Cloud Computing: What is it really.

We in Middle East and Africa, like the rest of world, have been experiencing a number of different CLOUD offerings. They are all the right type for the client as well as it can be the wrong type for the client. This is a short essay to differentiate the differences:

SaaS Cloud, Software as a Service. This is the ultimate type where the vendor offers the software solution which includes all the automated backups, upgrades, inclusive of the Operating System, Database, AntiVirus, etc. This type also includes the tools and means for you to integrate to your other 3rd party systems using international standards. One of the underlying benefits is that the vendor will dictate how customizations are developed so that they are ‘Future Proof’ rather than ‘Backward Proof” as is in the other options. Another major benefit is the integration component. SaaS systems come with built standard based integration APIs. Should your company venture into BI, AI, CRM, etc. the installation part is virtually coming to an end. Large vendors are now providing all the necessary components for smooth integrations without the need for top of the line technical expertise. Examples include Microsoft Dynamics and Oracle Financials ERP Clouds. They are Investing in the billions so that you can focus on your business.

SaaS has no human intervention; it is truly virtual. This is the real cloud computing.

HaaS Cloud, Hardware as a Service. Hardware in more than the server. It also includes the Network, the Bandwidth, the Storage and Memory, Cache, Transaction Count, Disaster Recovery, and so much more. This type of cloud is also provided by the large multinational vendors. The client will go through a long menu of service requirements, chose what they need and start operating. The services provided sometimes includes software licensing. In most of these cases, the billing is monthly and is based on usage. A nice benefit includes the upgrading and downgrading of services as you see fit as a client. But a major benefit is the underlying cost of a computer room and its monthly costs like electricity, AC, Security, etc. is gone. But the administration cost remains the same. A good example is Microsoft Azure offerings.

Outsourcing Service: This has been available globally since the 1960s. It used to be expensive because big mainframe systems where required, and only the largest of global clients can afford it. In short, this is when you as client want a server or two with certain storage in a secure location, so you buy or rent the capacity. The rest remains the same. From an operational perspective, this is still an on-premise installation. The only difference is the location of the computer room. It has simply moved from here to there. Major names in this arena are EDS, Southland Corp., IBM in the US.

For a proper definition of cloud computing, this is not cloud. This is simply moving the location of your server. All other costs including licensing and administration remains as is.

Today, similar operations have popped up everywhere, including our region. All ISPs across the region have been providing this service for over 20 years now. Other private sector vendors have also tried their hands in it, some succeeded and some failed, mostly due the ROI and breakeven points are very high. A positive from this type is that the provider can afford a better computer room which includes AC and Humidity control, Power Stability and Power Backup systems, Security. But it is not cloud computing.

Today, neither of the three options is good or bad. However, the Outsourcing Option is slowly but surely going obsolete. With more software systems going the SaaS cloud model globally, the need for your own servers, locally or in the Outsourcing model is going obsolete. ERP business Solutions have gone cloud, Microsoft Office has now gone cloud. Archiving Systems such as SharePoint has gone cloud. CRM systems are all cloud. The days are numbered for this model. SaaS and HaaS in the present and future of computing.

Numbers always make more sense. Here are some numbers gathered from a study we conducted on our clients over the past 7 years, for instance:

• SaaS with all the bells and whistles is actually the cheapest of all, over a 5 and 7 year periods the total cost of ownership is 60% less than Outsourcing or your local IT Department.
• Cost of Operation and Administration is 65% cheaper in SaaS.
• 1st year go live is about 70% Cheaper.
• Hidden costs are higher in HaaS and highest in the Outsourcing model.
• Most companies start with SaaS for the critical systems, then add HaaS services for the none-critical systems.
• Once the budgeting departments understand the new models, their budgets process becomes more professional, predictable and accurate.

For more details, please reach out to me, Mitri Muna at [email protected].