Major enterprise software vendors like Oracle and SAP are aggressively promoting “cloud” however chronic overuse of the term “cloud” may be creating common misconceptions.
There are essentially two distinct cloud models, with very different characteristics, that are frequently confused because they are both generically called “cloud”.
The ongoing blurring of the term “cloud” can disadvantage enterprise software customers.
Two main type of “cloud” are Infrastructure as a Service (IaaS) or ‘'hosting” and Software as a Service (SaaS). While both are called “cloud” they are extremely different models.
It's important to understand these differences and which approach is best suited to each part of your application landscape.
Despite all the hype, unless your business needs are simple, it's unlikely that all parts of your application landscape are suited to cloud.
IaaS or “hosting” is by far the simpler cloud model to understand and the more commonly referenced of the two broad types of cloud. Essentially this involves running your existing enterprise applications on a service provider's infrastructure and data center.
These services could be “private cloud” or “public cloud” depending on whether that infrastructure is dedicated or shared. Varying levels of services are wrapped around this core hosting service.
IaaS or “hosting” decisions generally have an unnoticeable impact to the end user. It typically involves no changes to the applications and business processes they support.
If your IaaS provider is not performing you may move your applications and data to another provider because you generally still own your software and data. You may configure or modify your applications as you like but you are also responsible to maintain those applications.
SaaS is a far more complicated beast.
SaaS involves the implementation of a web-delivered business application that is totally owned and maintained by a service provider.
Deploying a SaaS solution involved the implementation of a new application, changes in business process, data migration, building new interfaces, and re-training users.
SaaS decisions, therefore, have a large impact on the end user and are much harder to reverse. If your SaaS provider is not performing you may have to go through the whole project again, i.e., reimplementation, redesign business process, another data migration, rebuilding interfaces and another round of user training.
You generally don't own your licenses and are locked into ongoing rental style subscriptions.
Some applications are well suited to SaaS, particular if you want to deploy a generic or configurable business process quickly. CRM and HR are classic examples that can work well. If your application needs are complicated, unique or sensitive it is less likely that a full SaaS solution will be attractive.
This is why large complex ERP sites with deep functional needs are almost entirely not delivered via a true SaaS model.
So why can the confusion between IaaS (or “hosting”) and SaaS disadvantage enterprise software customers?
From a marketing perspective it's convenient to associate the simplicity and proven benefits of IaaS with the complexity and lock-in nature of SaaS by wrapping them together under the same banner i.e. “cloud”.
The next time someone mentions “cloud” I encourage you to ask “What type of cloud do you mean?