When a company chooses a cloud service, they have certain expectations. First off, most companies plan to enjoy the cost savings in IT—not having to maintain a powerful, scalable server with guaranteed up time. Rather than paying for room to grow, they anticipate that the service will be able to expand during times of peak demand—referred to as elasticity. Second, they expect fresh software that they don’t have to update. The provider updates the software at frequent intervals for all subscribers. Third, flexible costs allow them to pay for just the features, number of users, and server space they need, when they need it. And lastly, they expect to access the service from anywhere, even mobile devices. These are the expectations of cloud, but do these expectations always align with reality?

It seems like every new service hosted on the internet gets labeled cloud. But are all cloud services the same in terms of benefits—especially over the long-term? I recently came across an article that listed the three indicators of true cloud as “mobility, personalization, and integration.” These three things are a natural outgrowth of true cloud but can easily be baked into other solutions trying to mimic true cloud without the key ingredients that lead to a superior service.

As we look at the cloud space, we can drop services into four buckets:

  • Cloud Infrastructure: Technologies required to build cloud solutions, often used for building private cloud-like services. (Amazon Web Services, Heroku)
  • Cloud Hosted: Often an application set up for a specific client, that comes close to emulating true cloud, but without the innovation, integration connections, multi-tenant delivery, and flexible costs. (hosted WordPress, hosted Drupal)
  • True Cloud: Delivered in the public cloud (generally) and with multi-tenancy, elastic infrastructure, high configurability, self-service expansion, and integration APIs. (Salesforce, Sage Intacct)
  • Platform Hosted: Services built on top of existing cloud platforms that benefit from the platform—a way of creating specialized business offerings without building out all the underlying infrastructure. (Financial Force, Gainsight)

Let me layout a few key definitions, most of which spring out of multi-tenancy.

Multi-tenancy

Multi-tenancy gets thrown around cloud discussions a lot. That’s because it’s a big deal. A multi-tenant system essentially has all the clients residing on a single code base or set of applications. Rather than installing a new set of applications and a database for every client, the service has one application and one big shared database serving all the clients. The significance comes out in a couple of ways. Rather than rolling out new, limited space for each client, multi-tenant services focus on making the service bigger, broader, and more dynamic to handle whatever load clients need to throw at it. And when a multi-tenant service updates their code, everybody gets the update. Because a multi-tenant service provides a single code base to a broad audience, it also has more interest in making that system configurable by the client, allowing the client to use self-service tools to help them grow at their own pace, not the pace of the provider’s service department.

Integration Connections or APIs

Integration connections, also called application programming interfaces (APIs), allow a cloud service to talk to other services. The most common and least expensive options are between cloud services with built-in APIs. For example, Sage Intacct connects with Salesforce using APIs. This allows Sage Intacct to receive sales orders from Salesforce for processing and billing, while at the same time pushing order processing and customer payment information to Salesforce for sales visibility. Pure cloud services make this kind of connection easy.

Stacking up Cloud Categories

As you consider the expected benefits from a cloud service, you’ll hit limitations on the first two in a couple different ways.

On cloud infrastructure, you don’t benefit from freshness, because the solution, though very specific, has to be updated at the client’s direct expense. It’s unlikely that you’ll achieve the scalability of a multi-tenant system, because there hasn’t been any reason to build elasticity into the application itself, even though the infrastructure itself has amazing elasticity.

On cloud hosted services, you’re closer to the ideal cloud solution. The drawbacks are the lack of effortless updates and elasticity. It’s like having a desktop application delivered over the web. With a solution posted to the cloud client by client, updates are time consuming and not likely to come at frequent intervals. For much the same reasons, elasticity isn’t built into the system. It’s configured to function at a certain level, based on initial requirements. Growth has to be handled by engaging the vendor. This can also lead to customization lock in, where companies fail to make changes to customizations because of the cost and complexity.

Recommendations for cloud services seem to land squarely on true cloud. It’s the one system that delivers on all the expected benefits. One benefit above all others may be why true cloud services lead out on innovation. As a true cloud service works to meet the needs of a broad set of customers, they continually innovate to stay ahead of changes and possible disruptions in their area of expertise. This includes maintaining nearly unlimited computing capacity. For example, a cloud financial service like Sage Intacct will adapt early to a new accounting regulation like ASC 606 so that clients can transition to the new regulation without a disruption in benefits. This adaptation will often lead to more circumspect solutions as it did with Sage Intacct’s ASC 606 leading to advances in subscription billing on multi-element arrangements.

The forth category, platform hosted, grows out of true cloud as providers allow others to leverage their infrastructure to build additional services. The Salesforce platform Force.com is an example of a space where cloud enhanced services can be built and deployed for clients. They have many of the advantages of the Force.com platform with a few drawbacks. The main drawback is their dependence on functionality provided by Force.com. They have to work within the constraints placed on them by the platform. They can never create a service that goes beyond the limits of the platform they’ve chosen. In that regard, they are unlikely to be innovative visionaries.

As an innovator in the cloud space, starting the same year as Salesforce, before anyone had coined the terms Cloud or even SaaS, Sage Intacct has been able to follow and hone a pure cloud model. Sage Intacct was built from the ground up to deliver multi-tenant financial management over the internet, on a platform purpose-built for finance. As you consider your cloud strategy, you would be well served to look carefully at services, like Sage Intacct, built from the ground up to deliver on the promises of cloud computing.