Navigating the world of cloud technology and Software as a Service (SaaS) can be confusing, with various terms used to describe the architecture of software solutions. In this blog, I’ll clarify these terms and discuss their implications for institutions investing in these technologies for the long term.
Cloud and SaaS solutions are not all the same. All SaaS systems are cloud systems, but not all cloud systems are SaaS! The terms are not synonymous, and sometimes vendors can confuse the situation with their marketing. Understanding the underlying architecture of software solutions is crucial to the success of solution selection. System architecture can affect performance, security, innovation, redundancy, and resiliency—the key benefits of the cloud to institutions. These benefits allow institutions to provide the most reliable and functional solutions to their constituents. The various architecture models also drive differences in a vendor’s ability to provide support and offer seamless updates without the need for major upgrades.
Cloud-native solutions were built in the cloud. Differentiating benefits of cloud-native solutions include that they are generally built by taking advantage of the scalability, redundancy, and resiliency of the core cloud architecture. Given that these systems cannot be customized, but only configured, they are built for regularly updating a single code line across all customers, reducing the variability of support requirements (which allows for better, more economical support from the vendor). These applications are also typically built with componentized architectures, allowing, for example, for new user interfaces without rewriting business logic, or for new functionality to be surfaced without reengineering an entire module—and all of this without the dreaded upgrades or downtime required of legacy systems.
Cloud-adapted solutions are market-tested legacy systems that have been reengineered for cloud SaaS operations. These systems may be more difficult to transform over the long term because of the technologies used to develop them originally. Vendors are reducing this impact by reengineering the most antiquated parts of their technology architecture, eliminating old software languages, and reengineering components of their application platforms for modern cloud operations. They are also adding fully integrated cloud-native components (especially for extensibility) to their product offerings. As these vendors continue to invest, refactor existing solutions, and add cloud-native functionality, they reduce the differences between cloud-native and cloud-adapted solutions. Will they ever reach parity in the critical areas of performance, innovation, security, redundancy, and resiliency? I think some, but not all, of these solutions can—if they are willing to rewrite critical business logic into modern architectures.
Cloud-hosted solutions (or just “hosted solutions”) are legacy software solutions run on vendor or third-party cloud infrastructure that, if properly implemented, can offer specific benefits to institutions, including improved security, redundancy, and resiliency. Importantly for many institutions, hosted solutions can also bring institutional customizations with them, reducing or eliminating the need for users to change processes but retaining the need for maintenance of those customizations. Customizations are not supported in cloud-adapted or cloud-native solutions. As SaaS-architected solutions become more mature, hosted solutions are becoming less desirable in the long term due to limited scalability and redundancy, and higher maintenance costs. Vendors are likely to reduce these offerings, as they cut into the profitability of the core SaaS-architected solution business because they extend the life (and support requirements) of legacy platforms.
Because these solutions represent decades-long investments by institutions, it is critical to fully comprehend these definitions and the underlying architecture of the solutions being evaluated. Institutions should consider various factors when selecting the appropriate solution for their needs, such as scalability, redundancy, resiliency, and innovation without major rewrites or upgrade processes. Based on these factors, cloud-native solutions might seem like the obvious choice. Still, institutions must also consider the maturity of the functionality and the long-term benefits cloud-adapted solutions provide. While understanding SaaS and cloud terminology can be challenging, it is essential to know the differences between platforms—and their implications for your institution’s long-term investment. Tambellini analysts are available to discuss the impact of specific differences between platforms and the investments vendors are making in their product offerings to help institutions make informed decisions.
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