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The triumph of the cloud services, such as software-as-a-service, business model over the past ten years has been striking, and its core philosophy has spread like a mutating virus fundamentally transforming the tech landscape.  Some of us may remember hearing the phrase “SaaS-based” for the first time and thinking it odd that anyone would devise a strategy around cheeky backtalk. However, the definition has been refined and expanded while the cloud services category has grown exponentially, with no signs of slowing.

Today, the “as-a-service” designation has been tacked on to every significant aspect of the IT ecosystem. In addition to SaaS (Software-as-a-Service), we now have IaaS (Infrastructure-as-a-Service), PaaS (Platform-as-a-service), and even CCaaS (call center as a service), among many others. However, before we can dig into the question of telecom-as-a-service and VoiP's role in it, let’s make sure that we’re speaking the same language about all these cloud services.

Back That SaaS Up

Imagine if you had set up a time-lapse camera in your office back in 1997 and aimed it at your desk.  If you reviewed the footage from the past twenty years, there’s a reasonable chance you would find the same flotsam and jetsam of business life sprawled across it. Notes, reports, mail, and catalogs haven’t given way to a paperless office.  Your computer setup gets lighter and thinner every couple of years. However, look at the things that disappear. Floppy disks and CD-ROMs vanish. Zip drives and tape drives are unplugged and unloaded. Boxes of software for everything from Lotus Notes to Microsoft Word, which are saved “just in case,” are removed from the shelf and stashed away.

The rise of SaaS and cloud services has driven much of this change. SaaS differs from traditional software in two key ways:

• Architecture: Unlike programs installed and run on your local machine, SaaS-based programs are typically web-based, leveraging web browser functionality to operate. These applications are centrally hosted and run on a SaaS provider’s servers. The provider also manages access to the application, including security, updates, availability, and performance.  Behind the scenes is a centrally maintained, multitenant architecture, where users and applications share a single, common infrastructure and codebase. One of the biggest SaaS-based success stories is Salesforce, with thousands of corporate clients, each with their own dedicated database(s) for their respective users.  Devoting time and money toward building a proprietary customer relationship management system (CRM) is no longer necessary. Businesses can use those resources more efficiently, while still being able to customize the CRM to meet their own needs.
• Pricing and Distribution: Unlike traditional software, which was often sold like video games or movie DVDs with one upfront price, SaaS providers typically use subscription service model. Subscriptions offer considerable flexibility for the purchaser because a company no longer must purchase copies (or seat licenses) of the software for all 250 of its employees. Instead, they can negotiate a subscription fee, which reduces sticker shock and helps prevent vendor lock-in.

Cloud Services Expanded

Advances in cloud technology and network bandwidth have allowed other areas to adopt the cloud services model, which ushered in the era of platform-as-a-service (PaaS) and infrastructure-as-a-service (IaaS):

• PaaS: The relatively small size of the PaaS market is because PaaS is used to build, run, and manage applications. So, while almost everyone in your sales, marketing, and finance divisions will have access to Salesforce, only your dev team will make use of PaaS systems. They can focus on creating code and developing apps in an environment where they need not concern themselves with provisioning servers or scheduling backups. Popular PaaS providers include Heroku, Google App Engine, PythonAnywhere, and Amazon’s Elastic Beanstalk.
• IaaS: Infrastructure as a Service (IaaS) is a self-service model for managing remote data center infrastructures, and has seen exponential growth over the past five years thanks to Amazon Web Services, Google’s Compute, and Microsoft Azure. The allure of IaaS for companies is tantalizing because it reduces or eliminates the need to purchase expensive and quickly obsolete hardware. Instead, it enables companies to add, remove, or reconfigure IT at the drop of a hat, based on business needs.  Companies that experience episodic or seasonal traffic spikes can quickly bring new servers online, or even set up thresholds, so new servers are added once you’ve reached a specific capacity.  IaaS vendors are also used for data transfers and data processing, transmitting and processing huge data sets that might paralyze small and midsize companies trying to accomplish it in-house.

Projected Growth in the As-A-Service Sector

According to Gartner, when examining the state of the as-a-service sector, we haven’t seen anything yet.  Over the next four years, they predict that the global public cloud services sector—which includes SaaS, PaaS, and IaaS—will jump from nearly $250 billion in 2017 to over $380 billion in 2020.  SaaS and PaaS industries will double in revenue growth, taking SaaS to over $75 billion in annual revenue. IaaS will nearly triple by 2020.

We’ve established the basics of SaaS, PaaS, and IaaS. We're ready to explore telecom's place in the cloud services picture.  We’ll do that in Part 2.

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