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FINDING A TRUE
CLOUD SOLUTION
SHINING A LIGHT
ON THE CLOUDS:
Page 2Copyright © 2017, Oracle and/or its affiliates. All rights reserved.
SHINING A LIGHT ON THE
CLOUDS: FINDING A TRUE
CLOUD SOLUTION
The Cloud continues to hang over the
business computing landscape like, well,
a cloud. Public cloud, private cloud, hybrid
cloud, SaaS, PaaS, IaaS—all of it makes for a
confusing alphabet soup for even the most
experienced industry observers and IT pros.
And, as longstanding technology firms look
for ways to get into the market and new
entrants emerge, creating new terminology,
claiming firsts and generally obfuscating the
entire landscape, it only promises to get more
confusing for technology buyers seeking a
cost effective, scalable and agile solution for
their needs.
This paper serves to provide some clarity
around the different flavors of cloud and a
detailed explanation of why multi-tenant SaaS
offers the greatest combination of value,
agility and scalability.
Grab a seat and enjoy.
Read Time: 4 minutes
Defining the Cloud
At its simplest, cloud computing is just using
someone else’s computer over the internet.
However, the marketplace has done its part
to confuse things, offering up multiple flavors
of cloud, including:
Public cloud: Shared services available for
public use, including applications, storage,
databases and analytics. Essentially, multiple
people using someone else’s computer over
the internet.
Private cloud: Cloud infrastructure created for
a single organization that takes advantage of
advances like virtualization and economies
of scale. Essentially, one company or many
divisions of a company using one computer
over the internet.
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Infrastructure-as-a-Service (IaaS): Not much
different from the public cloud, but the
customer is just renting the processing power
of the cloud, which it can scale up or down in
times of need. The customer still maintains,
customizes and updates the software. Some
common examples include DigitalOcean,
Linode, Rackspace, Amazon Web Services
(AWS), Cisco Metapod, Microsoft Azure and
Google Compute Engine (GCE)
Platform-as-a-Service (PaaS): Here the vendor
provides not just the computing power,
but also the development environment,
allowing customers to build their own
software applications while sharing services.
Some examples are AWS Elastic Beanstalk,
Windows Azure, Heroku, Force.com, Google
App Engine and Apache Stratos.
Software-as-a-Service (SaaS): In this
scenario, the vendor supplies everything—
the processing power, the development
environment and the software itself.
Customers run the applications over an
Internet browser and can feed or extract the
data they need. Perhaps most importantly
and often overlooked, SaaS is built in a multi-
tenant architecture, meaning customers are
all on the same version of the software at the
same time.
Why Multi-tenancy Matters
It’s this multi-tenancy that makes the big
difference and separates fake cloud
solutions from true cloud solutions. Many
legacy software companies have simply
ported their old code and architecture over
to a private cloud and offered it up as a
service—this is what we call the fake cloud.
A true cloud platform is differentiated from a
fake cloud platform for the following reasons.
• Economies of scale
Running business applications in a single
instance, whether it’s on-premise, with a
hosting provider or with an Infrastructure-
as-a-Service (IaaS) provider such as
Amazon, does not provide the economies
of scale of a multi-tenant solution. A hosted
provider, aka the old Application Service
Provider (ASP), model may save a company
the hassle of managing hardware and using
IaaS for applications may allow companies
to tap into shared commodity hardware. But
running all customers on one instance of
software and shared hardware can mean
far bigger savings. Some vendors might
suggest that the advantage is only to the
cloud provider, but be sure that savings
are passed along to the customer—just do
a little price comparison and you’ll find out
for yourself.
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• No more version-lock
Cloud customers using a multi-tenant
solution don’t have to worry about being
stuck four versions behind the way they
do with hosted software. Ask customers
whether they want the latest version of
software and the answer is almost always
"yes". Unfortunately, the follow-up questions
are "how much does it cost and how
disruptive will it be?". Customers of multi-
tenant solutions do not need to worry about
either one. Upgrades come as part of the
subscription service and enhancements
are iterative and gradual, what many end-
users have come to expect based on their
experiences with consumer applications.
• Adapting to evolving regulations
Those automatic, regularly scheduled
enhancements are particularly important
as regulations and standards change
and evolve. For example, when changes
were made to the Value Added Tax (VAT)
by the UK and EU in 2008, 2009 and
2015, NetSuite customers didn’t have to
worry about downloading and testing new
software. Since they were all on the same
version of the software, NetSuite updated
the code and all customers woke up
with a compliant system. For on-premise
customers, that meant downloading a
patch, testing it to make sure it works and
then testing any integration that might be
impacted by the change. For on-premise
or hosted cloud customers locked into
even older versions, it’s an even bigger
headache. The same is true for the new
changes coming to the ASC 606 accounting
standards. The changes coming for public
companies in December of 2017 and
private companies in 2018 demand more
than just software upgrades—they demand
many organizations rethink the way they
operate, particularly around finance and
sales commissions. NetSuite customers
at least know they have a system that has
addressed the new standards and built that
into the system.
• Customization
True cloud vendors also provide a
customization platform that allows
customers and partners to not only
customize the application on their
platform, but ensure that all of those
customizations continue to work when a
new product enhancement is rolled out
by the vendor. This guarantees that you
not only get to use the latest functionality
without delay, but that you do not need to
constantly re-implement customizations
and integrations you previously had in
place every time a new product version
comes out.
• Investing in the future
Furthermore, multi-tenancy means the
money being spent on applications isn’t just
maintaining the status quo. The maintenance
fees that go into on-premise and hosted
software may ensure that you can implement
the new version that comes out every
couple of years, but doesn’t account for the
disruption and associated costs that goes
along with that upgrade. With the true cloud,
the money spent on a vendor like NetSuite
is no longer being spent simply on what
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you have. You’re spending on the newest
and latest versus just keeping the lights
on. True cloud users are benefiting from all
the enhancements made by the vendor as
opposed to waiting for it.
• Subscription pricing can be a differentiator
Most multi-tenant SaaS providers offer
their solution in a subscription pricing
structure, typically per user/per year. This
serves as a win-win for both customer and
vendor. For the customer, the upfront costs
are significantly lower than on-premise
alternatives and the vendor needs to
continue to earn your business. It also
mitigates risk. While some cloud vendors
offer perpetual licenses, should the
implementation fail or the customer switch
to another provider after a short period, they
lose that upfront investment, but ultimately
costs the vendor nothing.
Not All Cloud Vendors are the Same
Beyond the true cloud/multi-tenant vs. fake
cloud/hosted debate, even within the world of
multi-tenancy, all clouds are not created equal.
Even as legacy providers are scrambling to
cloud-wash their old applications, the emerging
software companies are architecting their
solutions for the cloud—they have to or they
don’t get funding. This leaves buyers in an
uncomfortable place: either they turn to
legacy vendors and hope the transition to the
cloud goes smoothly, or they select an up and
coming software company that has built their
solution for the cloud from the ground up,
but doesn’t have the track record of serving
customers long term or the deep pockets to
ensure they stay in business. There is an
alternative, however. There are a handful
of companies that understood the need
to architect for the cloud before the hype
began and have built successful businesses
with a large customer base, giving them
decades of experience serving their
customers in the cloud and the resources to
continue development.
Shopping for cloud software can be a
confusing endeavor. With the true cloud,
customers get economies of scale, regular
updates and the scalability they could
not with hosted solutions. And with well-
established companies like NetSuite, they
get a partner invested in their success that
continues to enhance the product, while
supplying the security, uptime and flexibility
that a modern business demands.
When evaluating cloud
providers, it’s important to
ask these questions:
1. What is the vendor’s viability, cloud
track record?
2. What are the cloud SLA commitments,
transparency?
3. Does the cloud vendor have the right
certifications?
4. Is it hosted or a true cloud solution?
5. Has the provider achieved scale?
6. Can it be customized, extended
and integrated?
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