Cloud computing refers to a new delivery model for IT services on the Internet rather than accessing your own servers or mainframe computer located in your place of business. The term “cloud” is used as a metaphor for the Internet, based on the drawing usually used to symbolize the Internet (a cloud).
In a traditional (non cloud) scenario the servers are well defined by name or IP address. We often hear about accessing “ABC Server 01” or similar and what we are referring to is a specific computer or server located somewhere in our datacenter or server room.
In cloud computing you are connecting to business applications and data on the Internet, but without really knowing the specifics of the server name or IP address. Usually all you need to know is a web address and the cloud takes care of the rest.
Some well-known providers of cloud computing are Google and Amazon. They both provide a service, but all we need to access their services is a web address. We don’t need to understand anything about their infrastructure, number of servers or anything else than the web address. The cloud computer vendor handles everything else for us.
Some vendors offer software on a subscription basis or pay as consumed basis. The vendor delivers the software using the cloud computing model and users access the software via the Internet. All the users need to start is an Internet browser or specific local software that access the vendor-supplied service. Providing the software as a monthly service is also called “Software as a Service” or just SaaS.
One benefit to the SaaS model is that there is usually very little to no upfront cost associated with the model. Since the software is hosted in the cloud all the user need is Internet access. There is no need for additional hardware, software or installation and maintenance services. This makes it very easy to get access to advanced software and at the same time avoid the capital expenditure associated with a normal purchase of the software.
Another benefit is that the company using the SaaS model has no infrastructure to maintain. Someone else is responsible for delivering the software, maintaining hardware, performing backup etc. All SaaS vendors provide an uptime warranty to ensure their customers continuous access to their software. If the software goes down, the vendor is responsible to get it back up with a certain time frame. It gives the company a piece of mind almost like an insurance policy.
Under the SaaS model you will never actually own the software. You are essentially renting the software and over time the economic benefit diminishes because you will continue to pay for the access and you never get to own the software. Most SaaS vendors have a pricing structure that will break even after around three years. So after three years you will paid the cost of the software solution just like if you would have financed a purchase of the solution. The only difference is that you will never own the solution when using the SaaS model.
The cloud or SaaS model is an excellent solution for smaller installations and for startup companies that can’t afford the initial high cost of purchasing and installing the software. The model also makes a lot of sense if you have little or no IT infrastructure and can’t afford to maintain a server environment with all it entails. In the long run you typically won’t save money but it offers you piece of mind and the flexibility to change to a different provider at any time.