Understanding Cloud Computing
Cloud computing (“the cloud”) has quickly become one of the leading technology topics in the world, yet many people don’t fully understand what it is or how it impacts their IT decisions.
Here’s what you need to know to make informed choices about your deployment and infrastructure.
What Is the Cloud?
“Cloud” is a generic term for computing resources provided from a remote location. It spans everything from storing email or photos on services like Google or Snapfish, to hosting and maintaining an entire corporation’s IT infrastructure from a remote data center.
At its core, cloud computing means renting storage and processing resources rather than buying and maintaining them on-premise.
Business Applications in the Cloud
Major applications such as ERP and CRM that run in the cloud are often called “cloud-hosted” or “cloud-based.” They’re typically offered under a Software-as-a-Service (SaaS) model.
With SaaS licensing, you pay a monthly fee based on usage. That fee generally covers software, hosting, and maintenance—no upfront license cost or on-premise server to buy and install.
Differences Between SaaS and On-Premise Applications
Traditional on-premise software involves a large up-front capital expense for licenses and hardware, plus installation of operating systems, databases, and more. SaaS replaces those costs with a predictable monthly fee.
While SaaS can save time by eliminating hardware setup, implementation tasks—customization, data migration, training—remain the same for both deployment types.
On-premise setups also incur ongoing support costs (backups, disaster recovery, server tuning, load balancing, security). In contrast, SaaS providers typically absorb those costs into the monthly subscription, often at a net savings.
Cloud solutions are highly scalable: as your business grows, you can add or remove users and resources instantly by contacting your provider, which adjusts your service and fees accordingly.
SaaS Deployment Options: Single-Tenant vs. Multi-Tenant
Most cloud applications fall into two categories:
- Single-tenant SaaS: Your instance and data are hosted separately in the cloud, accessed via the Internet or leased lines—much like an on-premise setup.
- Multi-tenant SaaS: A single software instance serves multiple customers, each with its own secured database and customizations. All customers share the same update cycle (instant access to enhancements), but have limited control over the underlying software.
With single-tenant and on-premise, you control upgrades, customizations, and integrations. In multi-tenant SaaS, those responsibilities are shared with your provider as defined by your contract.
Beware of “Faux Cloud” Solutions
Watch out for legacy applications that have been “re-engineered” for the cloud but still rely on client software or middleware. True cloud applications run entirely in a browser, with responsive designs optimized for web and mobile—no client installs required.
Choosing the Right Deployment Option
While cloud/SaaS offers many advantages, it isn’t ideal for every situation. Evaluate each deployment option only after selecting the right software and service provider based on functionality, fit, reputation, financial stability, and support capabilities.
