Is SaaS the same as cloud?

Is SaaS the same as cloud?

Summary: Customers don't care what sort of cloud service it is, they just want the convenience and cost benefits. Channel players shouldn't think in terms of SaaS or cloud, they should be a trusted advisor on all aspects of cloud.

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From the customer's perspective, it's all the same. If it's provided over the Internet on a pay-for-usage basis, it's a cloud service. Within the industry, we argue about definitions more than is good for us. Customers look in from the outside and see a much simpler array of choices.

Why is this important? It matters to how we market and support cloud services (of whatever ilk). Yesterday EuroCloud UK (disclosure: of which I'm chair) had a member meeting, hosted at SAP UK headquarters, that covered various aspects of the transition to SaaS for ISVs. From the title, you'd imagine it would have little content of relevance to raw cloud providers at the infrastructure-as-a-service layer. (One of our challenges in the early days of EuroCloud, whose founders are more from the SaaS side of things, is to make sure we bring the infrastructure players on board with us). But in fact, much of the discussion covered topics of equal interest at any level of the as-a-service stack: How to work with partners? How to compensate sales teams? What sort of contract to offer customers? How to reconcile paying for resources on a pay-per-use basis with a per-seat licence fee? What instrumentation and reporting of service levels should the provider's infrastructure include?

And then came the customer presentation, by Symbian Foundation's head of IT, Ian McDonald. He was there as a customer of SAP's Business ByDesign SaaS offering, whose team were hosting the meeting. But it soon became clear that his organization's voracious consumption of cloud services runs the gamut from high-level applications like ByDesign and Google Apps through to Amazon Web Services, Jungle Disk storage and file sharing (stored on either Amazon or Rackspace), even Skype. Symbian's developers still build their own website infrastructure using open-source platforms but that too is hosted in the cloud. The imperative for Symbian, as a not-for-profit consortium, is to stay flexible and minimize costs. An important part of that is having the capacity to scale rapidly if needed but without having to pay up-front for that capacity.

For Symbian, relying on the cloud for the entirety of its IT infrastructure gives the cost flexibility and agility of execution that it requires. It doesn't differentiate between infrastructure and applications as a service — what matters is that they are delivered from the cloud in a usage-based billing model.

The takeaway for industry players is that we all have to work together. Earlier in the afternoon, the meeting heard a presentation by Chrysoula Christopoulou, a long-term member of the SAP Business ByDesign team and a key architect of its go-to-market and channel strategy. SAP will be bringing live its partner strategy for ByDesign this year (it already has some beta partners working with it) and it will encourage partners to offer mashups, add-ons, integration services and other extensions to ByDesign. Indeed, SAP is planning to introduce an application marketplace (they're all the rage these days) and will be positioning ByDesign to its partners not just as an application but also as a platform.

SAP needs partners to sell ByDesign because (for the average case) the product alone doesn't produce enough margin to cover the cost of making a sale. By adding their own extensions and services, the theory is that partners can spread that cost of sale across a larger total value. I think the Symbian story demonstrates that ByDesign partners should consider casting their net wider and as well as building on ByDesign they should also offer services that bring together a complete portfolio of cloud services. Most ByDesign customers won't have the same in-house resource of smart developers that Symbian, because of the nature of its business, has on tap. Therefore there's probably a big opportunity for partners to provide that expertise as part of their service offering. Of course they still have the challenge of providing it at cost-effective prices that are more in line with the price points of cloud services — the old SI models of long-term projects and sky-high bills don't work in the cloud. The opportunity is around understanding the cloud environment and helping customers make the most of it — becoming the customer's trusted advisor as they embrace the cloud, from top to bottom.

Topics: Emerging Tech, CXO, Cloud, Data Centers, SAP

Phil Wainewright

About Phil Wainewright

Since 1998, Phil Wainewright has been a thought leader in cloud computing as a blogger, analyst and consultant.

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14 comments
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  • You mention....

    That you discussed "How to compensate sales teams?" at your recent EuroCloud meeting. I would be very interested in hearing your views and the views of others in the meeting about this from a SaaS perspective. How about an article on it?

    Thanks
    jayco535
    • How to compensate sales teams

      I've got a posting in the works for early next week about SaaS contracts based on the discussion yesterday.

      Sales compensation is a bigger topic, but sure, I'll put it on the to-do list.

      Regards
      Phil
      phil wainewright
      • Would love to hear

        from you on Sales Compensation, Phil.

        We are starting sth new [www.secondcrm.com/scrm]
        and are currently thinking what should be the best
        com plan.

        regards,
        deep3
  • RE: Is SaaS the same as cloud?

    I think the Symbian case story will be a interesting to watch, as it represents a distinct opportunity for them and others to take advantage of the Business ByDesign solution and coming platform.

    My thoughts may well be biased but I do think your analysis is spot on.
    jmosesbyd
  • RE: Is SaaS the same as cloud?

    I think the terms are related but not interchangeable. I would see a software as a services as an example of a cloud service. Automated cloud based data back ups could be another example of a cloud service. Online file storage is another example.

    Is an Internet based business CRM tool the same as an Internet based home movie sharing service? No they are different but they both are cloud services. You can call the CRM tool SaaS if you like but SaaS doesn't really apply to the home movie sharing service because it is more that just software, it is also database storage.
    mr1972
    • SaaS a subset of cloud?

      mr1972, Agreed that the terms are related but not interchangeable. Your example shows how some cloud services are SaaS and others are not. Are there SaaS services which are not "cloud"?
      Web Cloud
  • RE: Is SaaS the same as cloud?

    I look at SaaS as part of the cloud definition. It
    all happens on the net, ie cloud, which is a more
    general term. I like your comment about vendors all
    needing to get along. Of course there will always be
    the sticky marketing strategies which try to retain
    customers by making the exit difficult but now Google
    has entered the fray and they are taking a contrarian
    approach that I actually agree with. I think, and I
    am biased here as I founder Qtility, that the cloud
    needs vendor neutral, non-intrusive and inexpensive
    integrations in order to allow customers pick, choose,
    combine and build solutions.
    mike.clarke
  • RE: Is SaaS the same as cloud?

    As far as I can see SaaS is a subset of Cloud, the NIST defintion is a pretty good one. Cloud consists of the following in, in terms of maturity, and also level of abstraction:

    SaaS
    PaaS
    IaaS

    IaaS will be superceded (from an end-user point of view, not from an ISV point of view) by PaaS and SaaS in the long run as we are more and more abstracted away from hardware. I see IaaS a better option than physical hardware (when there is also cost+technical fit), while end users still need to worry about hardware. But once PaaS and SaaS really take hold, they will be the big cloud driving forces from an end-user point of view.
    nezproc
  • SaaS is not Cloud - but can be

    In my opinion there is a difference between cloud and SaaS. Similar to the difference between SaaS and on premise.
    I'm just thinking out loud here:

    Layer one: The screen that displays the solution, whether it is a PC, phone, tablet, TV...

    Layer two: The pipe it comes from. The pipe may be short (LAN) or wide connected (WAN). So there are two branches in the tree.

    Layer three: The processing unit. It may be a local Server, it may be a remote server (first phase SaaS) or it may be a server from a SaaS provider that they don't own. So we have three branches now.

    To the application consuming user it just shouldn't make any difference.

    We are introducing an application that you possibly put in the Social CRM box. It was hosted on co-location servers (SaaS version 1). We now moved it to a provider's cloud - together with about 8,000 other companies. But on the screen of the user there are still just pixels in 64 Million colors.

    I see it as a new consolidation of computing power. SaaS was cool for the business as they could outsource all the trouble of daily backup, release changes, updates and upgrades, technical support, infrastructure... Now SaaS solution provider no longer need to worry either as companies like us bump it up one more level to people like Amazon, Google, Hosting.com or whoever and let them deal with it.

    The go-to-market strategy however is a different beast. Too many solution provider still bother customers with technical aspects, security discussions, and "sell" the advantage of SaaS on a technology level.

    Axel
    http://xeesm.com/AxelS
    as14
  • Vendor neutral, non-intrusive and inexpensive integrations

    I like Mike?s comment "the cloud needs vendor neutral, non-intrusive and inexpensive integrations in order to allow customers pick, choose, combine and build solutions".
    What we are seeing with current PaaS initiatives from big vendors, Salesforce, Google, Microsoft, SAP, Intuit and Zoho, is an attempt to increase application wallet share through an ecosytem. The message is: start with our core app and add certified modules from our partners. It is not new and is legitimate on three fronts: 1) big vendors drive additional revenues to justify their enormous infrastructure/development costs 2) smaller app providers expand their reach and possibly lower their customer acquisition costs thanks to the brand power of the big vendors 3) end users benefit from much required apps integration.

    But their will be another model developing in parallel of "vendor neutral, non-intrusive and inexpensive
    integrations". By providing open APIs smaller vendors will allow other app providers to integrate 1:1 overcoming platforms constraints and cost.

    What is likely to develop in an hybrid model where a user, prior to choosing a new application, will look at vertical integration (which large platform are supported) and horizontal integration (has the vendor integrated with my current solutions). An example: I want to make sure that my email marketing app is integrated with my CRM and also with my newsletter template generator while the latest does not need to be integrated with my CRM.

    In conclusion, the Cloud will be an enabler for users to pick and choose freely the most suitable applications (mostly SaaS) in terms of features, cost and integration needs.

    There will be one challenge though. Where to find organized, independent and neutral information about applications vertical and horizontal integrations?

    That is exactly what we want to address at GetApp.com: "allowing customers pick, choose, combine and build solutions" in any form or shape.

    Of course we?d love to do that in close partnership with Eurocloud.

    Christophe
    http://www.getapp.com
    getappcom
  • RE: Is SaaS the same as cloud?

    informative. thank you


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    julioconnors
  • RE: Is SaaS the same as cloud?

    When I hear SaaS I think Cloud. The best description I have found to date is from a company in Washington called Surge.

    In the software industry, "The Cloud" is used as a metaphor to represent the Internet. Any computing resource, software, or service that can be shared over the Internet is considered to be in the Cloud. This sharing of resources and anytime/anywhere accessibility makes Internet-based software more efficient and cost effective than traditional on-premise software.

    Software-as-a-Service or SaaS is Internet-based software . In this model customers pay subscription or usage fees to "lease" their application from the vendor. SaaS applications do not require the installation of any desktop software nor do they require any hardware investment by the customer. The SaaS model provides multi-tenancy, which means that multiple customers are hosted from a central location managed and maintained by the vendor. The software industry is quickly moving away from on-premise software in favor of Cloud & SaaS software.

    Check it out...
    http://www.surgeforward.com/InternetCloud.aspx
    mickormick
  • RE: Is SaaS the same as cloud?

    I was doing some research on SaaS and cloud-based computing as we're new to the space and I need to really get my head around these distinctions. Another blog (http://www.mindtouch.com/blog/2008/05/28/differences-between-saas-and-cloud-software/) where the author argues the difference is a matter of control of data.

    What are your thoughts?

    I'll keep following

    Thanks,

    Stephen Harding

    Symphonic Source
    http://www.symphonicsource.com
    http://www.dupecatcher.com
    stephen.harding
  • RE: Is SaaS the same as cloud?

    @mr1972 Yes, SaaS and cloud are related and also interdependent. Delivering SaaS solutions without cloud, is this possible or cloud computing without SaaS model. As cloud is much bigger than SaaS as SaaS is all about software application. Cloud computing three main segments are: "applications," "platforms," and "infrastructure" and when cloud is application SaaS model is used to access cloud resources. Agin for other two segments "platforms," and "infrastructure" what model is used.

    I would appreciate if anyone could explain???

    http://www.digite.com/saas/saas.htm
    Digite-Inc