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You’ve no doubt heard the terms “cloud computing” and “software as a service” tossed around almost interchangeably, so what is the difference between the two?

The term “cloud” refers to the type of Internet networking that is more of an abstraction than a physical anomaly. In early network drafts, the concept of interconnected computers was originally depicted as clouds linked together on a flowchart. The intricate system of networked computers that came to make up modern Internet eventually adopted the term “cloud computing” to describe its functionality. With early computers, users didn’t own the computer and merely rented time from a server. Many years later, users owned personal computers but had the added responsibility of keeping software up to date and had to manually backup data. Now, the two models of computing have meshed together; consumers own personal computers and devices but are also renting out server time elsewhere. Instead of relying on one server to complete tasks, we’re now drawing information from several different sources.

Any time you use a computer that is not in your physical location, it’s some form of the cloud. Most often, you use the cloud in terms of “software as a service” (SaaS), such as with online versions of applications and software like e-mail, online financing, social media, or data hosting. SaaS can either be free or require a paid subscription. With SaaS, your personal account is connected to data stored outside of your computer or device. As long as you have an Internet connection, you can access the software and information.

So, what is the difference between cloud computing and SaaS?

Pure cloud computing is distinctly different from SaaS in that you create and customize an environment to suit your needs. It is more customizable with unique opportunities for storage and content creation. With SaaS, you are restricted to the features available to you by default through the program or application, though you are able to receive software updates and can back up data automatically. As a true cloud user, you are responsible for the upkeep of applications and servers you own. The price for cloud services can also fluctuate based on usage, whereas paid SaaS subscriptions are a flat rate.

For both choices you need to trust the organization you partner with. Both cloud and SaaS users have to rely on external servers to continue operating as promised. You need to know that the company or service will continue running and have a backup plan in the event something should happen to discontinue its usage. SaaS users can run the risk of restricted functionality or service termination due to a subset of people who use the software illegally or to perform harmful actions. Companies can also change hands and be bought out; this is something that happens quite frequently. In those cases, service agreements and terms of use are subject to change.