Understanding the Distinction Between These Important Technology Terms

Sometimes people in technology make the mistake of using terms without proper care.  When that happens, words lose their distinction and people can easily become confused.  We're guilty of that from time to time, but in the case of the terms "cloud-based" and "hosted" we are not alone.  Many in the software industry use these terms interchangeably and therefore, incorrectly.  Because, they are not at all the same thing.  I think that an analogy may be a helpful way to explain the difference.

Can Water Clear This Up?

A cloud-based solution is like having your water supplied through your municipal utility.  When you turn on the tap, water comes out.  Sometimes you need a little water, sometimes you need a lot.  Each month you are billed by the utility for the amount of water you used.  You don’t ever think about water storage or the pipelines to your house.  The utility worries about those things for your whole community.

A hosted solution is more like owning or renting a water tank that is located off of your property, but connects to your home.  The water tank is only for your use, but you are responsible for figuring out how much water you will need.  You are responsible for filling the tank and you are responsible for maintaining the pipes.  It’s pretty much like having a water tank on your lawn, but it is somewhere else.  You pay for all of the water that goes into the tank, whether you use it or not.  If you use too much and run out of water, you are out of luck until you refill the tank or get a bigger one.  Make sense?  You could pay someone else to take care of your water tank for you.  You would then have a managed, hosted solution.  Cloud solutions are, by nature, managed.

A Slightly More Technical Way of Saying It

Cloud-based solutions are designed to take advantage of the economies of scale by using shared resources.  Most leverage the principal of multitenancy where a single instance of the software runs on a server that serves multiple client-organizations or "tenants." This makes it possible to allocate excess capacity to be shared across all tenants, making it easy to absorb usage spikes.  It also means that users can easily scale use up or down by adding or dropping users and applications.  In the case of cloud-based software, the vendor is responsible for maintaining and managing all of the equipment and the applications.  In the hosted model, software and hardware is reserved for the service of an individual client.  The client pays for all of the resources that are available, whether they are used or not, and must invest in additional resources if use exceeds capacity.  If the hosted solution is not managed, the client also has responsibility for supporting the system.

What it Means for VoIP as a Service

Customers considering a VoIP as a Service solution should understand the distinction and consider the advantages of cloud-based technology.  With the cloud model, vendors can provide access to things like multiple, redundant carriers and least cost routing that would be way too expensive to implement for an individual company.  The model also makes it so that when a new feature or function is added, all customers benefit.  In the telecommunications space, many vendors started out with the hosted model before cloud computing became as popular as it is today.  Many have tried to repackage these hosted solutions as "cloud" technologies, but that's a bit like putting wheels on a boat and calling it a car.

To truly leverage what the cloud has to offer, solutions must be architected intentionally for the cloud from the ground up.  Customers considering a VoIP solution should require that the vendor be clear, not cloudy, about this important part of the infrastructure.

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