On-Premise, Hosted, and Cloud Applications
When software is installed at the company’s site, it generally is referred to as “on-premise.” But some companies prefer to outsource the care and feeding of the application to a third party. This, however, does not necessarily mean that the software is delivered as a service. Often, the software is simply delivered to a different destination and licensed just as it would be if it were running on-premise. This generally is referred to as a hosted environment, and services also may be purchased to perform that care and feeding, in addition to the hosting fees.
In a hosted environment, the company that licenses the software may in fact be responsible for running the application itself, and then outsource the technical infrastructure and maintenance. Or, it may decide to outsource much of the work involved in running the application. This generally is referred to as application-managed services (AMS).
If the software is not located at your physical site but you can access it virtually, this operating environment is referred to as cloud. A cloud can be private—nobody can access it except your company. Or, a cloud can be public—you access it through the Internet and you may, indeed, share the software with other companies, even though your data is secure. This is more likely to be a SaaS environment. In a SaaS or on-demand model the software itself is neither licensed nor owned by the company using it. The software is delivered as a service and typically is paid for through a subscription for the service provided.
Multi-Tenant and Multi-Instance
SaaS purists will insist that in order to be true SaaS, the solution also must be multi-tenant. This means there is only one instance of the software itself, and the data belonging to each subscriber is segregated and secured. However, everyone runs a common set of code and configuration settings tailored and personalized for its business processes. But in fact, the software can be delivered as a service in a single tenant or multi-instance, rather than a multi-tenant environment.
The solution provider benefits most directly from being able to offer a multi-tenant solution, because this allows it to scale delivery with less cost. Obviously, delivering bug fixes and product innovations to a single instance of software supporting many customers is far easier and more efficient for the vendor.
But, in fact, some vendors choose not to deliver their SaaS solutions as multi-tenant, for one of two reasons: Either their solution is not constructed to support this; or they feel they can deliver a more customized solution through multiple instances. And in fact some companies purchasing ERP solutions prefer to not run in a multi-tenant environment, for the same (latter) reason. While it is not impossible to deliver customized solutions through a multi-tenant SaaS solution (Plex Online SaaS ERP does this, for example), it does add a level of complexity for the solution provider.
To the nontechnical ERP users, the most important aspect is that they are able to connect to the application and its data from any computer with a browser. This may be accomplished with any of these deployment and license options. If in fact this is possible, often times the end user does not know or care which of these deployment options actually are being used to deliver the application, and they are even less likely to care how it is paid for.But for those responsible for the purchase and deployment decisions, it is important to understand all of the potentially confusing options. MF