Cloud Applications - Delivery Model Or Application Differentiator?

There are a variety of reasons for adopting applications delivered by the cloud. All will have a shared set of “base cloud benefits” that are inherent in cloud delivery:

• no scalability issues
• no server infrastructure costs
• no OS costs
• no OS patching
• no application install time
• no application upgrade expenses
• no backup or DR expenses
• remote access from anywhere, suitable for dispersed user base

Whether these factors make adoption of a cloud solution compelling depends on the pricing model of the application compared to the on premise software pricing models.

Security is, surprisingly to some, also often an advantage of cloud delivery. Most SaaS companies have to focus significant resources on security to overcome enterprise and financial institution objections, and as a result typically have an advantage over most small and medium businesses in this regard. Most business do not host their application servers in SAS 70 certified datacenters, with 24 hour guards, biometric controls, strong encryption, and so on.

Some software gains nothing from cloud delivery except the base cloud benefits. Consider Salesforce.com – were Salesforce delivered as on premise software system, then (assuming the remote access issue was addressed) it would functionally be no different from the cloud delivered software. It gains nothing extra over the base cloud benefits by being delivered by the cloud. (Of course, I'm talking purely about the original Salesforce CRM app – Salesforce.com is now taking advantage of cloud delivery in other ways to add additional value.)

There are other classes of software for which the method of cloud delivery confers additional benefits over on premise software, beyond the base cloud benefits. Any software that incorporates a social network is an obvious example. While it would be possible for LinkedIn to be sold as an on premise software system, the value is in a membership network not constrained to a specific company. Similarly, applications that exploit user generated content or expertise are leveraging differentiation by SaaS delivery.

A variation of this is software that uses its customer base to generate metrics for comparison and benchmarking – the wide base of a SaaS delivered software makes this possible, where it would not be relevant or interesting to see the profile based on a single company. (For example, Google Adwords lets you compare your company's advertising campaign's performance with that of other companies in similar industries.)

A less obvious advantage of cloud delivery for some applications is the simple fact that the software is hosted off-premise can confer a significant advantage in and of itself. For example, in the case of network and systems monitoring software delivered as a service, you’ll be notified of several situations in which a premise-based system would not alert you of:

• complete power failure of a datacenter
• network failure of datacenter (which will also prevent alerts from being delivered)
• failure of premise based monitoring server
• failure of local mail forwarders, if that is the path used for sending alerts

Rather than arriving at work to a mass of angry users (or worse, an angry CEO) from an outage you didn't know about, you'll be alerted in a timely manner, you’ll know if your other datacenters are OK, and if services failed over to other datacenters. This will give you some breathing room to focus on the failed site, knowing all is well elsewhere (assuming you have DR setup.)

And when you restore power or what have you to the failed datacenter, you’ll know immediately what hosts recovered, what databases started automatically, what storage clusters failed over – or not – without having to first recover your monitoring node and wait for all its services to start.

So, the next time you are considering whether to adopt a cloud based solution or premise based software, don't just consider the base level SaaS advantages. Give some thought as to whether there is actual differentiated value in having the application delivered from the cloud.