How to spot a fake cloud before it costs you

Cloud technology can enable business growth but beware of shams

With global spending on Software-as-a-Service (SaaS) rising by 17.9 percent to $14 billion, buyers need to beware of on-premise solution in disguise and spot a fake cloud before it costs them.

Many software vendors simply modify their applications so they can be accessed online—but application hosting is not the same as "real" SaaS.

On-premise solutions cannot deliver on the real promises of cloud computing. "True" SaaS delivers seamless upgrades, lower operating costs,ubiquitous access and ease-of-use.

On-Premise is false premise

Onsite, hosted solutions promise hassle-free software management, but they are not truly cloud-based. A customer has the processes, architectures and maintenance associated with an on-premise environment. They run, maintain and scale systems in-house—and that comes with manpower and cost commitments.

They have to deali with multiple versions, which can be costly and confusing. On-premise software must be customised, which is more involved and changes the underlying code. They can also cause problems down the line with future integration.

On the cloud, all clients are always using the same, centralized version, so updates don't leave themcold —and you can spend your time innovating rather than maintaining software. Moreover, cloud-based software can be configured to your needs, eliminating the problems that come with on-premise customisations.

A real cloud pays off. In a recent cost comparison of on-premise software with true SaaS solutions over a seven year period, the accounting and advisory firm Baker Tilly Virchow Krause found that if a $300 million automotive manufacturer used SaaS cloud-based software, they would spend 46% less than the on-premise solution and 35% less than a hosted solution. The trick now is to distinguish cloud-based lies from truth.

Spotting a Real Cloud

To ensure that your SaaS is the real deal, look for these five things.

1. Multi-Tenant Architecture

Multi-tenant means cost-efficient scalability, upgrades, integration and customization. The software is always fres, functional out of the box, and doesn't require your IT department to tool around to do much of anything. It also means that the software stays cost-effective.

2. Integration With Existing Products

Remember, SaaS is about keeping things simple and cost-effective. Your SaaS product should integrate seamlessly with most or all of your existing solutions, so that you can easily add functionality. Users around the world can have access to these enhanced functions—at the will of the admin. You want to look for SaaS providers that help you avoid multiple or complicated systems.

3. Availability and Performance

Part of the promise of the cloud is that your systems will stay up, all the time. Vendors using on-premise software management cannot guarantee service availability and cannot publish their uptime status online. A true SaaS has a 99.5% up-time with full transparency, and should be able to back up performance claims with a history of up-time and downtime for the last two years at minimum. True cloud vendors, with a strong history of uptime statistics, guarantee consistent service levels in their License Agreements.

4. Consistent, Frequent Upgrades

Many software management vendors take between six months to a year for upgrades; true SaaS providers issue updates on a weekly basis and deploy them with no interruption to your business. A good SaaS provider enables hassle-free testing of upgrades before deployment, so customers can opt-out of any upgrades pre-production.

True SaaS is also responsive to client feedback and invests heavily in research and development. Any good provider is always one step ahead, anticipating trends and integrating its clients' responses to upgrades in meaningful ways.

5. Security

Good SaaS providers invest in security on all levels. Look for information encryption between your computers and the vendors' host server, including user authentication, password protection and role-based user access limits to specific modules.

Firewalls, including anti-virus software, should be in place to separate the SaaS application network from outside traffic. Also look for physical security measures such as identical data facilities, mirrored transactions, auto fail over, regular backups and manned data centers. Finally, look for annual SSAE 16 audits, which ensure the longevity of internal data security controls.

Review Before You Buy

By taking a few simple steps to look closely at SaaS solutions, you'll be able to separate the wheat from the chaff. It is crucial to take the time to do this. The future of your revenues, and the sanity of your IT department, partially depend on it.

  • Raj Narayanaswamy is co-founder and co-CEO of Replicon, a provider of cloud-based time-tracking software. Narayanaswamy is responsible for executing the company's strategic goals and leading corporate initiatives. With more than 25 years of software development and senior management experience.