Fundamentals of Cloud | Public v Private, SaaS v Hosted, Multitenancy

Posted by Rick Yvanovich

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No longer a novel technology, the cloud is increasingly becoming the mainstay of modern enterprise IT architecture. Nonetheless, navigating a myriad of cloud-related concepts can still prove challenging.

Should your business opt for public cloud or private cloud? What does it mean if your software is single-tenant / multi-tenant? Are SaaS and hosted software solutions the same?

This article will get you up to speed with the fundamentals of cloud computing.

Fundamental Concept of Cloud Computing

Table of Contents

What is Cloud Computing?

Simply put, cloud computing is the delivery of on-demand computing resources through the internet. These resources include tools and applications like data storage, servers, databases, networking, and software.

Cloud computing offers faster innovation, flexible resources, and economies of scale. As a result of these benefits, cloud computing has become an indispensable part of modern life.

Most of us are using cloud computing applications on a daily basis, even if we are not aware of them. Notable examples include Gmail, Dropbox, Salesforce, HubSpot, Microsoft 365, etc.

Still, there is no denying that cloud computing is quite a generic term, used to refer to many different classifications, types, and architecture models.

Read more: The Cloud: A Storm of Confusion

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Public vs Private vs Hybrid Cloud

Cloud computing can be categorised into three general types:

  • Public cloud is cloud computing that’s delivered via the internet and shared across organisations.
  • Private cloud is cloud computing that is dedicated solely to your organisation.
  • Hybrid cloud is an environment that uses both public and private clouds.

Public Cloud

Public clouds are owned and operated by third-party service providers, which deliver their computing resources, like servers and storage, over the internet. The public cloud offers customers of all sizes extensive choices of solutions and computing resources, as well as low cost and high elasticity. All of these make the public cloud the most popular model of cloud computing services.

Services on the public cloud may be free, freemium, or subscription-based, wherein customers are charged based on the computing resources they consume.

Read more: Cloud-Washed vs. Cloud-Native: What Are They & How to Spot Them?

The services provided by the public cloud can range from basic emails, and app storage, to more demanding tasks such as serving as a large-scale infrastructure platform for software development.

With the public cloud, the service provider is the one who is responsible for all of the maintenance, management and development of the pool of computing resources used by customers.

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Private Cloud

Contrary to the public cloud, a private cloud is any cloud computing solution that is used by a single organisation. The organisation that uses a private cloud does not share these resources with any other customers. Many use this type of cloud due to its security, exclusivity, flexibility, and efficiency.

A private cloud can be located physically on the company's on-site infrastructure, or operated by a third-party service provider. A private cloud can be customised to meet the unique business and security needs of the organisation.

With more visibility and control into the infrastructure, organisations can operate compliance-sensitive IT workloads with high security and performance. However, all of these benefits come with a higher price tag, which is the main reason for its unpopularity.

Read more: Cloud Adoption Strategy: Cloud-First vs. Cloud-Only

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Hybrid Cloud

A hybrid cloud is any system that incorporates both private and public cloud solutions. Organisations that use this type of cloud can use the public cloud for non-essential and non-sensitive data to keep the cost down and use their private cloud for more important and sensitive tasks for optimal security.

As a combination of public cloud and private cloud, the hybrid cloud inherits both the positive and negative traits of the two. With a well-integrated system, organisations can expect more security, control, flexibility and reliability from their cloud services.

However, the hybrid cloud’s weakness is its added complexity, as well as its high cost.

Read more: Cloud 101 - A quick guide to Cloud ERP: Benefits & Drawbacks

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PaaS vs IaaS vs SaaS

The most popular models of cloud computing are PaaS (Platform as a Service), IaaS (Infrastructure as a service), and SaaS (Software as a Service). These models serve different purposes and needs.

Software as a Service (SaaS)

Software as a Service, also known as cloud application services, represents the most widely used option for firms in the cloud service market.

SaaS uses the internet to deliver applications, which are managed by a third-party provider, to its users. Most SaaS applications run directly through your web browser, which means they do not require any downloads or installations on the client side, which eliminates the need for IT staffs to perform such tasks. Vendors manage all potential technical issues, such as data, middleware, servers, and storage, resulting in a well-maintained, well-supported yet agile IT structure for the business.

The main selling points of SaaS are its simplicity, cost-effectiveness and convenience for the user. With the service provider doing most of the tasks, ranging from maintaining, managing and developing the system, to handling technical issues and customer support, SaaS can help companies redirect their resources to their core businesses.

However, SaaS has its cons as well. Such as low interoperability, lack of control for the customer, and low customisation.

Read more: How AWS Manages and Maintains Their Massive Data Centres

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Platform as a Service (PaaS)

Cloud platform services, also known as Platform as a Service (PaaS), provide cloud components to certain software while being used mainly for creating applications. In other words, PaaS offers a framework for developers upon which they can build applications.

PaaS deliver its services through the web, much like SaaS. Because all servers, storage, and networking can be managed by the enterprise or a third-party service provider, developers can focus their resources on making software instead of worrying about operating and maintaining of the computing infrastructure.

This kind of cloud service is highly available and, most of the time, cost-effective.

The pitfalls of PaaS is quite similar to that of SaaS, i.e. potentially low customisation, hard to migrate to other providers, and low operational control for customers.

Read more: SAP vs. Infor – Software Giants Face Off Over Cloud Strategy

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Infrastructure as a Service (IaaS)

Infrastructure as a service (IaaS) is a type of cloud computing service that offers essential computing, storage, and networking resources on demand. IaaS allows customers to operate their businesses with a high level of computing power without the need to invest in hardware, or manage and develop a physical data centre.

IaaS delivers cloud computing services, including but not limited to servers, networks, operating systems, and storage, through virtualisation technology. These cloud servers are typically provided to the company through a dashboard or an API, giving customers total control over the entire infrastructure.

IaaS provides the same technologies and capabilities as a traditional data centre without having to physically maintain or manage it. IaaS clients can still access their servers and storage directly, but it is all outsourced through a “virtual data centre” in the cloud.

Contrary to SaaS and PaaS, IaaS gives customers much more control over the services. In most cases, customers have complete control over the databases. This, however, means that customers are responsible for the OS, middleware, runtime, etc.

With many benefits such as scalability, flexibility, more control for the customers, and cost-effectiveness, IaaS is a very popular option for many firms who want to utilise and control their systems without having the cost of purchasing hardware.

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Software as a Service (SaaS) vs Hosted Software

SaaS and Hosted software offer some quite similar benefits, however, they have some key differences, as well as their own pros and cons. To be able to choose the correct option for your needs, is it important to understand the differences between the two, and what they offer.

Software as a service (SaaS), as mentioned above, are applications that are delivered to customers through the web. SaaS software does not require any installation from the end-users and is provided by the service provider.

This form of cloud service is very popular due to its reliability, low initial costs, and convenience as the service providers do most of the management and maintenance.

However, SaaS has its own drawbacks, such as a lack of control and customisation for the customer as well as potential higher long-term costs.

Another approach to delivering the software to end-users through the internet is hosted software. Hosted software, in simple terms, is software that a customer buys and owns, but is installed via a hosting centre instead of on the customer’s servers.

As the customer owns the software, they can choose to update the software whenever fits them most, as well as having more customisations on the product.

On one hand, there are a few disadvantages to hosted software, one of which is that the customers will have to get more involved with the software. Installing, maintaining, and updating the software requires resources, provided either by the customer’s IT personnel or a managed service provider (MSP).

Additionally, because the customer owns the software, they still have to pay a high upfront license fee instead of a much lower monthly rental fee of the SaaS model.

On the other hand, the SaaS pay-as-you-go model may result in a higher total cost in the long run. Because the customer rents, rather than owns, the software, customisation is limited compared to hosted software.

Read more: How to Adopt Cloud

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Single-tenant vs Multi-tenant

Single-tenancy or multi-tenancy is another crucial consideration in cloud services. What are their pros and cons? And which model should you choose?


A single instance of the software and supporting infrastructure serves a single customer. With single tenancy, each customer has their independent database and instance of the software. Essentially, there is no sharing happening with this option.

Read more: Cloud Vendors - What Do They Have to Offer?

In a single-tenant architecture, the cloud service provider will aid in managing the software instance and dedicated infrastructure while still lending nearly full control to a single tenant for the customisation of software and infrastructure. Some common characteristics of single-tenancy models are that they tend to provide a high level of user engagement and user control, as well as reliability, security and backup ability.

Potential benefits of the single-tenant model are high levels of customisation, reliability, and security. However, these benefits result in a higher cost for customers.

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Multi-tenancy means that a single instance of the software and its supporting infrastructure serves multiple customers. Each customer shares the software application and also shares a single database. Each tenant’s data is isolated and remains invisible to other tenants. This type of architecture is very popular in the SaaS environment.

In comparison to single-tenancy, multi-tenancy is cheaper, has efficient resource usage, has a lower maintenance cost and a potentially larger computing capacity. 

On-premises/ hosted vs Multi-tenant cloud


Multi-tenant cloud

Scalability and resilience

  • Scalability has to be manually configured for various workloads, usually resulting in oversizing
  • Requires static sizing of hardware, which results in underutilisation of hardware during low volumes and performance issues during peak volumes
  • Static sizing results in higher costs as IT is always trying to adapt to business needs
  • Manual failover and resilient infrastructure
  • Auto-scaling functionality within applications supports automatic scaling for various workloads
  • Modern product architecture supports highly elastic applications to scale up/down automatically based on workload
  • Elastic architecture provides a highly efficient and lower-cost solution compared to other deployment methods
  • Takes advantage of on-demand cloud platforms with high-availability zones to provide resilience

Continuous innovation

  • Requires manual updates and thus lags behind in versions
  • New features can only be available when deployment is upgraded to the latest release
  • Expensive as frequent software upgrades, testing and validation is time and resource intensive
  • Automated product updates at a regular cadence are done either with zero or near zero downtime
  • New features can be previewed with the feature toggle on/off switches giving control to customers
  • Zero cost upgrade for customers with subscription services that deliver upgrades on a regular cadence

Lower cost of ownership

  • Hardware costs are high as hosted applications are not elastic and have to be sized for peak performance
  • Security costs are higher as the customer is responsible for managing their own security infrastructure and resources
  • Minor cost reductions in operational costs from on-premises deployment as the majority of activities require manual processes
  • Modern product architecture supports highly elastic applications reducing hardware costs significantly
  • Security costs are lower compared to on-premises;
  • MT cloud service providers will have put the best practices in place for addressing multiple levels of security
  • Significant reduction in operational costs such as performance optimization, monitoring, patching, upgrades integrations, testing

Faster time to value

  • Application installation is lengthy due to hardware and software version dependencies
  • Hardware and software failures need to be managed as hosting does not provide automated data replications across availability zones and regions
  • Manual failover and resilient infrastructure
  • Automated provisioning gets applications up and
    running very quickly without hardware and software concerns
  • Failures are automatically taken care of by on-demand cloud platform availability zones and replication
  • Significant reduction in unplanned application downtime due to resilient infrastructure; increased uptime directly translates into higher productivity

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Bolstered security and compliance with best-in-class multi-tenant cloud

  • Physical security: World-class physical facilities
  • Network security: Security through separation of duties and layered defence architecture
  • Operations security: Data encryption at rest and in transit, centralised secured certificate management, least privilege authorisation model
  • Application security: OWASP threat analysis and remediation, vulnerability and penetration testing, security best practices as part of the development cycle
  • Policies and processes: ISO 27001, NIST 800-53 standards, SSAE18 assessments, SOC report published annually for review
  • Monitoring and management: Dynamic password management, immutable SIEM collection and analysis, ITIL-based incident, problem and change management processes

Read more: Defense-in-depth - The 5 Security Layers of Infor In-depth

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The modern architecture of multi-tenant cloud

Integrations to other applications regardless of their deployment supported via the iPaaS platform

Highly scalable and elastic data management platform with a data lake repository

Prepackaged content for business processes integrations, BI, and analytics available as implementation accelerators

Extensions to standard software can be created via industry-standard PaaS platform

Cloud-based analytics, artificial intelligence, and data-driven applications are available

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Are you considering moving your key business processes to the cloud? Or simply interested in learning more about business continuity in the cloud? Check out our information kit and discover FOUR different ways to maintain financial agility. Download now!

Cloud migration strategy: 4 paths to the cloud

Topics: Technology trends, Cloud Computing

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Rick Yvanovich

 Rick Yvanovich
 /Founder & CEO/

With TRG International Blog, it is our mission to be your preferred partner providing solutions that work and we will make sure to guide your business to greatness every day.

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