Authors: Sean Epstein ’04, Head of SAP Private Equity, EMEA; Srinivas Rapthadu, Resident Fellow SAP Private Equity
Although the on-premise IT model provides businesses full control over the customization of applications and data, firms remain responsible for ongoing maintenance and upgrades for hardware, software, and security. Cloud service models, however, offer up a fresh take, allowing businesses to host, build and consume IT services of their preference through the internet. Taken together, the following three services form the three general categories of Cloud: consuming applications using Software-as-a-Service (SaaS); building applications using Platform-as-a-Service (PaaS); and hosting with Infrastructure-as-a-Service (IaaS).
Cloud Service Models
Software-as-a-Service (SaaS)When SaaS is regularly updated, its upgrades and enhancements offer new functionalities, utility refinements, and leaps in performance. SaaS ensures companies are always on the cutting edge of utility and innovation. Using SaaS, companies can focus less on actively managing their own IT infrastructure, and more on their core business activities—as it should be.
Platform-as-a-Service (PaaS)PaaS provides developers with a Cloud platform and tools to help build and deploy Cloud applications. Like with SaaS, users can access PaaS from a web browser, once again eliminating the need to purchase and maintain underlying software and hardware. With PaaS, developers have the opportunity to pick and choose the application features they want and test what works best for their specific business needs.
Infrastructure-as-a-Service (IaaS)IaaS lets companies “rent” computing resources—servers, networks, storage, and operating systems—through several pricing options such as subscription model, Pay As You Go (PAYG) model based on the actual usage. IaaS providers host the infrastructure, as well as handles tasks like system maintenance and backups, so that, in addition to customers not having to buy hardware, they don’t have to employ in-house experts to manage it, either.
Cloud Deployment Models
To best leverage these Cloud services, a business must choose the Cloud deployment model (Public, Private, Hybrid) that offers the optimal environment for their unique business needs, based on dimensions of ownership, size, and access.
Public Cloud services are delivered to customers over a network open for public usage. Public Clouds offer efficiency and affordability and are often multi-tenant, meaning the provider runs the service in a shared environment. The infrastructure is provisioned for public use, and is owned, managed, and operated by the Cloud provider.
Private Cloud services are maintained on a private network that is protected by a firewall. A business can build a Private Cloud within their own data center, or they can subscribe to one hosted by a vendor. Of the three Clouds, Private Clouds offer users the most security and control.
The Cloud infrastructure is provisioned for exclusive use by a single organization comprising multiple consumers (e.g., business units). It may be owned, managed, and operated by the organization, a third party, or some combination of the two, and may exist on or off-premises. The Private Cloud is most useful when any of the following are differentiated: intellectual property, control, regulatory or compliance concerns, security, performance, or the cost of service delivery. In any of these cases, Private Clouds run on-premises, in co-location facilities, or at provider facilities. Private Clouds offer similar benefits to the Public Cloud.
A hybrid cloud includes both Cloud and on-premise solutions, often from multiple providers. Hybrid Clouds offer variety, so one can pick and choose which aspects of his or her business are suited for Public or Private Cloud versus on-premise.The Cloud infrastructure is composed of three or more distinct Cloud infrastructures: Private, Community, and Public. While each of these remains its own unique infrastructure, the infrastructures are bound together by standardized or proprietary technology that enables data and application portability (e.g. Cloud bursting for load-balancing between Clouds).
Inevitably most companies will start their journey with a hybrid model for their digital core. While the Cloud offers numerous financial and operational benefits, the underlying technology and decision-making process behind a Cloud migration is not simple, nor is it easy to understand. We will explain more about the decision framework in Part III of this series.