There seems to be much confusion over the various cloud business models, so let’s start by dispelling the biggest myth of all: there is no cloud. All of your ‘cloud’ applications are running on a real CPU, with real RAM and real hard disk, in a real data centre.
Once you accept that, it becomes easier to understand the models. Firstly, on-premise and off-premise. If an application is running on-premise then it’s in your data centre – you are paying for power, cooling, tech support, etc. If it’s off-premise then it’s running in somebody else’s data centre.
Now we need to consider the deployment and business model – private, public, hybrid or SaaS?
Private cloud means that your workloads are running on a dedicated physical machine. That could be in your data centre (in which case you probably own the machine), or someone else’s data centre (in which case you’re probably renting it). That machine could be ‘bare metal’ (i.e. you have to install the operating system, hypervisors and everything else), or it could be pre-loaded with a full cloud stack such as OpenStack. Whichever deployment you choose, with a private cloud there is no one else on the server. But it typically costs more.
Public cloud means that your workloads are running on a shared physical server. Your bit will be isolated in one or more VMs (virtual machines), but you may get issues with ‘noisy neighbours’ hogging the resources of the physical server with their heavy workloads. Public cloud is always rented – you never own these machines – but like private cloud you can get either ’empty’ VMs or pre-built cloud stacks. It depends on how much work you want to do in setting up.
Hybrid cloud is a growing phenomenon. This involves running workloads in a private, on-premise cloud for most of the time, but ‘bursting’ out to an off-premise, public cloud at certain time – to cover peak trading periods, for example, or to cover downtime due to server maintenance in your own data centre.
Note that for private, public and hybrid cloud, you will need to manage the licences for whatever you’re running in those clouds. You will also almost certainly need some cloud orchestration capability, or you’ll spend a lot of effort on administration and monitoring of your cloud workloads.
Software-as-a-Service (SaaS) is different. With this model you don’t have to set up a load at all – the software vendor does that. You pay to use their cloud, and everybody else’s data is in the same cloud as you – just separated by a username and password. If you’ve used Gmail, or Netflix, or Adobe Creative Cloud – then you’ve used SaaS. The advantages are that there is no set up time – just create an account and go – and that you don’t have to think about licensing.
Generally, private cloud gives you more control than public or SaaS, but is more expensive and more complex to set up. Choose the model that best fits each particular workload.