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Everyone talks about “the cloud” and different business models and offers. The assumption is that you already know what they are talking about. But, do you really know what they are? How can you take advantage of something you don’t understand? How can you know if it makes good business sense if you don’t know about it? Read on to learn about cloud, and Software as a Service (SaaS) in a new article in the What is Series.

Cloud and SaaS Basics

You will hear about “the cloud” when speaking about many services that run online. Even though not all that runs online is technically “the cloud”, many people consider it to be that way. In general terms, the cloud is whenever you run a service from an online vendor. However, not all services are software. That vendor may be able to save you from performing some management and maintenance required for the service to work. In fact, the common saying of “the cloud is code for other people’s servers” is a good explanation for what it is.

Where did the Cloud start?

There were some precursor services that still survive to this day. You may have heard of server rooms and data centers. Some companies still have them. These are the locations where a company has their servers and runs the server-side software required for the company to operate. As server technology evolved and gained larger capacity, companies started renting spare server capacity to other companies that could not afford their own data centers.

More specifically, servers gained the capacity to run “virtual machines” (VMs) that can act as a standalone server but while running in software. This meant that one large server, could run multiple VMs; each one of those VMs would behave as a standalone server. Better capacity allows a single server to run all your “virtualized” servers in a single box.

Some companies use virtualization software for their own internal needs, but others just started building their own data centers with the sole purpose of renting VM “space” to others. Without getting into details about Platform as a Service and Infrastructure as a Service, let’s just say for now that companies can use that VM space for running software that they then offer to their customers.

Software as a Service (SaaS)

Those companies that have product software started eyeing the opportunity of reducing costs and avoid offering an actual physical “boxed software”. Instead, they offered the software as part of a website. The benefit to them was beneficial in many ways. Companies would save themselves from having to ship a physical box with the media and the installable software.

Companies even avoided having to support customers for downloading and installing the software. There is nothing to download when it just runs within a web browser. At the same time, they convert what would be a one-time purchase into a monthly income. This helps their business become more stable and less prone to fluctuations because customers commit to a monthly payment for access to the software online. Finally, they even benefit from eliminating software piracy, because there is no software to be copied and distributed.

On the other hand, Customers also benefit from this online service. Companies don’t need to deploy and install the software on all the user devices where it should run. This means that the cost of maintenance and support is reduced to a minimum. Speaking of cost, Customers can also pay month-to-month, which also means they pay a fraction every month, facilitating better cash-flow.

Some say that it is better to purchase the software, because then you have a physical product. However, software is a dynamic application that may require corrections, and enhancements. If you use the software from a SaaS vendor, you are guaranteed to use the latest and greatest. If you purchased, and installed it, you go back to having to deploy updates and provide maintenance to the installed devices in your network.

Cloud and SaaS… but which one is SaaS?

So, of all the software and websites out there, which ones qualify as SaaS? While there are many services out there, only a part of them are considered SaaS. For example; your news service could be either free or paid. However, what you are doing is consuming content. By the same token, when you are “consuming functionality” as opposed to content, you are using SaaS. A typical example of SaaS is an ERP, HR, Sales, Support, or any other back-office system.

Security and Compliance

In the very early days, everyone saw Cloud and SaaS as unsafe. They had a bad reputation because there were no common guidelines, best practices and standards to follow. Today, we consider certified Cloud and SaaS vendors safer because of the certifications they earn. Only a handful of companies remain following outdated guidelines that prevent Cloud and SaaS usage. All cloud vendors offer certified and compliant services that can be used even in the most stringent and protected environments. To this effect, cloud and SaaS vendors provide services to highly regulated markets such as publicly traded companies, healthcare, insurance, finance, government, and defense organizations throughout the world.