. Does the provider offer the right services for an affordable price?

One of the biggest benefits of cloud computing is cost savings. However, SaaS businesses will typically only see these savings if they are working with a provider who offers services for an affordable price.

What to Choose?

A hybrid IaaS/PaaS option can certainly be a suitable choice for startups, although both IaaS and PaaS on their own can work, too. However, if it must be an either/or scenario, then it is generally accepted that it’s best for startups to begin with PaaS, which can be better in terms of initial growth, before migrating to IaaS as they become bigger and start to experience greater, more specific needs. It may even be possible for SaaS businesses to create their own IaaS in the future to sell to clients as a PaaS.

Ultimately, however, it’s not worth losing sleep over. Thanks to the growing trend of digital convergence, service really isn’t all that vital a consideration these days, especially as we look towards a future of consuming technology and collaboration. Many SaaS startups may find it more beneficial in the long run to place less importance on service, and more important in choosing the right provider for them.

Jorge Sagastume is a Vice President at EscrowTech International, Inc. with 12 years of experience protecting IP and earning the trust of the greatest companies in the world. Jorge has been invited to speak on IP issues by foreign governments and international agencies.

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