Blog Post

Cloud Cannibalism: Is PaaS Killing SaaS?

Let’s be honest: The cloud is a killer. Other than the microprocessor, I think we would be hard-pressed to find another technological innovation that has so effectively killed off its predecessors. For example — try to buy a piece of software packaged in an actual physical box. Sure, a handful of consumer-oriented PC applications are still sold in retail stores, but with enterprise applications — good luck. Even Microsoft (s MSFT) is pushing customers, both business and consumer, to the cloud for their products.

But is the cloud upping the ante, from tech killer to cannibal?

One of the earliest innovations brought about by cloud computing’s rise was Software-as-a-Service (SaaS). From to Google (s GOOG) Apps, SaaS has been the savior of small businesses and cash-strapped enterprises…but this notion is changing. XaaS has taken the spotlight from SaaS – everything from Platform-as-a-Service (PaaS) to Infrastructure-as-a-Service (IaaS) is eating away at SaaS dominance, leading many businesses to reconsider whether investing in SaaS is the right choice.

Don’t get me wrong, SaaS certainly has its upside. It’s low-cost and effectively turnkey, requiring only an Internet connection for the solution to be up and running. This great strength of SaaS, however, is also its biggest weakness — the product doesn’t actually belong to the end users. A typical SaaS solution is also relatively inflexible, requiring lengthy and expensive customization — great for plugging an application gap, not so great for building a business around. Just a few years ago, the downsides to SaaS were rarely discussed, and the alternative — custom application development — was seen as absurdly expensive and time-consuming, putting even the customization costs of SaaS to shame.

But that mindset is changing as other XaaSes, particularly PaaS, gain traction in the enterprise. PaaS essentially gives IT teams access to world-class development environments and infrastructure for what amounts to pennies, turning the old argument against custom application development on its head. Specifically, rapid application development (RAD) PaaS platforms are turning up the heat on inflexible SaaS, by speeding up custom development and slowly pushing SaaS out the door.

Essentially, RAD PaaS is comprised of two pieces: an IDE coupled with all the tools to manage the entire application delivery cycle (PaaS), a model-driven development language (RAD).  For the former, the IDE must seamlessly integrate with back-end deployment and management tools, allowing IT teams to streamline the entire application development, delivery and maintenance processes.  This exposes a whole host of functions, from configuration management and application deployment to monitoring and access control, which are delivered as services.

For the RAD component, a model-driven development language is layered on top of the IDE, dramatically simplifying the development process and allowing the development team to focus on the business, not the technology, problem.  The result is a streamlined development process that empowers not only IT, but also business stakeholders, to build applications incredibly fast, delivering working functionality in hours rather than weeks or months.

But why is RAD PaaS eating away at SaaS?

There are really three issues at hand for why PaaS, and RAD PaaS in particular, are providing a compelling alternative to SaaS.

  • Speed. Thanks to a set of seamlessly integrated services addressing the entire application development lifecycle, RAD PaaS streamlines custom development. This dramatically improves the pace of all aspects of the process, from access to the development, test and production environments to actually building and delivering the working application.
  • Cost. RAD PaaS cuts costs in several ways.  First, overall team size tends to be smaller, as the environment automates tasks typically completed by specialists, improving the efficiency of the full lifecycle of application delivery.  Next, economies of scale come into play when using cloud infrastructure, saving precious dollars.  Finally, custom applications provide a differentiator to the business at-large, providing a distinct value that’s difficult to calculate.
  • Flexibility. Through RAD PaaS, businesses gain the ability to deliver application functionality to accurately meet business needs.  This means no more suffering from misfit packages or struggling to extend existing functionality (a costly effort to undertake and maintain). Instead, custom applications now evolve with the business and stay almost ‘evergreen,’ resulting in applications that age very little and are inexpensive to change.

PaaS cannibalizing SaaS should not be looked at as a bad thing for the cloud – SaaS solutions will remain in play for many commodity applications across both small-scale operations and for larger enterprises, but their promise of speed to delivery and ability to scale is no longer a key differentiator.

The future of the cloud, and its next round of innovation, lies with RAD PaaS providing the ability to build applications, anywhere, at any time as fast as you can procure and configure a SaaS package.

And if the cloud’s future is hungry, shouldn’t we feed it?

Mike Jones is a 20 year veteran of the IT industry and currently serves as vice president of marketing for OutSystems, a provider of application development and platform-as-a-service solutions.

67 Responses to “Cloud Cannibalism: Is PaaS Killing SaaS?”

  1. Adinath Raveendra Raj

    To say this succinctly, with all due respect, I think the author of this article got it seriously wrong.

    I think the case for SaaS has to do, not so much with avoiding custom software development, but with not having to maintain your own servers, upgrades to the latest version of software, having to manage the integration between different systems and so on.

    Furthermore, the author somehow suggests that just because an application is deployed on the cloud building a complex applications just got really easy, thanks to these amazing “RAD” tools. This is another fallacy.

  2. Appreciate the points highlighted in the article. But overall the article positioning is pretty misleading to say PaaS is cannibalizing/killing SaaS. “Evolution”? Also if you look at it in another way, PaaS would help SaaS providers get away from the traditional SaaS limitations such as “no customization” or “limited customization”. Earlier companies sold packaged software with just the binaries. Later came the point when companies were ready to sell the product with source code access for an additional fee and some legal terminology. So why wouldn’t SaaS companies follow a similar model taking advantage of PaaS benefits?

  3. While it may be the future, I see it moving about as fast as laptops replacing desktops. There are just too many SaaS companies out there that need more power and faster than the cloud can provide right now. Plus there will be perceived security risks associated with outsourcing virtual environments where personal information may be transported. Same roadblocks as vitualizing personal health records.

  4. Paas and Saas both are cloud computing services and both are used for and designed also for different purpose.Paas is a platform in the cloud, upon which applications can be developed and executed.PaaS suits organisations that are committed to a given development environment for a given application but like the idea of someone else maintaining the deployment platform for them. Saas offers fully functional applications on-demand to provide specific services such as email management, CRM, ERP, web conferencing and an increasingly wide range of other applications.

  5. Gnanesh PS

    Good to read regarding cloud computing and various cloud adoption techniques to suit the organization,just viewed an informative video, Adoption Roadmap a guide to the cloud @

  6. The true value of PaaS is in enabling the provisioning and management of SaaS applications end-to-end.

    Management of single tenant applications for each customer is cost prohibitive for large scale applications. RAD tools are good to speed up development but they provide a mechanism to lock-in developers and applications to a platform. A true PaaS enables a more efficient SaaS delivery model by simplifying app development, improving developer productivity and by providing an end-to-end managed runtime environment with no-vendor lock-in and portability across the IaaS clouds.

  7. Jason Penkethman

    Doesn’t the flexibility of the platform still depend on the building blocks available in the RAD IDE? How does any model improve the management of needing to cater for unique customer requirements?
    The other concern I have, is where the customers sensitive dates resides. Increasingly I get concerns from legal regarding where the customer data sits, and how to partition that data, even geographically for international customers, yet still leverage the benefits of XaaS.

  8. Yes, I can see how PAAS is picking up with all the effort of so many HW manufacturers to launch services in the cloud. It is natural that they will try to diversify with more offerings such as a platform.

  9. Mike
    I dont think you should generalise about SaaS “A typical SaaS solution is also relatively inflexible, requiring lengthy and expensive customization — great for plugging an application gap, not so great for building a business around” My company builds SaaS apoplications for Life Sciences and our clients experience the exact opposite, Rapid and agile customisation, Granular configuration delivering Businness process specific tools. Perhaps you should open your eyes and take a look at us.


  10. Regardless of who wrote the article, it is thought provoking. I read this and thought of ways to improve developers productivity, totally outside the venue of a PaaS provider.

  11. I think this article misses a key dynamic – PaaS efforts become SaaS products.

    Paas is still a high risk proposition because of the lock-out or termination risks (i.e., CogHead). There are few vendors, and no instant migration of your app between platforms. It will happen, but these products and the industry need to mature collectively to lower the risk curve. You guys should get together…keep in mind every time one gains popularity and goes offline it’s a huge trust violation that slows adoption generally.

    SaaS is usually a discrete business service, ready made where you play the role of integrator. There is an abundance of offerings and competition. If you wanted an invoicing service today you have literally hundreds of options. Further, it’s not all that costly to move between vendors, certainly not on the order of writing an app in house when your PaaS vendor flatlines.

    Further, the key point is that PaaS must offer additional monetizing it is most attractive to development groups anyway, who have the dev resource investment already and proprietary knowledge they want to sell. So in the end their PaaS work becomes SaaS ultimately.