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SaaS and Cloud Computing Demystified

The most popular comments I receive seek to define both cloud computing and SaaS as well as explain whether the two delivery methods are the same or different. It also seems many of the requests are related to the high growth cloud CRM software market. So to start of the year on the right foot, and hopefully bring some clarity to this pervasive question, I'll attempt to circumvent the hype and focus on the primary tenants that set the cloud and SaaS technologies apart.

There are a few common and generally agreed upon definitions for cloud computing. According to analyst firm Gartner, cloud computing is "a style of computing whose massively scalable and elastic, IT-related capabilities are provided 'as a service' to external customers using Internet technologies."

Other similar cloud computing definitions emphasize several key traits of cloud delivery such as,

  a) delivery of capabilities 'as a service' (e.g. software as a service);
  b) delivery of services in a highly elastic, expandable and scalable model;
  c) use of Web technologies to develop and deploy the services; and
  d) designed for delivery to external customers.

The two most popular examples of cloud computing solutions come from and Google. Each of the vendors basically rent their data center resources, availability and capacity to external users. Amazon's Elastic Computer Cloud (EC2) permits external users to rent virtual machine (VM) instances and remotely run their software applications in Amazon's data center. EC2 offers an umbrella of related services such as storage and business continuity. Amazon uses Xen for its virtualization services and offers customers a choice of Linux, Solaris or Windows operating systems.

Amazon's cloud offering permits customers to take advantage of its IT infrastructure, its impressive scalability and its IT expertise so that customers only pay for the processing and storage resources they actually use. This type of infrastructure in the cloud is the most basic level of cloud computing.

The next level up is cloud computing as a Web development platform. For example, the Google App Engine is a virtual location where Web developers can upload (Python only) code and let Google's platform perform the storage, processing and delivery to end-users.

A third level is running enterprise software applications in a cloud. A IT provider could host an enterprise software program and assume IT management for such functions as uptime, performance, information security, backup, disaster recovery and business continuity. These functions would generally be accompanied with a service level agreement (SLA). Gartner forecasts that e-mail will become one of the first enterprise business applications that are migrated to the cloud.

Software as a service (SaaS) solutions are generally delivered from a specific software vendor such as, NetSuite or Aplicor. These SaaS solutions are normally manufactured by the vendor, often deployed in a multi-tenant hosting environment and accompanied with a wide range of professional services and SLA support.

Legacy Computing
Cloud Computing
Capital expenditures and build out of IT infrastructure
Use service on demand, no advance build out
Purchase fixed assets with overhead and IT administration
Pay based on use
On premise internal network or intranet
Internet, any device, any time
Single tenant, dedicated owner
Multi-tenant, shared services

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January 12, 2009 in SaaS | Permalink | Comments (0) | TrackBack (0)

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This blog is focused on hosted, on-demand or software as a service (collectively SAAS) business solutions. To qualify as a SaaS solution, the service should be offered on a subscription (pay as you go) purchase price, housed in a multi-tenant data center and delivered remotely over the Web to web browsers. Business applications include about any front office or back office business system. Frequently cited business applications include Customer Relationship Management (CRM) systems, Sales Force Automation (SFA) systems, Enterprise Resource Planning(ERP) systems, Supply Chain Management (SCM) systems, Manufacturing Systems and Human Resource (HR) systems.