Confusion between Cloud ERP and SaaS ERP software

September 20, 2010
By ecohen

cloud-enables-saasIn a recent post, we provided definitions of cloud computing, SaaS, and web-based software. The definitions provided were compiled from several popular web sources as well as through interviews with cloud ERP vendors, resellers, analysts, and customers.

Recent news article with cloud and SaaS ERP Software terms

The Economic Times posted an article, Ramco launches new software for cloud computing platform, where the term “cloud computing” was incorrectly equated to a pay-per-use model. The quote from the article is:

Cloud computing refers to a pay-per-use model, where applications and software are available over the internet and one pays as per the usage without owning them.

This quote confuses cloud computing and how in enables but does not equal software as a service.

Cloud Computing Enables SaaS

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Confusion around cloud computing is understandable. Many marketers and sales folks have used the cloud as a way to freshen up their message. Frequently these messages confuse Cloud (a type of technology to run applications) with SaaS (a type of delivery mechanism for applications). As you can see from the diagram, you can have cloud without SaaS, SaaS without Cloud, or SaaS enabled by cloud.

There are several different pricing models and deployment models for cloud technology. As pointed out in a Wikipedia cloud computing article, there is the idea of private clouds and public clouds.

  • Public Clouds. Cloud technology deployed in a way where computing resources become available to anybody who wants to purchase resources on a self-service basis. Public clouds are key components of software as a service offerings.
  • Private Clouds. Cloud technology deployed inside a company owned data center. This use of cloud technology is not necessarily used to deliver software as a service.

Cloud technology is a technology that helps reduce hardware costs and improve scalability. But, the way that cloud technology is deployed and sold influences whether you pay for what you use, whether you conserve capital, and whether you reduce IT expenses. Using internally deployed cloud technology provides control, but not the financial benefit of reduced capital expenses. External clouds that are delivered as a service (SaaS) on a subscription basis can reduce capital expense and IT requirements.

Over-Simplifying Cloud and SaaS

In paradise, cloud technology would be referred to as an infrastructure tool that can be used to reduce hardware and IT costs while SaaS would be referred to as a deployment and business model that provides customers with a new way to purchase software.

Cloud ERP versus SaaS ERP Diligence

We will continue to look for press releases and articles that are not consistent with our understanding of Cloud Computing and SaaS ERP Software.

If you see any articles that fall into this category, please bring them to our attention!

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5 Responses to “ Confusion between Cloud ERP and SaaS ERP software ”

  1. Vinitha on September 21, 2010 at 2:28 am

    Thanks for this post. We would like to highlight that the press release referred to in your blog is a story filed by a journalist and is not part of the release shared by the company.

    The press release can be accessed from:
    http://www.ramco.com/news/company_press_Sep_9_10.asp

    Thanks,
    Vinitha

    - – - – - – - – - – - –

    ERP Cloud News Note:
    Thank you for the clarification. We updated the article to indicate that the quote was from a journalist and not part of the original press release.

  2. Chintan Tyagi on September 21, 2010 at 8:36 am

    I am still confused by the use of term cloud in Ramco’s press release “A powerful ERP on the Cloud with successful client implementations”.

    Is it a public cloud that is being used or is RODE 2.0 deployed on a private cloud maintained by Ramco.

    Actually for the end customer it should not matter as long as they are able to get the business benefits of SaaS.

    Regards
    Chintan

  3. Vinitha on September 21, 2010 at 11:51 pm

    Ramco’s OnDemand ERP (RODE) is on a public cloud. The cloud is located in our data centre in Chennai, India. Our data centre is ISO270001 certified and SAS 70 Type II certified for its security standards.

    Just to further clarify the myths behind ERP on Cloud:

    The main perception about ERP on the cloud is that it’s a strip down version of OnPremise with only few features available and also that it’s suitable only for small enterprises. But with Ramco, we offer an OnDemand ERP which is similar to an On Premise ERP offering all the features and convenience and can be used without any hitch even by larger organizations. It’s robust enough to replace any On Premise. RODE is a true multi-tenant ERP model with definite cost advantages and better flexibility infused along with the offering.

    Currently we have over 2000 users from 200+ client organizations for our ERP on Cloud offering and the numbers are growing…

  4. Pedro Bicudo on October 4, 2010 at 10:45 am

    I differ Cloud and Saas by user freedom:
    SaaS: the way you pay for licenses. Software as a Service means no upfront pay, because you pay as you use the license (per seat, per access, per database size, whatsoever). You can adjust the software to your needs, the solution is yours, it does not matter where you run it.
    Cloud: although there is the cloud datacenter, I refer to Cloud Services. That would mean using ERP as a service. The license does not exist in this context, it’s cost of the vendor. The service means you sign to use “order to cash”, “procurement to pay”, and other processes end-to- end, over the web, with no system integrator. No customization. No IT. Just the user and the service on the web. Only commoditized process are candidates to be market as cloud services, because the definitions of cloud include: “no customization”, “pay-per-use”, “one to many”.

  5. Nathan T. on November 9, 2010 at 4:51 am

    Info on the Ramco’s OnDemand ERP (RODE) is on a public cloud. We developing Accounting software. Can both estblish ..Further clarify behind ERP on Cloud..

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