Is that Cloud Computing or is it SaaS?

No question that Software as a Service (SaaS) and Cloud Computing are hot topics and major trends in the business solutions market.  SaaS vendors and solutions continue to grow new customer subscriptions and revenues while traditional on-premises vendors and solutions experience declining new customer license revenues.

But vendors are causing confusion for prospective buyers by referring to SaaS and Cloud Computing interchangeably in their marketing materials.  As with most new technologies, prospective buyers largely depend on the vendors to provide information and educational content as part of their marketing outreach.  We’re at the early stages of a major long-term trend on how business solutions and computing capabilities are delivered to customers.  Using standard and consistent terminology and definitions avoids customer confusion and disinterest in what may appear to be more tech jargon.

While most of the terminology is established, the definition or interpretation of the terminology is still inconsistent and a source of confusion for prospective buyers.  In the interest of resolving this situation, I hope to instigate a broader discussion by proffering the following definitions and interpretations of the common, currently used terminology:

Software as a Service (SaaS) – customers subscribe to the use of a functional solution as an on-demand service delivered by the vendor or authorized partner in a multi-tenant deployment online environment.
Cloud Computing – provides customers with a complete, secure, private and scalable on-demand computing environment from a utility-computing provider on a subscription basis.

The important and confusing distinction is that while a SaaS vendor may use cloud computing to deliver a CRM solution for example, the SaaS customer is only subscribing to the CRM application service.  If they do not have access to the underlying cloud computing environment for other purposes, it should be referenced as SaaS, not cloud computing.

On the other hand, a cloud computing customer subscribes to a computing environment for all their computing needs and deployment of multiple solutions as an alternative to their own data center.  The solutions could be sourced from multiple vendors and/or self-developed.  They may choose to deploy one or more SaaS solutions in their private cloud computing environment.

This leads to more terminology and definitions to more fully describe all the available possibilities.  The cloud computing environment is currently comprised of three layers of services:

  • Infrastructure as a Service (IaaS) – this is the computing foundation and infrastructure for cloud computing consisting of the computing services, storage, networking, security, backup, recovery, operations management and other requisite capabilities.
  • Platform as a Service (PaaS) – this is all the application enabling technologies for developing, deploying and servicing functional SaaS solutions in a cloud computing environment.  PaaS also enables customers and authorized partners to develop and deploy their own applications using the tools and services provided by the PaaS vendor.  PaaS runs on the underlying IaaS.
  • Software as a Service (SaaS) – these are specific functional applications such as CRM, Expense Management, HR Benefit Management, etc. licensed and delivered by solution vendors in an on-demand online or cloud computing environment.  SaaS runs on the underlying PaaS and IaaS.
Hopefully this article will help prompt a larger discussion for industry analysts and vendors to agree on standard and consistent definitions and interpretations of the terminology for evolving SaaS and Cloud Computing technologies.

Your comments are always welcome.
Copyright © 2009 The Marketing Mélange and Ingistics LLC.


Unknown said...

Oh, the tangled web we marketers weave. I agree with your differentiation although I believe that the confusion is caused at times by ignorance and at other times by intent.

The Extreme Moderate said...

Im not sure the differences are relevant really.

My customer approach is to understand what the need or want specifically, and map it to an architecture model that delivers the maximum value.

"Cloud" was designed out of the gate as a buzz word (the industry is almost fully marketing driven these days), so it's no surprise it is a little more than a buzz word.

The semantics may be important from a branding standpoint, but not so important to the customer.

They have a problem to solve. Either "I spend to much running this infrastructure and want it out" in the case of an enterprise or "I want to be able to always have access to all of my "stuff" and share it with my friends wherever I am" in the case of a consumer or "I'd like to build an application that scales dynamically and rapidly, with global reach, and leverages vast stores of public data" in the case of a developer.

Once the needs have been defined, they can be mapped to a model that delivers the capabilities required. Whether it is SaaS, IaaS, PaaS, and on and on (or some mixture of all of them) is something the marketing folks can puzzle over :)

Ideally, from a provider standpoint, a single platform should be dynamic and automated enough to both allow for, and self configure for, any of these scenarios. That is the only way to achieve the economies of scale and agility required to adapt to emerging customer needs without massive reinvestment.