Private Cloud vs Public Cloud
Let the games begin!
SaaS has become an integral part of our everyday lives, often without us even realizing it. From consumer applications like Facebook, Twitter and Instagram to productivity tools like Gmail, Grammarly, and Figma, SaaS has transformed the way we work, communicate, and access information. The SaaS delivery model excelled because it addressed the shortcomings of traditional software distribution models.
Prior to the development of SaaS, software was typically installed and maintained on individual computers or servers. This particular distribution model created several challenges;
high upfront costs (purchasing expensive licenses & hardware to run the software)
maintenance/upgrades (software updates and upgrades required significant time and resources by individuals or IT teams)
limited accessibility (software deployed locally/on-prem was only able to be accessed from specific computers or servers, thus limiting remote access)
SaaS was developed to address these challenges by providing a cloud-based software delivery model. With SaaS, users can access software/information over the internet, eliminating the need for expensive hardware and licenses.
SaaS was the perfect recipe for the modern age. However, the architecture has its flaws.
With a SaaS architecture, software is deployed and hosted in the vendor’s cloud account. In this model, the application is run and managed by the vendor with the customers data also stored in the vendor’s cloud account. Vendors can easily make updates and launch new features at much faster pace. However, once you introduce customer data into the model, things become a bit more challenging. With each SaaS vendor that you use, you are now storing & exposing your data in several, different databases. The average company uses roughly 130 different SaaS applications. That means 130 different databases storing your data.
As the number of SaaS tools that a company uses increases, more and more customer data is being spread across multiple systems/databases. For companies in highly regulated industries (GDPR, CCPA, HIPAA) such as fintech & healthcare, they have strict data location requirements. It’s getting increasing harder to upsell into these sectors + enterprise.
Cloud-Prem Model
I first got introduced to the idea of ‘cloud-prem’ when I read Tomasz Tunguz’s article where he described how in the cloud-prem model, SaaS applications are ‘split into code and data’.
The SaaS company writes, updates, and maintains the code. And the customer manages the data. Typically, the data resides in the customer’s cloud account.
By deploying software into the customer’s cloud account or VPC, customers get greater control over their data and compliance teams. Cloud-prem brings all the benefits of SaaS to self-hosted applications.
By running an app on their customer's cloud account, vendors are able to align incentives with their customers. Instead of spending cycles maintaining compliance standards, they can give them what they want: control and ownership over their security, data, and infrastructure. Without this burden, companies can go back to shipping and doing what they set out to do in the first place: build a great product experience.