Confusion between Cloud ERP and SaaS ERP software

September 20, 2010
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cloud-enables-saas

In a recent post, we provided definitions of cloud computing, SaaS, and web-based software. The definitions provided were compiled from several popular web sources as well as through interviews with cloud ERP vendors, resellers, analysts, and customers.

cloud-enables-saas

In a recent post, we provided definitions of cloud computing, SaaS, and web-based software. The definitions provided were compiled from several popular web sources as well as through interviews with cloud ERP vendors, resellers, analysts, and customers.

Recent press release with cloud and SaaS ERP terms

The Economic Times posted a press release, Ramco launches new software for cloud computing platform, where the term “cloud computing” was incorrectly equated to a pay-per-use model. The quote from the release is:

Cloud computing refers to a pay-per-use model, where applications and software are available over the internet and one pays as per the usage without owning them.

This quote confuses cloud computing and how in enables but does not equal software as a service.

Cloud Computing Enables SaaS

Confusion around cloud computing is understandable. Many marketers and sales folks have used the cloud as a way to freshen up their message. Frequently these messages confuse Cloud (a type of technology to run applications) with SaaS (a type of delivery mechanism for applications). As you can see from the diagram, you can have cloud without SaaS, SaaS without Cloud, or SaaS enabled by cloud.

There are several different pricing models and deployment models for cloud technology. As pointed out in a Wikipedia cloud computing article, there is the idea of private clouds and public clouds.

  • Public Clouds. Cloud technology deployed in a way where computing resources become available to anybody who wants to purchase resources on a self-service basis. Public clouds are key components of software as a service offerings.
  • Private Clouds. Cloud technology deployed inside a company owned datacenter. This use of cloud technology is not necessarily used to deliver software as a service.

Cloud technology is a technology that helps reduce hardware costs and improve scalability. But, the way that cloud technology is deployed and sold influences whether you pay for what you use, whether you conserve capital, and whether you reduce IT expenses. Using internally deployed cloud technology provides control, but not the financial benefit of reduced capital expenses. External clouds that are delivered as a service (SaaS) on a subscription basis can reduce capital expense and IT requirements.

Over-Simplifying Cloud and SaaS

In paradise, cloud technology would be referred to as an infrastructure tool that can be used to reduce hardware and IT costs while SaaS would be referred to as a deployment and business model that provides customers with a new way to purchase software.

Cloud ERP versus SaaS ERP Diligence

We will continue to look for press releases and articles that are not consistent with our understanding of Cloud Computing and Software as a Service.

If you see any articles that fall into this category, please bring them to our attention!