Platform-as-a-Service (PaaS) refers to software and product development tools hosted on the provider’s infrastructure.  You pay the host for the use of their platform, but may also pay someone else for other software or services.   A good example of PaaS is Google Apps.

According to Forrester Analyst, James Staten, PaaS is a “build-deploy-manage environment.  These cloud services provide a framework and a software system for application developers to create new services and rapidly deploy them on the Internet. They typically support a particular type of programming language or environment and provide cloud-implemented services that the developer can integrate into their application. It’s becoming common to see PaaS offerings designed specifically for the enhanced use of a SaaS service. For example, Force.com is primarily
used to create new applications that directly leverage the Salesforce.com CRM service.”

The biggest challenge with PaaS is how limited it is in terms of applicability. Many PaaS platforms are focused on a particular class of developer or application, which means that applications will not run on other platforms.  The “lock-in” that PaaS provides is therefore a big downside.  According to Staten, PaaS will take 3 – 5 years to reach the next stage of development because “significant function build-outs are still needed, as well as maturity of the platforms and greater enterprise adoption.”