‘Cloud’ is such a marketing buzzword that it can obscure the type of infrastructure you’ll get with a new ERP system. Here’s a primer on the different types of cloud computing.

One difficulty of planning to move your ERP to the cloud: The term is largely a marketing creation. Depending on who’s doing the talking, the cloud can mean many different things. No wonder there is still a lot of confusion about the different types of cloud computing.

“Cloud is more of a branding and marketing apparatus for the industry to package services in a consumable way,” than it is a term with concrete meaning, technologies at PCM, an IT services provider.

“Many people are still confused, and sometimes fooled, by deployment options that vendors slap the cloud buzzword on, but [which] are really the old hosting model that simply takes what might have been on-premises and puts it in the vendor’s data center.”

This arrangement describes classic IT outsourcing or managed services, and it has existed for decades.

Cloud, on the other hand, carries the connotation of services and software being delivered and maintained by a provider, along with an IT infrastructure.

“The cloud to me is more based on next-generation services and the ability to continue to innovate and enhance your processes, Cloud is, by nature, more dynamic than IT outsourcing.

Sorting through the different types of cloud computing is an imperative task before proceeding with migration planning for ERP. The selection of platforms and types of cloud computing services can affect your costs, the degree of flexibility and security, as well as the amount of customization that is possible.

The bringer is key in different types of cloud computing

When most people talk about cloud today, they are referring to the shifting of IT infrastructure from running on-premises to running in a cloud provider’s environment. The software, platforms or IT infrastructures are maintained by a services provider in the public cloud (such as Amazon Web Services or Microsoft Azure) or the private cloud (one operated by a services provider).

With public cloud, the deployment may be multi-tenant, where infrastructure is shared by more than one company, thereby reducing costs, or private also called single tenant where the customer has its own dedicated database and code base, resulting in comparatively higher costs. A software as a service (SaaS) ERP system is a type of communal cloud application that can be either single or multi-tenant.

Today, most manufacturers that have migrated to the cloud have hybrid cloud environments, meaning they use a mix of different types of cloud computing and on-premises deployments of IT resources for the optimal balance of agility and cost. Hybrid environments are often necessary, as cloud ERP vendors do not always have every capability a manufacturer might need. Functions such as distribution and warehousing are easily carved off to reside either on-premises or with a different cloud service provider.

A private cloud allows a much greater degree of customization than public where there is little to no customization but at a price. This offering is designed for higher security, as the environment is not shared.

The key when arrangement through the different types of cloud computing is to understand, at a high level, what flavor of cloud the ERP vendor provides some offers multiple types of cloud computing while not getting bogged down in the technicalities.

“Don’t get hung up on the type of cloud offering,” the enterprise solutions practice at consulting firm KPMG. “If I were a buyer, I would look at capabilities and how much they cost. Those things are the most important to me.”