Differentiating Cloud Deployment Models

Public cloud software typically runs in a multi-tenant server, where multiple tenants, or customers share the resources of the server. This is similar to an apartment building where multiple tenants live within the same physical infrastructure and share certain resources, but each tenant has their own key to a secure unit within the building. Maintenance of the building and apartment units is factored into the rent paid by tenants and taken care of when tenants need it. In public cloud, each customer has their own "cloud container", where their applications and data are completely hidden from the other customer tenants. Because customers are sharing some of the same computing resources and the cloud provider takes care of maintaining the software and infrastructure, public cloud generally has the lowest total cost of ownership (TCO).

For on premise software, the license is perpetual, meaning the customer is purchasing the solution for a one-time fee "into perpetuity" (forever). The customer is responsible for purchasing and maintaining the physical server(s) where the software will be installed on site, and installing and maintaining the software itself. The software provider may release patches and upgrades, but it's completely up to the customer to decide when/if they will install them.

Private cloud software runs in a single tenant server, where only a single tenant (customer) uses the resources of the server. The software runs in a private network protected by a firewall, which is very similar to an on premise system. When differentiating between private cloud and on premise software, ask yourself these questions:

• Is the software license perpetual or a subscription?
• Who is responsible for maintaining the infrastructure (server(s)) where the software is installed?

For private cloud software, the license is subscription-based, meaning the customer pays a fee at regular intervals, through the end of their contract period. The physical servers are located off-site in a data center somewhere in the world, and the subscription fee is paid to access and use the software located in the remote server(s) over the internet. The cloud provider is responsible for maintaining the infrastructure and guaranteeing the software is available the percentage of time defined in the service level agreement (SLA) (usually 99.5 - 99.9%). The cloud provider is responsible for certain maintenance activities with the software defined in the SLA, but there is flexibility for customers to choose to take over some tasks, or even request the cloud provider to handle additional tasks for a fee.

A differentiator between private and public cloud is the level of customization allowed in the system. Private clouds tend to offer more flexibility than public clouds because the software lives in a single tenant server, rather than a multi-tenant server. If public cloud is an apartment complex where you share some resources with your neighbors, private cloud is a single family home on a plot of land. In an apartment, you can make customizations within the constraints of your unit, but you cannot make major structural changes that could affect the other tenants. With a home, you can build an addition or change the exterior, because you are the only tenant in the space.

Private cloud software tends to have a lower TCO than on premise software, because you are outsourcing some of the technical maintenance activities to a cloud provider. However private cloud has a higher TCO when compared to public cloud software because you are solely responsible for the cost of maintaining the server where your software lives, and customers usually build in more customizations that have to be maintained over time.

A hybrid cloud includes both cloud (public or private) and on premise solutions, often from multiple providers. Most customers will have a diverse landscape consisting of a combination of different solutions that need to be integrated. Our customers can leverage the SAP Business Technology Platform to develop and host cloud-native integrations and applications to ensure data is fully integrated across their software solutions.