True cloud solutions are designed from the ground up as web-based, multi-tenant, scalable and flexible solutions. In practical terms, that means they are built to ensure that customers do not have to worry about additional fees or labor in maintaining servers or applying upgrades and patches. Enterprise-class cloud solutions are backed by uptime guarantees and are delivered from secure data centers that adhere to stringent compliance standards.
Because so many companies are moving to cloud solutions and threatening the business model of on-premise software developers, some on-premise vendors and resellers have started to sneakily offer "fake cloud" packages. The fake cloud shows up in many forms, but the real fool's gold rush is happening as vendors and third parties take existing
on-premise software, establish a hosted server, and present it to customers as a "cloud-based solution." This repackaging of the old, failed application service provider (ASP) model is an attempt to fool the marketplace into doubling down on costly implementations, painful upgrades and inflexible software by locking in long-term hosting contracts that are even more difficult to deal with than the on-premise product was.
Simply establishing a remote, dedicated server or virtual server does not automatically turn an on-premise product into a cloud solution. In fact, the multi-tenancy approach taken by NetSuite and other true cloud providers is a core benefit because it ensures continuous and instantaneous access to the latest product upgrades, with the vendor taking full responsibility for deploying those upgrades. And only solutions designed from the ground up for cloud deployment can offer key features such as easy customization and automatic migration of customizations to new versions.
Fake cloud systems often impose an additional fee for the privilege of being hosted in the fake cloud. We've heard of proposals as high as 30 percent or more of the annual cost. These hosting fees mean that the system is even more costly than it would be to maintain internally, without most of the benefits a true cloud solution would offer.
The bottom line? If the details of a so-called "cloud solution" seem confusing because the system is also available as an on-premise product, or the product requires separate licensing and maintenance fees even though it is hosted off-site, chances are it is the "fake cloud" at work. For speedy and predictable upgrades, reliable performance, flexibility and service, the true cloud consistently beats the pretenders.
-Vishrut Parikh, Director, Product Marketing at NetSuite