After reading this itnews.com article, I feel safe in saying that I don’t think Aussies are the only ones confused by the definitions of cloud computing and SaaS.
The biggest difference lies in control. By its nature, SaaS resides in the “cloud” and is thus a great first step towards cloud computing, but in traditional models the vendor maintains control of both the application and any accompanying data.
Cloud computing puts the control back in the pocket of the consumer. By its definition, cloud computing is actually cloud services, or in Amazon’s case, web services. Whatever the name, the definition of cloud computing ultimately lies with the benefits that users should reap from it: obtaining a wide range of functional capabilities in a pay-as-you-go model without the knowledge, expertise, or direct control over the software. Such flexibility and doesn’t exist with traditional SaaS models.
That said, I believe those lines will continue to merge as SaaS providers move away from fully-baked applications such as Salesforce.com into providing platforms on which businesses can truly leverage the application as a set of services in a time, manner and function they see fitting.