Cloud Computing: Demystifying IaaS, PaaS and SaaS

Commentary - Cloud Computing has the entire IT industry buzzing, with companies such as Microsoft,IBM, Amazon, Google, and others investing billions of dollars in this new form ofcomputing in recognition of its potential to usher in a new era of responsiveness,effectiveness, and efficiency in IT service delivery. In fact, Gartner recently namedCloud Computing as the second most important technology focus area for IT users in2010. But what is Cloud Computing exactly?

Generally, the way I like to think of the Cloud is as any Internet-accessible servicethat you could leverage as a business. These could include services around standardbusiness processes such as CRM, ERP, Marketing Lead Generation, Office ProductivitySuites, Product Lifecycle Management, and Supply Chain Management. But they canalso extend to technical services for software development and infrastructure; this iswhere some of the more recent developments around Cloud Computing have occurred.

There has been explosive growth in the industry in data and processing requirementsto support businesses. This has led to increased power consumption and the needto add data center capacity. The Cloud has provided an alternative to large capitalinvestments required for data center expansion, infrastructure hardware and softwarepurchases, and application software purchases.

You may be asking yourself, “How do I leverage the Web to extend my infrastructure tothe Cloud? How can I use the Web as a platform to build software and products? Howcan I use the Cloud to run key business processes?”

To help understand the next level of detail around Cloud Computing, I like to segmentthe topic by the following categories:

• Infrastructure as a Service (IaaS) provides data center, infrastructure hardwareand software resources over the Internet. IaaS can provide server, operatingsystem, disk storage, database, and/or messaging resources. The highest-profile example is Amazon's Elastic Compute Cloud (AWS), but IBM, VMware,HP and other traditional IT vendors are also offering services. IaaS has alsointroduced other usage and billing models around the concept of “Elastic Cloud”– using and paying for what you need at any given time.

• Platform as a Service (PaaS) provides infrastructure on which softwaredevelopers can build new applications or extend existing applications withoutrequiring the need to purchase development, QA, or production serverinfrastructure. Salesforce.com’s Force.com, Google’s App Engine, andMicrosoft’s Azure are examples of PaaS. These Platform features enablecompanies to create custom applications, but also allow Independent SoftwareVendors and other third parties to create solutions for vertical niches.

•Software as a Service (SaaS) is the most mature, widely known, and widelyused “flavor” of Cloud Computing. It can be defined as a software distributionmodel in which applications are hosted by a vendor or service provider and madeavailable to customers over a network, typically the Internet. Also known as “ondemand” software, it is the most mature type of Cloud Computing because of itshigh flexibility, proven support services, enhanced scalability, reduced customermaintenance, and reduced cost due to their multi-tenet architectures. Examplesinclude Salesforce.com, NetSuite, Google's Gmail and SPSCommerce.net.

Drawing a distinction between PaaS, IaaS and SaaS is somewhat secondary, since allthese approaches involve outsourcing the burden and personnel expense of managingand maintaining server hardware, network hardware, infrastructure software, and/or application software. At a high level, they all attempt to solve the same businessproblem - provide function, scale, service, and business value with little or no capitalexpenditure. The lines also tend to blur as a particular Cloud offering gains success.Successful SaaS or IaaS offerings can easily extend their capabilities to becomePlatforms.

For CIOs or business executives considering Cloud Computing, or one of these “flavors”of Cloud Computing, my advice would be to follow the standard process you would forany business or technical investment.

• First, it’s important to start with a business case. Calculate the net financialimpact that an investment or change is going to have to your business.
• When considering Cloud Computing, it is very important to consider your networkbandwidth requirements, and understand how much data you will need tomove across the network, as well as the network response requirements for theparticular service.

• Security is another big factor, so you need to know your security requirementsand how your internal capabilities compare to those of the Cloud provider.

• With any development or change, it is always good to look at things from a riskperspective. I’m a big fan of researching a solution, as well as running a pilotbefore making a larger commitment or investment.

• If the business service for which you’re looking to leverage the Cloud is missioncritical production, be sure to look closely at the Cloud service provider, itsorganization, and its business sustainability. For example, are they profitable,are they growing, and do they have a strong balance sheet?

In terms of leveraging the Cloud for Supply Chain Management and EDI functionsspecifically, one of the first things a company should do is look at is the size of theproviders overall network. A large network provides scale and quality that can beeasily leveraged to provide faster and higher quality implementations. This scale alsoprovides the same value when adding pre-wired connections to Trading Partners toaccommodate business growth and change.

Make sure you look at the implementation process and organization for your SupplyChain service. Are they tried, true, and professional? Evaluate their service deliverymodel, their overall capacity, and their track record for getting businesses up andrunning on their service.

Finally, one of the most important things you should do is look at the ongoing serviceand support around the application. For example, most SaaS applications are soldunder a subscription model, which is great for the customer because it means theprovider has to provide ongoing value and support to you. The subscription is not justabout access to a set of technology but just as importantly access to a set of people ofpeople who provide customer support, change management, and overall business valueevery day, every week, every month.

As a Supply Chain Cloud customer, another item you should also examine is howwell the provider benchmarks and scorecards themselves in meeting their customers’service level agreements. Many Cloud providers do this at a global level, acrosstheir entire service, but it is equally or even more important to do benchmarking andscorecarding for individual customers. This enables you to determine if your Cloudprovider is meeting your particular SLA objectives around items such as uptime,processing speeds, and responding to support inquiries. This is especially critical formission-critical systems in insuring the Cloud provider is meeting its commitments to therequirements of your business.

biography
Mike Gray is Chief Operations Officer at SPS Commerce, a provider of on-demand supply chain management business solutions. You can reach Mike Gray andlearn more about SaaS-based supply chain solutions by contacting SPS Commerce atinfo@spscommerce.com.