What is PaaS?

March 10, 2020 - Samrat Malakar

A platform as a service (PaaS) is a cloud-based environment that provides everything firms need to run their businesses, except for software applications themselves.

PaaS and SaaS are like fraternal twins — they share some characteristics and sometimes they hang out together, yet they’re very different. SaaS — software as a service — is the application itself. It is typically subscription-based and delivered through a web browser or an app that is installed on a computer or device.

Their first cousin, IaaS (infrastructure as a service), doesn’t do quite as much as PaaS and SaaS, but as you’ll learn, infrastructure as a service provides a framework for firms that employ their own IT teams and purchase or develop their own software programs. More on that in a minute.

PaaS, SaaS and IaaS aren’t always mutually exclusive. In other words, systems aren’t always entirely PaaS, SaaS or IaaS; some are hybrids. NetSuite, for example, is both SaaS and PaaS. It includes a suite of applications as well as a cloud-based platform for integration and collaboration.

Paas versus SaaS versus IaaS

The following table explains the similarities and differences between PaaS, SaaS and IaaS. Items shaded in blue are managed by the firm (i.e. wealth and asset managers, hedge funds, family offices), and unshaded items are managed by third-party, cloud-based technology providers. 

IaaS

IaaS is the most basic cloud-based computing environment. In the “stack” of services, it outsources your servers, backup, storage, virtualization and networking. You run your applications on the cloud-based servers and all files are saved in the virtual environment. You or your IT team configure your platform and run applications on it. 

In this setting, your team would log into remote desktops from anywhere and access all of the programs and files they need to do their jobs. IaaS is the most expensive cloud-based option because it still requires you to employ IT managers, who must install and update software programs on your firm’s computers and servers. 

Examples of IaaS that you may have heard of include Amazon Web Services (AWS), Microsoft Azure and Google Compute Engine

PaaS

A platform as a service is an environment that lets you develop, run and manage applications. Am example is a turnkey asset management platform, or a TAMP, which provides a digitized, customized solution for managing clients’ portfolios and data.

The biggest advantages of PaaS solutions are:

PaaS has its disadvantages, including concerns about cybersecurity; however, the risks of data corruption, hacking and security breaches are minimal when you work with a third-party developer that puts security and compliance compliance and security as top priorities. 

Examples of PaaS that you may already be familiar with include Windows Azure and TAMP1 (see a free demo to understand how it works).

SaaS

Software as a service is full-stack outsourced management. All of your applications, runtime, data, security, integrations and more are managed from a central location, in the “cloud.” Your end users — employees and clients — access your technology by logging in through an internet web browser. It is the most common cloud-based application service.

SaaS is more cost effective than IaaS, because it nearly eliminates the need to hire IT staff to download, install, maintain and update software applications. Your clients, too, don’t need to install software on their computers; they access your technology through a web-based portal.

SaaS has been replacing legacy software in many industries because it is less expensive to develop and maintain, and updates are simple and low-cost to deploy. 

It has limitations, however. Firms that use multiple software applications — for example separate apps for accounting, scheduling, reporting, etc. — may find that integrating these apps can be cumbersome. Not all APIs are created equally, which can increase and frustrate setup and maintenance. 

Examples of SaaS that you likely use or are familiar with are Microsoft Office 365 and Google Gmail, Dropbox, Salesforce and GoToMeeting.

PaaS, SaaS, IaaS versus Legacy Systems

SaaS is slowly replacing legacy systems because they’re easy to develop, cost-effective to deliver to end users, and updates are incredibly easy and efficient to deliver to end users. Each time your staff or clients log into your system or open the application, the latest version is ready for them. 

PaaS is the most recent wave of technology development among fintech, which our ebook, “Why Shift from Client-Server Software to TAMP,” explains in greater detail. Download it for free. It’s OK if you don’t completely understand the technical differences and jargon used to differentiate PaaS from SaaS from IaaS.

If there is anything we want you to take from this article, it’s this: Wealth and asset managers are shifting from legacy systems and moving toward cloud-based systems because they’re more efficient, less costly, and they’re secure.