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How are SaaS and Cloud computing related? January 17, 2010

Posted by ranjitn in Uncategorized.
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With the terms “Cloud computing” being used so often, like many, I pondered on its relationship to Software as a service (SaaS). Are they synonymous? If not, what is the overlap? To add to the confusion analysts, reporters and vendors, have their own definitions. For instance Gartner calls it “hosted software based on a single set of common code and data definitions that are consumed in a one-to-many model by all contracted customers, at any time, on a pay-for-use basis, or as a subscription based on usage metrics” http://www.gartner.com/it/page.jsp?id=496886. According to internet news “Software as a Service may also be referred to as simply hosted applications” http://inews.webopedia.com/TERM/S/SaaS.html. The second description implies that a software vendor could get a hosting company to host an instance of the software and voila, you have SaaS. The question is how is this any different from an ASP (Application service provider). Now the pay-for-use can be construed to be a monthly subscription fee and this is different from the pay-for-use we see in our electricity utility bills or cell phone bills. So let’s see how Salesforce.com the poster child of the SaaS industry fits in to the definition. Yes, there is a hosted solution, and yes they charge a monthly fee ( up front). They also charge a different subscription fee based on the features available for use. However, there is a significant characteristic which differentiates salesforce.com from an ASP – multitenancy. This means salesforce.com does not create a new instance of the software installation for every new customer.

Cloud computing on the other hand seems to have originated from the hardware side of computing. The terms “utility computing” and “grid computing” immediately come to mind. The following blog by Geva Perry, on gigaom.com, contrasts utility computing from cloud computing http://gigaom.com/2008/02/28/how-cloud-utility-computing-are-different. In summary he says “Utility computing relates to the business model in which application infrastructure resources — hardware and/or software — are delivered. While cloud computing relates to the way we design, build, deploy and run applications that operate in an a virtualized environment, sharing resources and boasting the ability to dynamically grow, shrink and self-heal.”

Based on this description of Cloud computing, it is clear to me that SaaS vendors must adopt the cloud computing paradigm which encompasses concepts such as linear scalability, multi-tenency, self-healing, high reliability and virtualization, in order to deliver customer value. As such, SaaS is software delivered using cloud computing infrastructure. Cloud computing infrastructure includes all the hardware and middleware components needed to satisfy the pre-requsites listed above.

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