Many people use the terms “cloud hosting” and “cloud software” interchangeably, but they are actually quite different. If you’re looking into cloud options for your business, it’s important to understand these differences and how they’ll impact your software users. 

What is cloud software?

Cloud software is hosted on specialized servers and accessible anytime, from anywhere. Cloud software has three unique characteristics that set it apart from any other type of software.

• Built for cloud servers. Cloud-based software is built on cloud servers, which are internet accessible. This means you access the software on them using a web browser or an application.
• Multi-tenant. Multiple users can access one version of the software, but the software is segmented so users see only their information. Think of it like a social media platform—there is one version of Facebook, but every user is able to set up an individual profile that only they have access to.
• SaaS subscription. Software as a Service (or SaaS) is a software delivery and purchasing model. You pay a monthly or annual subscription fee, which gives you access to the software through a web browser or an app. It’s not a one-time purchase—you don’t download the software or have perpetual access to it. If you stop paying the fee, you lose access to the software. 

What is cloud hosted software?

While some software providers advertise cloud-hosted solutions as cloud-based solutions, the two are quite different. The key difference is that cloud-hosted software was not originally built to be accessed remotely—rather, it is adapted to do so. 

• Built for on-premise servers. On-premise software is meant to be installed on servers in your office and accessed through your office network. Some software providers offer a “hosting” option so you don’t have to install the software on your servers. Instead the software is installed on servers owned and maintained by a hosting provider. You rent space on the provider’s servers for your software and are given remote access to it.
• Multiple versions. With cloud-based software, there is one version of the software that every user accesses. With cloud-hosted software, every user has their own version of the software, which means different users can be running different versions.
• One-time purchase. Cloud-hosted software is usually a one-time purchase and you have a perpetual license to it. This makes it affordable for the long-term.

What are my other hosting options?

True cloud and cloud-hosted solutions are just two options for businesses. Think of them as opposite ends of a wide range—in between them, you’ll find browser or web-based solutions with web APIs. These deliver an experience similar to what you’d get with the cloud, but they aren’t true multi-tenant solutions. 

While some companies prefer these hybrid models, it’s important to understand that they can often be clunkier and slower than true cloud solutions. If you’re evaluating new software, you may want to double-check the cloud functionality of a vendor’s offering and see how it might impact your business and your users.

What are the advantages of cloud software over cloud hosting?

Quick and easy setup.

With cloud-based software, there is no hardware setup or software installation. You may work with your software provider to configure the solution to your needs, but once it’s set up the way you want, you can start using it immediately. Cloud-hosted software requires the same server setup and software installation process as on-premise software, just at the hosting provider’s location.

Easy, instantaneous updates.

With cloud-based solutions, there is only one version of the software, so you never have to worry about your software being out of date or being on an unsupported version. When the software is updated, you can take advantage of the enhancements almost immediately.

With a cloud-hosted solution, each customer has their own version of the software, and each version must be updated individually. You’re at the mercy of your hosting provider to schedule and manage the updates, which means you could end up waiting to receive new capabilities that would help you run your business more efficiently and profitably.

Less expense, more flexibility.

Updates for cloud-based solutions are pushed out to you without the need for a technician to install them on-site. This saves time and money. Cloud-based solutions also give you the opportunity (via APIs) to integrate the software with other platforms and customize it quickly and cost-effectively.

Because on-premise systems aren’t usually built to be hosted, integrations and customizations can become expensive—and they might not work reliably either. With a cloud-hosted solution, you will probably need to pay additional fees to your software provider to customize your software and to the hosting company to have a systems engineer implement it.

Scalability.

Cloud-based solutions have all the servers of the software provider at their disposal. If you have high-volume periods that require more bandwidth or need more server space to add new users, your needs are easily spread out across the cloud infrastructure.

With cloud-hosted software, you are limited to the servers the hosting provider has dedicated to your solution. If you outgrow your designated space, you will have to pay the hosting provider to set up additional servers for your use and pay for the additional server space. 

Reliability and security.

Many hosting vendors lack the human resources needed to provide the same degree of uptime and security as a cloud-based software provider. These are critical considerations because lost productive time and data breaches could debilitate your business. Always ask about a solution provider’s uptime performance and guarantees, as well as their security and privacy certifications.

One point of contact.

With cloud-based software, you have a single go-to when you have questions or issues. Either the software provider directly or the software partner you’ve contracted to configure the solution for your business.

Cloud-hosted software requires coordination, cooperation, and communication between the software provider and the hosting provider to make changes and troubleshoot problems. Not only can this become frustrating, it can also delay results as both parties try to determine who has the responsibility for taking care of the matter.