White Papers

Copyright 2013 TechVentive, Inc., All Rights Reserved - Unauthorized reproduction, storage, transmission or quotation strictly prohibited. 3 Hosted solutions are almost always "single-tenant." Single-tenancy means that each customer has his own version of the software and his own databases. While single-tenancy provides some measure of "user control" over the software installation and upgrade timing, the costs associated with these upgrades are often as steep as traditional on-premises solutions. Another deployment option is the "private cloud." Generally, a private cloud is an on-premises solution that is configured to run as if it is on a cloud technology platform. The customer owns the computing hardware and licenses appropriate systems software. Applications are accessed via an Internet browser. Essentially, the customer's software and data remain behind the company's Internet firewall. Private cloud solutions appeal to buyers that want a web-like experience but want to retain total control over their applications. For software customers, the cost structure for private cloud solutions is akin to that of on-premises solutions since the customer owns and maintains virtually the same solution in either environment. Finally, there is the "multi-tenant" SaaS solution. These are newer products that are often the result of ground-up development efforts from software vendors. Many of these products are designed to be cloud-based from their inception. Because they are multi-tenant, there is usually only one copy of the software that all customers are sharing simultaneously. One customer's data can be logically separated from other customers' data yet, all of this data may actually reside in a single physical database. The Core Advantages of Multi-tenancy Multi-tenant solutions have some important differences compared to other deployment methods. Like other SaaS solutions, these products generally do not require the customer to make large, upfront capital expenditures or acquire expensive IT infrastructure because the software is running on the vendor's (or a third-party's) cloud systems. With multi-tenant solutions, however, the vendor is on the hook to update and upgrade the system (not the customer or another third party). This is a significant point because the labor cost to maintain application software is often the single largest cost component of on-premises solutions. In a study completed by TechVentive involving users of multi-tenant application software, customers reported saving between 40-60% by using multi-tenant solutions instead of on-premises applications. Another recent report from the consulting firm Booz & Co., noted that typical one-time costs of on-premises solutions are 11x that of cloud-based solutions. The on-going costs of multi-tenant solutions over five years are higher and reduced some of that advantage. Yet, after five years, the combined one-time and on-going costs of cloud-based solutions were still 3.2x lower than on-premises solutions 1 . While both of 1 "ERP in the Cloud – Is it Ready? Are You?", Booz & Co., 2013

• Cover