Some basic differences

While people in the IT industry may enjoy debating about whether SaaS and cloud computing are different, most corporate decision-makers view them as sharing similar attributes and offering similar business benefits. According to Gartner, cloud computing is not just a buzzword; it does have a distinct meaning separate from SaaS.

Before we pull them apart we should start off with a couple of basic definitions of both SaaS and cloud computing:

“Software-as-a-Service is about delivering applications as a service over the Internet in a pay-as-you-go model. There are SaaS leaders across multiple categories of applications, including Customer Relationship Management (salesforce.com, Oracle),and many more. Research analysts had estimated the size of the SaaS market to be between $12-14 billion by 2010.

“Cloud Computing, on the other hand, is about delivering both applications and infrastructure as a service. Cloud Computing is now generally defined in terms of three layers: application, platform, and infrastructure. SaaS has evolved to become the application layer of Cloud Computing; the platform layer consists of providers such as Force.com, Microsoft Azure, Google App Engine, among others, that deliver a hosted platform and tools to build, run, and manage your applications in their cloud environment; the infrastructure layer consists of providers, including Amazon Web Services, IBM, Opsource, and others, that provide a hosted infrastructure to run and manage any cloud application you develop in a public or private cloud and pay for it based on an elastic pricing model (unlike the traditional managed service providers). The Cloud Computing market is estimated to be anywhere from $60 billion to $165 billion over the next few years.”

(Chandar Pattabhiram, eBizQ)

Further differences

Whereas cloud computing has more potential for mass customization than SaaS, cloud computing does not particularly compete directly with SaaS. Amazon AWS and Force.com are unlikely to be in competition with each other because they segment the market into the high-end and low-end of mass customization respectively, and customers choose one or the other according to their needs.

However, both compete against on-premise software, offering many of the same benefits such as mass customization. But unlike SaaS, cloud computing does not compete head-to-head for final end-user applications. Competition exists for components at each layer of the technology stack – from storage to user interface. As a consequence, they compete on architecture as much as they do on outsourcing. While SaaS adoption is usually driven by functional executives, cloud computing adoption is normally driven by IT executives.

Another interesting take is that of Brenda Michelson of Elemental Links, Inc. She created the “cloud-o-gram” diagram, her interpretation of the cloud computing space. Her cloud-o-gram has four inter-related areas: cloud computing offerings, cloud computing environment, cloud computing environment offerings and customer-provider agreements. There are five categories of cloud computing offerings: “for the cloud”, “about the cloud”, “on the cloud”, “of the cloud”, as well as the cloud computing environment itself. SaaS is an offering on the cloud. IaaS and PaaS are offerings of the cloud.

The essentials

The salient difference between SaaS and cloud computing is that SaaS has largely been about Internet applications used by people, whereas cloud computing is about Internet application components used by other computers. You could look at it as Websites vs. Web Services. SaaS is a fully formed end-user application that is not located on your premises, whereas cloud is computing infrastructure and services that you can rent.

Gartner offer a tutorial for understanding the relationship between SaaS and cloud computing. You can use this research to understand cloud computing and its impact on SaaS providers.

What do you think? Can you think of any more differences between the two? Your opinions are welcome!

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Astadia, a pure-play cloud computing integrator, and Salesforce.com have come together to announce the launch of the IT Cloud Transformation ROI Calculator, a free online service which will enable you to quickly estimate how much you stand to save in the cloud, versus on-premise. The program takes into account software applications, servers, data centers and back office functions and determines which would be cheaper with Web-based software applications and how long it would take to achieve ROI. The ITX (IT Cloud Transformation) ROI Calculator provides results in both US dollars and British pounds. The ROI generations will be made specifically considering moves to the Force.com platform as well every other major cloud platform including Amazon Web Services and Google.

For example, the ROI calculator shows that an IT environment for 250 users would run $883,000 for on-premise, while in the cloud it would cost $515,875, a massive savings of $367,125. That savings figure takes into account infrastructure migration costs; IT services costs; software licenses; project and platform costs; and IT development. At that rate, the calculator illustrates that the return on investment of the cloud project would be roughly 2 1/2 years. (Andrew Hickey, CRN.com)

"This new tool shows how much money IT departments could be leaving on the table," Cory Vander Jagt, VP, Astadia ITX, says. "Premise based IT solutions leak money at three different inflection points whenever a company gets bigger or smaller. Standardizing an application environment in the Cloud consistently provides elasticity at all three points."

You can access the ITX ROI Calculator here.

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Cloud adoption today

Adoption rates and forecasts for the much-hyped technology of cloud computing are all over the map. Goldman Sachs say one thing, Forrester say another. We looked at a Spiceworks survey of over 1,500 IT professionals that shows that smaller companies are more willing to move their technology to the cloud. The top line: 24 percent said they are using or planning to move to the cloud. Despite this, 62 percent still said they are not currently using the cloud and have no plans to use it. The biggest turn-off appeared to be concerns over unproven technology, something which is sure to change as technology becomes more trusted and more established.

The reality is that SMBs have been on the cloud for some time now, and are the main drivers of the largest and fastest growth trajectory surrounding cloud technology. Adopting SaaS early on, many SMBs have contributed to the rapid expansion of SaaS providers like Salesforce.com. Now small and medium businesses are looking to put much of their IT into the cloud, if only for the sole reason of saving money.

Why is the cloud suited to SMBs?

While larger organizations and government agencies are busy sorting out security, privacy, compliance and control issues, the decision to go cloud for small businesses is an easy one. In many cases they cannot justify or afford the large CapEx of traditional IT. They also typically have less existing infrastructure, less bureaucracy, more flexibility, and smaller capital budgets for purchasing in-house technology. Similarly, SMBs in emerging markets are typically unburdened by established legacy infrastructures, thus reducing the complexity of deploying cloud solutions.

A brighter future

Without the opportunities available in the cloud, most SMBs would have to go without core enterprise systems such as CRM, ERP, calendar sharing, e-mail, and even business intelligence. But what they have come to realize early on, is that all of these can be enjoyed out of the cloud for a few dollars a day.

What’s more, the increasing availability of clouds have opened opportunities for small technology-oriented startups to rent virtual data centers and avoid the huge investment needed to purchase hardware, software, and rent data center space. A million dollars used to be the minimum for a start-up to prepare for its development… With the options in cloud computing today, that money can be put to better use elsewhere.

Unfortunately many cloud computing providers and cloud application vendors are overlooking the emerging SMB market and just concentrating on the big players. We think we’ve positioned Bime to benefit both – and especially SMBs. Bime’s low prices and ease of use make it perfect for a start-up or a medium sized enterprise. But that is not to say it isn’t essential for larger enterprises too – among some of our larger customers are ArcelorMittal and the Adysa Group.

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The webinar started off with a quick description of how what a Hype Cycle is all about. To remind you, Hype Cycles are management models that help organizations understand the landscape of technology maturity and markets, and to decide which technology innovations to adopt, postpone or ignore, and when is an appropriate time to adopt. The Gartner Hype Cycle model was first published 15 years ago, and has grown to an annual release of between 70 and 80 Hype Cycles per year.

See the Hype Cycle explained below.

Jackie Fenn went on to discuss some specialized Hype Cycles, one of which was the Cloud and Platforms Hype Cycle – including private cloud computing, cloud computing, cloud/web platforms, mobile application stores, activity streams and Internet micropayment systems. You can see their positions on the 2010 Hype Cycle below.

As you can see, private cloud computing is making its way up the Technology Trigger, towards the Peak of Inflated Expectations. Fenn explains that certain industries (e.g. Governments) are realizing the benefits of cloud computing but are concerned about the level of security for their data – enter the private cloud.

She also makes the very valid point that most of the technologies included in the Gartner Hype Cycles are not new – they are niche ideas that early-adopters have already been using, which are moving towards becoming mainstream technologies.

You can see cloud computing has crept past the Peak of Inflated Expectations and is making its way down the curve towards the Slope of Enlightenment – in other words, cloud computing is about to explode! How can we use this kind of information to our advantage as an organisation? You’ll see on the graph above that each technology is marked differently on the curve – this tells us the timeframe in which Gartner expects the technology to reach mainstream adoption. They have predicted that cloud computing will be mainstream within 2-5 years time.

How else can we visualize and interpret this information? A priority matrix is published alongside every Hype Cycle. Priority matrices are useful for detailed technology prioritization – they are essentially risk/benefit matrices which enable the user to look beyond the hype and assess technology opportunities in terms of their relative impact on the enterprise and the timing of that impact. Take a look at the Emerging Technologies Priority Matrix for 2010 below.

The vertical “expectations” axis has been replaced with “benefit” which helps us decide which technologies to invest in. The top left hand corner contains “high priority” technologies – where we should focus our early efforts and resources – e.g. cloud computing, cloud/web platforms, mobile application stores. These are low-risk high-benefit technologies that are likely to become mainstream within the next 5 years.

On the other side, in the top right hand corner, we have technologies with a potentially very high return – but also a higher risk. As it stands in 2010, these include autonomous vehicles and mobile robots. Don’t expect to see these technologies emerging anytime soon, but when they do, they have the potential to be of high value. These are the type of technologies that are often ignored – so keep an eye on them, as early-adopters are already moving with these things.

Cloud computing is to well-positioned to become a high priority for organizations over the next few years as more and more people realize its benefit and low-risk. When you compare its position in last years Hype Cycle (see our previous post Gartner’s hype cycle for 2009: SAAS business intelligence is on the rise) you can see the graduation of cloud computing along the curve. You will also notice that some technologies such as private cloud computing were not even on Gartner’s radar last year, which shows just how quickly technology is adopted and how fast it matures, reinforcing the importance of early investment in such technology.

You can access the slides from the webinar here or watch the recorded webinar here.

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We just stumbled across this nice little visual all about cloud computing and thought we’d share it with you. It gives you a very basic overview of what cloud computing is all about, as well as some interesting stats. Some of the basic advantages of being in the cloud are explained, and there are some easy-to-read visuals about the differences between traditional IT and cloud computing.

Take a look for yourself:

Source: http://wikibon.org/blog/

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The recent report released by Gartner says all cloud services customers should have some basic rights to protect their interests. We’ll briefly outline their ideas :

What are your rights as the consumer?

1. The right to retain ownership, use and control one’s own data

Service consumers should retain ownership and rights to their own data. The provider must specify exactly what it can do with the consumer’s data and any contract must provide for the clear disposition of the service consumer’s data, in the case that the provider can no longer provide service.

2. The right to service-level agreements that address liabilities, remediation and business outcomes

All computing services suffer slowdowns and failures at some point along the line. However, cloud services providers rarely commit to recovery times or spell out details of the remediation process. The provider’s contract should not simply guarantee an x amount of turnaround time; it should really specify how it plans to deliver the remedy.

3. The right to notification and choice about changes that affect the service consumers’ business processes

Every service provider needs at some point to interrupt its services or make other changes in order to increase capacity and ensure that its infrastructure will serve consumers adequately in the long term. However they should give advanced notification of major upgrades or system changes, and grant the consumer some control over the timing of the switch.

4. The right to understand the technical limitations or requirements of the service up front

A lot of service providers fail to fully explain their own systems, technical requirements and limitations, leaving consumers at risk of not being able to adjust to major changes, at least not without a big investment. To save problems in the long-run for both parties, both service consumers and providers must do a better job of keeping each other informed about their technical limitations, particularly for complex, long-term projects.

5. The right to understand the legal requirements of jurisdictions in which the provider operates

If the cloud provider stores or transports the consumer’s data in or through a foreign country, the service consumer becomes subject to laws and regulations it may not know anything about. Service providers should explain which jurisdictions they put data in and what legal requirements the service consumer must therefore meet. The consumer needs reassurance that the provider is not violating any rules for which the consumer may be held accountable.

6. The right to know what security processes the provider follows

Service consumers must understand the processes a provider uses, so that security at one level (such as the server) does not compromise security at another level (such as the network). Service consumers also need to understand the provider’s business continuity plans, so that they can ensure that their own operations continue in the case of an emergency.

What is your responsibility as the consumer?

You have the responsibility to understand and adhere to software license requirements…

Providers and consumers must reach an understanding about how the proper use of software licenses will be assured. On one hand, providers must not be held liable if the consumer violates the licensing agreement by putting the software it licenses from a third party in the cloud. On the other hand, the provider should not agree to an audit directly by the vendor, if the consumer owns the software licenses.

So, to quickly sum up all of the above.. As Daryl Plummer, managing vice president and Gartner fellow says : “Respecting these rights will require effort and expense from providers, but securing the rights will encourage enterprises to put more of their business into the cloud”. Here at We Are Cloud we think these are all valid points, which is why we strive to be as transparent as possible, and we do everything we can to honor the rights of our customers.

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SaaS does not solve all the challenges associated with the delivery of traditional software, but it can be hugely advantageous provided the problem is not too complex. It provides a solution that is quicker to implement and configure than previous software would allow.

However, many of the bad practices that occur in traditional software are now working their way into SaaS. A good example is shelfware, a result of businesses purchasing too many SaaS subscriptions. “Shelfware as a service is the concept of paying for a software subscription that is not being accessed by an end user,” said Mr. Cearley, vice president and fellow at Gartner. The study conducted by the market research firm reveals that this is more common in larger organisations, but can still occur in companies of any size.

So, in order to minimize the risks of this happening, Gartner analysts have offered their advice on best practices for SaaS at the Gartner SOA & Application Development and Integration Summit 2010. They highlighted four important steps to take when evaluating SaaS:

1. Determine the value
While it limits infrastructure overheads, lowers short- to medium-term total cost of ownership and improves levels of ROI, SaaS is perhaps less financially and technically viablein the long-term, and for applications requiring a high degree of integration.

2. Develop governance of SaaS applications
The next step is to create an SaaS governance model which meets the internal and external needs of the organization. This should take the form of a policy document and all applications should be fully integrated into it.

3. Evaluation of vendors
Organizations need to evaluate vendors based not only on business performance, but also on financial, legal and technical aspects – in other words, within the context of specific application needs. It is not enough to simply consider a single dimension; a much more comprehensive overview of the effects of SaaS deployment can be achieved by considering a vendor’s full package. But the question that remains to be asked is: do all organisations have the means, or even the desire, to evaluate SaaS on such a level?

4. Put an Integration Road Map in place
Integration with on-premises applications and other SaaS solutions presents the biggest technical difficulty. It is therefore very important that the application stays constantly connected to the information system with which it is integrated, and evolves alongside it. For example, good mapping will ensure a smooth changeover in the instance where a major organizational change, such as a merger or acquisition, takes place.

At We Are Cloud, we are committed to being as transparent as possible in order to facilitate the evaluation process, so that organizations can be confident that Bime is the right solution for them. Please do not hesitate to contact us if you have any questions about Bime; we would be more than happy to answer them!

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It was Prague’s turn to host this year’s Cloud Expo Europe, the annual International Cloud Expo series event, organized to demonstrate the latest issues and trends in the world of Cloud Computing. We attended the conference in 2009 (see our previous blog post) and only wished we could have done so again this year!

June’s two-day event kicked off with an intensive program of keynotes, general and breakout sessions, and featured speakers from Cloud Expo, Inc. and IBM among many others.

Any changes from last year?

2010 saw an abundance of new speakers, with few returning from the 2009 session. Should this be viewed in a positive light? We think so. The growth of cloud computing is clearly evident through the evolution of the topics discussed in the various lectures – a year ago the bulk of the information delivered was theoretical in nature – whereas now we are seeing how that knowledge can be applied in practice. The 50+ technical sessions covered a wealth of in-depth cloud computing topics – from what is cloud computing, and how manage a migration to the cloud, to how to consume it in SMEs, and is cloud the new normal for enterprise IT?

What were the benefits of attending these sessions?

- LEARNING why cloud computing is relevant today from both an economic and technologic point of view. For example, Matthew Colebourne from Nivio Technologies discussed “Cloud Computing for Consumers and SMEs over the Public Internet” in his session, and how and why there is a need to deliver it in this way in order to reap the benefits.

- HEARING first-hand from experts in their field what issues should be considered when evaluating cloud systems. Mamoon Yunus, CTO of Forum Systems Crosscheck Networks dedicated his session to “Understanding Enterprise-to-Cloud Migration Costs and Risks”, during which he suggested developing a quantifiable impact assessment to ease the risks of the cloud migration process.

- SEEING what the potential advantages and disadvantages are of adopting cloud computing systems.

- DISCOVERING what to look for in a cloud computing provider to ensure data and applications are secure. The Sales V.P. of Unisys’ Global Security, Technology and Consulting unit, Roberto Tavano, talked about “How Cloud Computing Improves Security” – stressing that companies should not fear a switchover for security-related reasons, and that successful migration actually decreases the risks to the organization.

- FINDING OUT how to transform a traditional data center that is less flexible and costly to a cloud computing environment that is secure, virtualized and automated.

- MASTERING how to improve efficiency while lowering operating and capital expenditure.

- LEARNING what works, what doesn’t, and what’s next – a concept advocated by the renowned French evangelist firm Revevol and it’s CEO, Laurent Gasser. During the expo he spoke about organisations being able to move their applications to SaaS solutions, with the majority being able to move in as soon as the next 3-5 years.

Armed with this information, delegates were reliably informed of the contributions made by Cloud Computing to the rapidly falling costs of computation, application hosting, and content storage and delivery.

If there was one message taken away from the Expo it was this: cloud providers can help businesses to maximize performance, minimize cost and improve the scalability of their IT endeavors, which all of us at We Are Cloud totally agree with.

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You will understand why we didn’t translate “We Are Cloud” in french.

You’ll find the original Wall Street Journal’s article here.

Have a nice week end.

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Cloud Computing is part of the technologies at “the peak of inflated expectations”. Remember that this time last year, cloud computing was classified as a “technology trigger”.

Can we expect a “plateau of productivity” for 2010? Why not? In 2008, Gartner was already considering mainstream adoption of Cloud Computing to be between 2 to 5 years away and the odds are still good today.

The same hype cycle was released for Business Intelligence & Performance Management topics. Here are the details.

On the Rise

Collaborative Decision Making, Enterprise Metadata Taxonomy and Ontology Management, Supply Base Management, Integrated Business Planning, Product Portfolio Optimization, Marketing Performance Management, Closed-Loop Performance Management, Sales Performance Management, Enterprise Information Management Programs, Web 2.0 and BI, Product Performance Management, SOA-Based Analytic Applications, Information Infrastructure, SaaS BI, Entity Resolution and Analysis, Financial Reporting With XBRL

At the Peak

Price Optimization and Management for B2B, Data Discovery Tools, Master Data Management, Content Analytics, Sales Analytics, Open-Source Business Intelligence Tools

Sliding Into the Trough

Performance Appraisal/Assessment, Text Analytics, Contact Center Performance Management, In-Memory Analytics, Interactive Visualization, Strategy Management, Spending Analysis, Business Activity Monitoring

Climbing the Slope

Profitability Modeling and Optimization, Dashboards, Data-Mining Workbenches, Data Quality Tools, CPM Suites, Web Analytics

Entering the Plateau

Excel as a Business Intelligence/CPM Front End, Business Intelligence Platforms, Budgeting, Planning and Forecasting for CPM

So, how many years before SAAS Business Intelligence reaches “the plateau”?

What do you think about it? We’d love to hear your thoughts so please leave us a comment.

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