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Understanding the Different Layers of Cloud Computing

The advent of cloud computing has created a new world of enterprise IT solutions. This emerging technology allows a pool of computer resources to be shared over the Internet. Rather than investing in hardware and software, a company can now buy IT like it’s a utility—paying only for what the company uses.

Off-site cloud resources can be employed in countless ways as a solution for specific business needs. For example, a healthcare contract management system can utilize hospital contract management software and data kept on the cloud instead of on internal servers.

Cloud computing has become a feasible IT option due to several factors:

  • the development of affordable integration protocols to allow communication between a cloud application and a company’s internal applications
  • the proliferation of web-based applications
  • the continued increase in broadband Internet access, which allows remote centrally hosted applications to provide the speed necessary to compete with in-house systems
  • the standardization of web languages and protocols, including the HTTPS protocol, which allows increased security
  • the ability of cloud computing providers to constantly keep software up to date
  • the availability of third parties that will store and insure copies of cloud data

Different Layers of Cloud

To best understand how cloud computing can benefit a particular business, it’s important to understand the difference between the three principal types of cloud computing: SaaS, PaaS, and IaaS.


With Software as a Service (SaaS), companies use web browsers to access off-site software (e.g., contract management software) and associated data. SaaS already is commonly used for many business functions, such as customer relationship management, contract management, lead management, spend analysis, accounting, human resource management, and service-desk management.

Economies of scale allow SaaS providers to manage applications and data cheaper than traditional internal client/server systems. SaaS also offers lower start-up costs than traditional on-premises systems because there is no investment in hardware or software.

SaaS applications typically use multi-tenant architecture, which means that all users of a particular SaaS application will use the same version and configuration (network, hardware, and operating system). However, users will be able to control the look, feel, and functionality of the SaaS to some degree, depending on the application.


Protocol as a Service (PaaS) provides users with their own computing platform and solution stack—meaning that PaaS users can develop web-based applications with complete control of the entire development life cycle. A comprehensive PaaS allows control of source code and version, as well as the capability to test and track changes to applications.

PaaS can be used as a stand-alone system independent of any specific SaaS application, while some PaaS systems customize an existing SaaS.


Infrastructure as a Service (IaaS)—sometimes called “hardware as a service”—supplies an entire computer infrastructure, including data storage and networking. IaaS usually uses a platform virtualization environment, creating virtual hardware for users.


  • Cloud computing is a viable enterprise IT option to traditional on-site client/server applications.
  • Cloud computing offers benefits such as lower upfront costs (e.g. servers, software, and data storage), pay-per-use pricing so that cost is tied to activity, scalability to meet demand, and rapid software updating.
  • SaaS offers the least control of the computing environment for users. PaaS offers more control and application-development capability. IaaS replicates an entire traditional enterprise infrastructure.

Contract Logix provides contract management solutions to help you improve the management of all the stages of your contract lifecycle. Follow Contract Logix on Twitter at @ContractLogix.

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