“Should we use AWS or Azure?”
“Do we need Kubernetes?”
“What about serverless?”
If your eyes glaze over when your developer starts talking about cloud infrastructure, you’re not alone. The cloud industry loves jargon, and it can feel like you need a computer science degree just to follow the conversation.
Here’s the good news: the core concepts are actually simple. Once you understand IaaS, PaaS, and SaaS—the three main cloud models—you can evaluate proposals, ask better questions, and avoid paying for complexity you don’t need.
This guide explains everything in plain English. No technical background required.
TL;DR: The Pizza Analogy
Before we get into details, here’s the simplest way to understand the three models:
| Model | Pizza Equivalent | You Handle | They Handle |
|---|---|---|---|
| IaaS | Buy ingredients, make at home | Everything except electricity | Kitchen, oven, utilities |
| PaaS | Take-and-bake pizza | Add toppings, put in oven | Dough, sauce, oven maintenance |
| SaaS | Dine at restaurant | Just eat | Everything |
For most small businesses:
- Use SaaS for standard business functions (email, CRM, accounting)
- Use PaaS or managed hosting for custom applications
- Avoid IaaS unless you have a dedicated technical team
The cost trap to avoid: €10/mo server + 5 hrs/mo maintenance ≠ cheap. Factor in staff time, not just hosting fees.
The Three Cloud Service Models
Let’s break down each model with real examples and when they make sense.
SaaS: Software as a Service
What it is: Complete applications delivered over the internet. You use the software; someone else runs it.
Everyday examples:
- Email/productivity: Gmail, Microsoft 365, Google Workspace
- CRM/sales: Salesforce, HubSpot
- Communication: Slack, Zoom, Teams
- Finance: Xero, QuickBooks Online
- E-commerce/web: Shopify, Squarespace
What you’re responsible for:
- Your account and settings
- Your data (entering it, exporting it)
- Training your team to use it
What the provider handles:
- Servers and infrastructure
- Software updates and patches
- Security and backups
- Availability and uptime
- Everything technical
Pricing: Monthly or annual subscription per user (€5-€300/user/month depending on software).
When SaaS makes sense:
- Standard business functions that don’t need customisation
- When you want to start immediately without technical work
- When you don’t have IT staff to manage software
- When the subscription cost is less than building and maintaining it yourself
When SaaS doesn’t work:
- Highly customised workflows the software doesn’t support
- Specific compliance requirements the vendor doesn’t meet
- Need to own and fully control your data
- Total subscription costs exceed alternatives over 3-5 years
The hidden question: Can you get your data out if you want to leave? Always check data export options before committing to SaaS.
PaaS: Platform as a Service
Think of PaaS as handing your code to someone who handles everything else. You write the application; the platform runs it on servers you never see.
What it is: A platform for building and running applications without managing the underlying infrastructure.
Examples:
- Heroku, Render, Railway
- Google App Engine
- AWS Elastic Beanstalk
- Microsoft Azure App Service
- Vercel, Netlify (for web applications)
What you’re responsible for:
- Your application code
- Application configuration
- Data management
- Monitoring and debugging your app
What the provider handles:
- Servers and operating systems
- Runtime environments
- Scaling and load balancing
- Security patches for infrastructure
- Database hosting and management (often)
Pricing: Based on resources consumed—compute time, database size, data transfer. Ranges from €0 for small projects to €500+/month for larger applications.
When PaaS makes sense:
- Custom applications your team develops
- When your developers want to focus on code, not servers
- Startups building MVPs quickly
- Web applications with variable traffic
When PaaS doesn’t work:
- Applications needing specific server configurations
- Very high-performance or specialised workloads
- Situations where you need full control of the stack
- When the abstraction layer limits what you can do
Real-world example: You’re building a custom customer portal. With PaaS, your developer writes the application code. The platform automatically handles deploying it, scaling it when traffic spikes, and keeping the servers patched and secure.
IaaS: Infrastructure as a Service
What it is: Virtualised computing resources over the internet. You get virtual machines, storage, and networks. You manage everything that runs on them.
Examples:
- AWS EC2, S3, VPC
- Microsoft Azure Virtual Machines
- Google Compute Engine
- DigitalOcean Droplets
- Linode, Vultr
What you’re responsible for:
- Operating system installation and updates
- Security patches and configuration
- Application installation and management
- Backup and recovery
- Monitoring and troubleshooting
- Scaling and optimization
What the provider handles:
- Physical hardware
- Data centre facilities
- Network infrastructure
- Virtualisation layer
- Hardware maintenance
Pricing: Based on resources—CPU, memory, storage, network. Ranges from €5/month for small virtual machines to €10,000s/month for large deployments.
When IaaS makes sense:
- Full control over server configuration needed
- Running legacy software requiring specific environments
- Compliance requirements demanding dedicated infrastructure
- You have skilled IT staff to manage it
- Cost optimization at scale (large deployments)
When IaaS doesn’t work:
- No technical team to manage infrastructure
- Standard applications better served by SaaS
- Small scale where management overhead exceeds benefits
- When time-to-market matters more than control
Reality check: Most small businesses using IaaS are either overpaying for complexity they don’t need, or underinvesting in the staff required to manage it properly. Be honest about your capabilities.
Choosing a provider? If you’ve decided IaaS is right for you, see our comparison of top IaaS providers (AWS vs Azure vs Google Cloud) to understand the differences.
The Comparison Table
| Aspect | SaaS | PaaS | IaaS |
|---|---|---|---|
| You control | Settings, data | Code, app config | Everything above hardware |
| They control | Everything else | Infrastructure, runtime | Physical infrastructure only |
| Technical skill needed | Minimal | Development team | IT/DevOps team |
| Time to start | Minutes | Hours to days | Days to weeks |
| Customisation | Limited to app features | High for code | Complete |
| Vendor lock-in risk | High (data + workflow) | Medium (platform-specific) | Lower (standard VMs) |
| Cost predictability | High (fixed subscriptions) | Medium (usage-based) | Lower (many variables) |
Private vs Public Cloud
You’ll also hear about “public” and “private” cloud. Here’s what that means:
Public Cloud
What it is: Cloud services shared among many customers. You’re using the same underlying infrastructure as thousands of other companies, but it’s isolated and secure for each customer.
Examples: AWS, Azure, Google Cloud, DigitalOcean—virtually all the cloud services you’ve heard of.
Advantages:
- Lower cost (economies of scale)
- No upfront hardware investment
- Instant scalability
- Pay only for what you use
Concerns people have:
- “Is my data secure if we’re sharing infrastructure?”
- Answer: Yes. Isolation is fundamental to how these platforms work. Security incidents are rare and usually caused by customer misconfiguration, not platform flaws.
Private Cloud
What it is: Cloud infrastructure dedicated exclusively to your organisation. Can be on-premise or hosted by a provider, but you don’t share with other customers.
When it makes sense:
- Strict regulatory requirements (some government, healthcare, finance)
- Extremely high security needs
- Predictable, large-scale workloads where owning makes financial sense
- Legacy applications that can’t be modified for public cloud
The reality for most businesses: You don’t need private cloud. It costs significantly more and adds management overhead. Public cloud security and compliance capabilities satisfy the requirements of most industries.
Want the full breakdown? See our dedicated guide: Private vs Public Cloud: Which Is Right for Your Business?
Hybrid Cloud
What it is: Combination of public and private cloud, with orchestration between them.
Example: Keep sensitive customer data on private infrastructure, run compute workloads on public cloud.
Reality check: Hybrid cloud is complex to implement and manage. Unless you have specific requirements that demand it, simpler is usually better.
How to Choose the Right Model
Start With These Questions
Is there existing software that does what you need?
- Yes → Start with SaaS. Don’t build what you can buy.
Do you need a custom application?
- Yes → PaaS is usually the right starting point.
Do you have specific infrastructure requirements that PaaS can’t meet?
- Yes → IaaS might be necessary.
- No → Stick with PaaS.
Do you have a team capable of managing infrastructure?
- No → Avoid IaaS. Seriously.
- Yes → IaaS can be cost-effective at scale.
The Decision Flowchart
Start
↓
"Can we use existing software?"
↓
Yes → Use SaaS
↓
No → "Do we have developers?"
↓
No → Hire developers or use SaaS
↓
Yes → "Does PaaS meet our requirements?"
↓
Yes → Use PaaS
↓
No → "Do we have IT/DevOps staff?"
↓
No → Hire, outsource, or reconsider requirements
↓
Yes → IaaS is an option
Real Scenarios
Scenario 1: 5-person marketing agency
- Email: Microsoft 365 (SaaS)
- CRM: HubSpot (SaaS)
- Project management: Asana (SaaS)
- Website: WordPress on managed hosting (PaaS-ish)
- Custom tools: Probably don’t need any
Scenario 2: 20-person e-commerce company
- Email: Google Workspace (SaaS)
- Storefront: Shopify (SaaS)
- Custom inventory system: Built on Heroku (PaaS)
- Accounting: Xero (SaaS)
- Analytics: Custom dashboard on Vercel (PaaS)
Scenario 3: 50-person tech company with development team
- Email: Microsoft 365 (SaaS)
- Main product: Custom app on AWS (Mix of PaaS + IaaS)
- Development environments: AWS EC2 (IaaS)
- CI/CD: GitHub Actions (SaaS)
- Monitoring: Datadog (SaaS)
Notice how even technical companies use mostly SaaS for standard functions.
Common Mistakes to Avoid
Mistake 1: Using IaaS When PaaS Would Work
The symptom: You’re paying developers to manage servers instead of building features.
Why it happens: “We might need that flexibility someday.” (You probably won’t.)
The fix: Start with PaaS. Move to IaaS only when you hit specific limitations.
Mistake 2: Building When You Could Buy
The symptom: Your team is building a custom CRM when Salesforce would work fine.
Why it happens: “Our needs are unique.” (They rarely are.)
The fix: Before building anything custom, spend a day evaluating SaaS options. Build only what you can’t buy.
Mistake 3: Ignoring Total Cost of Ownership
The symptom: Comparing €50/month SaaS subscription to €10/month IaaS server without accounting for staff time.
Why it happens: Direct costs are visible; hidden costs aren’t.
The fix: Include staff time, maintenance, security, updates, and downtime risk when comparing options. A €50/month SaaS might be cheaper than a €10/month server that requires 5 hours/month of management.
Mistake 4: Not Planning for Exit
The symptom: Discovering you can’t leave a vendor without massive migration costs.
Why it happens: Lock-in is gradual and feels like convenience until you want to leave.
The fix: Before committing to any service, ask: “How would we leave? How would we export our data?”
Questions to Ask Your Technical Team
When evaluating cloud options, ask:
“Why are you recommending this model?”
- Good answer: Specific reasons tied to your requirements
- Red flag: “It’s what everyone uses” or “It’s what I know”
“What’s the total cost, including management time?”
- Good answer: Breakdown of hosting + estimated staff hours
- Red flag: Just the hosting cost with no mention of management
“What happens if we need to switch providers?”
- Good answer: “Our code is portable, data export is straightforward”
- Red flag: “We’d have to rebuild from scratch”
“Do we actually need this level of control/complexity?”
- Good answer: Honest assessment of trade-offs
- Red flag: “More control is always better”
“What’s the simplest option that meets our requirements?”
- Good answer: Starts with simplest, justifies any added complexity
- Red flag: Jumps straight to complex architecture
Key Takeaways
The three models in one sentence each:
- SaaS: Use their software. (Gmail, Salesforce, Slack)
- PaaS: Run your code on their platform. (Heroku, Vercel, App Engine)
- IaaS: Build your infrastructure on their hardware. (AWS EC2, Azure VMs)
For most small businesses:
- Default to SaaS for standard business functions
- Use PaaS or managed hosting for custom applications
- Avoid IaaS unless you have specific requirements AND technical staff
Public vs Private cloud:
- Public cloud works for the vast majority of businesses
- Private cloud is rarely necessary outside large enterprises and regulated industries
The key insight: The goal isn’t to use the most flexible or powerful option. It’s to use the simplest option that meets your actual requirements.
Next Steps
If you’re evaluating cloud options:
- Start by identifying which applications are candidates for SaaS
- For custom applications, evaluate PaaS options first
- Book a consultation if you want help evaluating your options
If you’re already in the cloud:
- Review whether your current model still makes sense
- Analyse your cloud costs to find savings
- Read our cloud cost optimization guide
If you’re planning a migration:
- Read our Cloud Migration Checklist
- Calculate your migration costs
- Understand the options before committing to an approach
Related Reading
- Top IaaS Providers Compared — AWS vs Azure vs Google Cloud
- Private vs Public Cloud — Which cloud model fits your business
- What is Cloud Containerization? — Containers and Kubernetes explained
- Cloud Migration Checklist — Planning a move to cloud
- The Hidden Costs of Cloud — Managing cloud spending
- Architecting Robust Cloud Infrastructure — Infrastructure planning basics
