Cloud Computing and SaaS are terms that describe a broad range of technology services. As with other significant developments in technology, many vendors have seized the term “Cloud” and are using it for products that sit outside of the common definition. In order to truly understand how the Cloud can be of value to your organization, it's first important to understand what the Cloud really is and how its different components interact. Since the Cloud is a broad collection of services, organizations can choose where, when, and how they use Cloud Computing. There are different types of Cloud Computing services commonly referred to as Software as a Service (SaaS), Platform as a Service (PaaS) and Infrastructure as a Service (IaaS). If you’re just starting to explore the concept of SaaS, this article will help explain what SaaS can do for you and to see how SaaS is different from traditional IT services.
Cloud Computing is often described as a stack (see diagram above the title), as a response to the broad range of services built on top of one another under the moniker “Cloud”. The generally accepted definition of Cloud Computing comes from the US National Institute of Standards and Technology (NIST) . The NIST definition runs to several hundred words  but essentially says that;
Cloud computing is a model for enabling convenient, on-demand network access to a shared pool of configurable computing resources (e.g., networks, servers, storage, applications, and services) that can be rapidly provisioned and released with minimal management effort or service provider interaction.
What this means in plain terms is the ability for end users to utilize parts of bulk resources and that these resources can be acquired quickly and at a reasonable cost.
The full Cloud Computing stack has 3 layers. Infrastructure as a Service (IaaS), Platform as a Service (PaaS) and Software as a Service (SaaS). The most relevant layer of the stack for the majority of companies is the SaaS layer. A very simplified way of differentiating these layers of the Cloud Computing stack is as follows:
What is SaaS?
Software as a Service (or SaaS) is a way of delivering applications over the Internet—as a service. Instead of installing and maintaining software, you simply access it via the Internet, freeing yourself from complex software and hardware management. SaaS applications are sometimes called Web-based software, on-demand software, or hosted software. Whatever the name, SaaS applications run in a private Cloud (on a SaaS provider’s servers) or in a public Cloud (Microsoft AZURE, AWS etc). The provider manages access to the application, including security, availability, and performance.
SaaS: THE PAYOFF
SaaS customers have no hardware or software to buy, install, maintain, or update. Access to applications is easy and importantly secure: You simply need an Internet connection. Customers pay for the services they consume, usually on a monthly basis and often there are no contractual terms and if there are it's on the basis of the customer enjoying discounted pricing.
CHARACTERISTICS of SaaS
Like other forms of Cloud Computing, it's important to ensure that solutions sold as SaaS in fact comply with generally accepted definitions of Cloud Computing. Some defining characteristics of SaaS include;
• Web access to commercial software
• Software is managed from a central location
• Software delivered in a “one to many” model
• Users not required to handle software upgrades and patches
• Application Programming Interfaces (APIs) allow for integration between different pieces of software
FLEXIBILITY TO REACT TO MARKET DYNAMICS
By adopting SaaS your company moves from being bound by investments in on-premises technology to having hugely improved flexibility to respond to changing business dynamics. As a CEO you might reflect on how many times your technology people have told you they can't move as fast or in a direction you want "because our in-house systems can't be changed quickly or for a reasonable cost". In the SaaS world you consume a SaaS solution for only as long as it supports your business direction. When that ceases you have total flexibility to turn one SaaS tap off and turn another on. Finally you have the freedom to move quickly in response to market changes and business priorities.
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