Guest Column | May 29, 2013

Cloud POS: Hype Vs. Reality

Managed Services, Backup And Recovery, And Networking News

By Jeff Riley, CEO, Dinerware

"Cloud computing" is one of the most heavily used buzzwords in technology today. The term achieved mainstream adoption around 2006-07 spurred on by the launch of Amazon Web Services, and prominent usage by Apple, Google, Microsoft and many other Web 2.0 technology providers. But in reality, the concepts and base technologies underlying cloud computing originated in the 1950’s and 60’s when mainframe computer manufacturers started offering time sharing services to expand the reach of business automation to companies that couldn’t afford their own mainframe computers.

So it goes… buzzwords are created to change customer adoption behavior. But really they are a repackaging of ideas and technologies that have often been around for decades. So how do we make sense out of all the hype and speculation within our industry to answer the most critical question of all: What effect over time will cloud computing have on the Value Added Reseller’s business? Of course, it’s a rhetorical question with no clear answer. But this onion can be peeled further to convert some of the hype into insight. First, some definitions:

Software as a Service (SaaS): This is business (end user) Software that is deployed over the Internet typically as a subscription model. E.g., or in our industry Vivonet’s Halo POS

Platform as a Service (PaaS): This is developer-oriented software (deployed over the Internet) that provides extended capabilities through APIs. E.g. Microsoft Azure, or in our industry Merchant Warehouse’s Genius

Infrastructure as a Service (IaaS): IaaS offerings consist of traditional computing resources such as servers, storage, and networking systems that are packed as a utility based model in a virtualized environment. E.g. Amazon Web Services 

For the sake of clarity, the rest of this article will focus solely on SaaS since SaaS offerings represent the largest opportunity and threat to the VAR business model versus the other two categories of cloud solutions. The hype about consumer mobile devices is a related trend but different from SaaS and would require a whole separate article to explore.    

There are many over-generalized and sometimes misunderstood perceptions about the pros and cons of SaaS vs. on-premise software. For example:

SaaS   On-Premise
  • Enables less expensive hardware
  • Accessible from any device anywhere
  • Eliminates upgrade costs and headaches
  • Availability and performance are dependent on the Internet
  • Customer can never “own” their system
  • Data is entrusted to third parties
  • Provides a richer user experience
  • Offers greater customization and extensibility
  • Offers faster performance
  • Hardware support, compatibility, and system configuration is a hassle and expensive
  • Customer is “hostage” to their system

These perceptions were formed based on software deployment methods that pre-dated the Web 2.0 and cloud computing era (5-6 years ago). Software development languages and tools have come a long way to obscure the boundaries between on-premise and cloud deployment models. Virtualization technology has reached a point where end users can’t tell whether a system is running locally or in the cloud. And IaaS offerings have matured and scaled to the point where deployment and operating costs have become a fraction of what they are on-premise. However, ubiquitous and high performance network access is still a challenge, even in heavily populated markets.

The past decade of cloud innovation has made it possible for companies with talented software engineers to choose the attributes they like from both deployment methods into their products. And software products that are thoughtfully designed can often be deployed from the cloud or on-premise without significant compromise in either mode, for example Microsoft Office vs. Office 365.

Before you find yourself in a defensive sales position or, worse yet, propagating outdated perceptions to your customers, take the opportunity to help them develop their own insight. Ask them what appeals to them about the cloud. When they answer, you’ll have a great opportunity to highlight the attributes of your product which support those objectives. Here are some of the points you can articulate in response:

1.       First, all viable point of sale systems today incorporate some level of cloud computing. Take integrated credit card payments as a simple example. Cloud based backup, monitoring, and remote access along with 3rd party add-on solutions are all great examples to discuss as well. You can highlight the reasons why the best systems incorporate a blend of both on-premise and cloud based features.

2.       Many of the cloud based POS systems available today are also newer, less proven, and less capable systems. When systems are compared side by side on functionality and usability the superior products often pull ahead. Don’t allow customers to make decisions based on perceptions, take the time to show them the facts.

With any shift in technology, there is hype and there is reality. The hype is that everything will move to the cloud and on-premise solutions are outdated. The reality is that the trend toward cloud computing is growing based on favorable costs, solution availability, and increased adoption and reliability of broadband Internet access. Successful VARs will take the time to understand the difference between hype and reality as it relates to each of your products. From there, the assessment of product and partner selection becomes a much clearer proposition. And, if a change is needed, don’t underestimate the complexity of adding new products to your mix and the disruption that occurs during transition from one product to another.