Cloud Delivers Benefits - But SaaS Delivers More
Eight to ten years ago deployment options were hardly a consideration. Most accounting solutions were still licensed and deployed on your own premises, or perhaps licensed and hosted by a reputable third party. “Cloud” had yet to become part of the business vernacular and “SaaS” was still a relatively new and poorly understood concept. While other complementary solutions like Customer Relationship Management (CRM) were headed in that direction, entrusting the transactional system of record of your business to the cloud required a higher level of trust that had not yet developed.
But now - how times have changed! Today the majority of businesses have some sort of cloud strategy and the shift to the cloud and SaaS has begun in earnest. When cloud was far less popular, decision-makers worked hard at analyzing the pros and cons and understanding all their options. Now with all the media and vendor hype, it appears to simply be a given. Like the tide, the surge towards cloud seems to be unstoppable. And as people and companies accept the inevitable, they stop looking at the different options with a critical and questioning eye.
Mint Jutras has been following perceptions and trends in cloud and SaaS since our inception in 2011, and we carefully distinguish between the two. We do this through our annual Enterprise Solution Study, an electronic survey that collects data from hundreds of respondents from all types of companies, of all sizes. In 2019 we had 464 participants. As in prior years, we asked those who were considering a SaaS solution (but not yet using one) what appealed to them about SaaS. Their responses are summarized in the “Anticipated” column in Table 1. For those already on a SaaS solution, we asked what benefits they had achieved by moving to SaaS. Participants were allowed to select any and all that applied. We found the answers this year disappointing.
Table 1: Anticipated versus Realized Benefits of SaaS. Source: Mint Jutras 2019 Enterprise Solution Study
Over the years the potential benefits we list have evolved but have been quite similar year after year. And year after year the percentage of participants recognizing the various potential benefits increased – until this year. With almost every software vendor hopping on the cloud bandwagon today and many of the largest claiming victory in the race to be the biggest and the best, we fear many business users are also hopping on that wagon without truly understanding the benefits. And without this kind of knowledge, choices are being made without full understanding. As a result, some of those benefits are being left on the table.
And therefore, we start this 5-part blog series by defining the various cloud and SaaS options. Parts 2 through 5 will summarize the different benefits into the following categories:
- Cost considerations
- Growth and distributed environments
- Security, Risk, Business Continuity
Defining Deployment Options
Non-technical ERP end users often don’t know, care or need to know which of these deployment options are actually being used to deliver the application and they are even less likely to care how it is paid for. But it is of paramount importance to understand the different (potentially confusing) options if you want to avoid being “cloud-washed,” and especially if you want to maximize the benefits.
Let’s start by getting back to the most basic definition of cloud and SaaS. Many use these two terms interchangeably, but there are some important differences. So, let’s distinguish between the two:
- Cloud refers to access to computing, software and storage of data over a network (generally the Internet.) You may have purchased a license for the software and installed it on your own computers or those owned and managed by another company, but your access is through the Internet and therefore through the “cloud,” whether private or public.
- SaaS is exactly what is implied by the acronym. Software is delivered only as a service. It is not delivered on a CD or other media to be loaded on your own (or a third party’s) computer. It is generally paid for on a subscription basis and does not reside on your computers at all.
We can conclude: All SaaS is cloud computing, but not all cloud computing is SaaS. Mint Jutras has long been a fan of both cloud and SaaS, even before either were widely accepted. We believe cloud delivers a lot of benefits… but SaaS delivers even more.
In our last few annual enterprise solution studies (including our most recent in 2019), we use the following options to categorize deployments:
- Software as a Service (SaaS): Software is delivered only as a service. It is not delivered on a CD or other media to be loaded on your own (or another party’s) computer
- Hosted and managed by your ERP vendor: Software is licensed by you, but you pay your ERP vendor to manage and maintain (host) hardware and software
- Hosted by an independent 3rd party: Software is licensed by you, but you pay another party to manage and maintain (host) hardware and software
- Traditional licensed on-premise: You license the software and are responsible for managing and maintaining it on your own premises
- Hybrid: Parts are licensed and maintained on-premise and parts (e.g. add-on modules) are SaaS
Traditional on-premise or hosted solutions might (or might not) be accessed via the cloud, although this is more likely to be a private cloud. Those delivered as a service (SaaS) might be offered as multi-tenant or single-tenant (also known as multi-instance) or both.
Now that we have set the stage, at least definitionally, the remainder of the blog posts in our series will explore the different types of benefits.
Cindy Jutras is a widely recognized expert in analyzing the impact of enterprise applications on business performance. Utilizing over 45 years of corporate experience and specific expertise in manufacturing, supply chain, customer service and business performance management, Cindy has spent the past 14 years benchmarking the performance of software solutions in the context of the business benefits of technology. In 2011 Cindy founded Mint Jutras (www.mintjutras.com), specializing in analyzing and communicating the business value enterprise applications bring to the enterprise.