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Platform as a Service: Is It Time to Switch?

Kurt Fanning and David P. Centers

INTRODUCTION

Software as a ser- vice (SaaS)—or, as it is commonly called, cloud computing—is becoming the current choice for software procurement. Users are overcoming their fears of not controlling access to their data and applications and view-

ing SaaS as way of providing cost-efficient and effective information techno- logy for their employees. Due to the success of SaaS, two similar forms of operations, platform as a service (PaaS) and infra- structure as a service (IaaS), are increasingly the object of chief information officers (CIOs) and chief financial officers (CFOs) interest. While there is usu- ally more risk involved in using either PaaS or IaaS in compari- son to SaaS, top management is viewing taking the next step up from SaaS as a viable choice. This article will focus on PaaS since it should be the one that matures the most over the next few years and has the most questions relating to what exactly it is. While there is always the chance that users may

Software as a service (SaaS)—or, as it is com- monly called, cloud computing—is becoming the current choice for software procurement. With cloud computing, computer services are typically provided to users over the Internet—instead of using software products on one’s own PC. Com- panies are now also looking to switch to a similar service, called platform as a service (PaaS). This article explains what PaaS is, and the pros and cons of adopting its use.

© 2012 Wiley Periodicals, Inc.

select the IaaS environment and bypass PaaS, the firm’s most log- ical path is to move up to PaaS. Thus, PaaS should follow, in the immediate future, SaaS’s growth pattern over the last few years. Within the article, we intend to explain what PaaS is—how it is similar to the cloud and how it is different from the cloud. What are its risks and rewards? Which vendors are currently active in PaaS and what does each offer to users? Finally, we will detail steps that users should adopt if they choose to investigate PaaS.

THE INTERNET OPTIONS

Users interested in mov- ing their IT processes to the Internet have three choices (see

Exhibit 1). The most popular is SaaS, which is now com- monly known as the cloud. While it has become common to refer to SaaS as the cloud, it is important to remember that the cloud actually includes all three options: IaaS, PaaS, and SaaS. Within

SaaS, users rent the application from the vendor, with the vendor being responsible for maintaining the software. The simplicity of the model allows firms only needing the vendor’s software to plug in and immediately get to work. At the opposite extreme would be IaaS, where users rent only the infrastructure from the vendor. This infrastructure includes the servers, operating systems, stor- age, and network access but no software or application environ- ment. The users then design and configure applications and intro- duce data into this rented system. So instead of having a server bank at their location, the firm rents it from an outside company. Somewhere in the middle is PaaS, where the vendor pro- vides the infrastructure available

© 2012 Wiley Periodicals, Inc.

Published online in Wiley Online Library (wileyonlinelibrary.com). DOI 10.1002/jcaf.21779

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The Journal of Corporate Accounting & Finance / July/August 2012

of Corporate Accounting & Finance / July/August 2012 Exhibit 1 Internet Options Software as a service

Exhibit 1

Internet Options

Software as a service

SaaS

Purchase software only

Platform as a service

PaaS

Purchase software and hardware

Infrastructure as a service

IaaS

Purchase hardware only

within an IaaS but also software servers and application environ- ments. PaaS provides a greater application development pool than what is provided by SaaS, which usually provides minimal if any application development tools. Usually the PaaS vendor provides an operating system and underpinnings applications, and the user loads their data and con- figures and develops applications that serve their business purpose. The lines between these three options are blurry at best, and what one user would consider PaaS would be SaaS to another user. A quick view would be IaaS is hardware, SaaS is soft- ware, and PaaS is both.

WHAT IS PAAS?

PaaS is a way for compa- nies to take advantage of cloud technologies to help contain or drastically reduce IT expendi- tures. PaaS provides the entire infrastructure needed to run applications over the Internet. It is delivered in the same way as a utility like electricity or water. Like a utility, PaaS is based on a metering or subscription model, so users only pay for what they use and the service provider can spread its IT costs over a broad base of customers. The economies of scale possessed by Salesforce.com, Google, Micro-

soft, and others allow for greater developer environments than small and medium enterprises (SMEs) could create with their own resources. Vendors provide off site servers eliminating the need for expensive investments in hardware, maintenance, and personnel to perform critical functions to keep the system run- ning and error-free. The services range from customers using prepackaged business software run on the pro- vider’s platform and data stored on a provided cloud to an open- sourced platform running many languages so a customer can move the existing application, as well as develop new ones with data stored over many clouds. Providers can custom tailor ser- vices to meet any needs of their customers. With PaaS, independent soft- ware vendors and corporate IT departments can focus on inno- vation instead of complex infra- structure. By leveraging PaaS, organizations can redirect a sig- nificant portion of their budgets, from maintaining the infrastruc- ture to creating applications that provide real business value. With technology constantly changing, there is a need for faster and more available infor- mation. Businesses are find- ing that PaaS is an economical alternative to the traditional

solutions. Companies can move quicker as the need arises. IT can concentrate on developing apps, tweaking existing apps, and pro- viding support services instead of spending time on the hard- ware aspects of IT. This model is driving a new era of mass innovation. Developers from any location can access unlimited computing power. So, anyone with an Internet connection can build powerful applications and deploy the applications to firms’ users wherever they are located.

FUTURE OF PAAS

The potential for growth of PaaS over the next five years is the main reason for our focus on PaaS. A survey by the Sand Hill Group of vendor executives shows that 85 percent of these executives feel that PaaS will provide them with their greatest revenue over SaaS and IaaS in the next five years. 1 The federal government, in its Federal Risk and Autho- rization Management Program (FedRamp), argues that PaaS should be the driving agent of the government’s move to the cloud. 2 The Garner Group projects that the market for PaaS will grow greatly in the next five years. 3 Decision makers at the CFO and CIO level are becoming more comfortable with Internet options, through the success of cloud computing. Therefore, they are more willing to examine the risk/reward issues of plac- ing their bets by moving their IT operations to the Internet. The success of early adopters taking advantage of the benefits of PaaS in comparison to those unwilling to move their applica- tion process to the cloud will probably tell the future of PaaS. Our bet is that many firms will quickly follow the early adopters to PaaS.

DOI 10.1002/jcaf

© 2012 Wiley Periodicals, Inc.

The Journal of Corporate Accounting & Finance / July/August 2012

ADVANTAGES OF PAAS

Now that PaaS’s bright future is explained, we will examine its advantages and risks. The first one that stands out and gets the attention of CFOs is the cost savings available by using PaaS. With no equipment to buy, the lack of up-front costs will benefit those living within a limited IT budget. There is also no maintenance cost since there is no infrastructure. With the IT department not having to deal with the bottom half of IT

infrastructure, it can allocate its resources to developing its busi- ness applications where the firm can derive its greatest benefit. As with all Internet

options, moving the appli- cation to the PaaS environ- ment simplifies the firm’s IT structure. The firm is no longer tied to any par- ticular location. Rather than spending money on several server locations to provide coverage for all the firm’s business loca- tions, the firm’s employees

can access the application from any Internet portal. Since duplicate server banks are no longer needed, this frees up funds that can be reallocated to other areas. Additionally, since the appli- cation environment provides pretested technologies and mul- tiple tools, it lowers the risks and costs of application development. Since the PaaS environment has these advantages, certain tasks can be performed by less experi-

enced and less costly personnel. The personnel will also have the advantage of working in the environment that the applications will be run on. This avoids the problem of it testing well in the lab and having problems in the real environment.

PaaS offer the advantages of letting the vendor worry about security updates and backup and disaster recovery plans. Such time-consuming tasks are no lon- ger the user’s problem. Best practices from other users can be built into a system with the selection from a drop box of tools available in the interface. This speeds up the construction factor and allows the efficient creation of useful applications.

DISADVANTAGES OF PAAS

As with any cloud choice, choosing a PaaS environment

likelihood of Internet shutdown increases the risk to moving to

a PaaS system. Working in a

PaaS environment will be more

risky since its application will be based on a system the firm may not have access to. Individual PaaS vendors offer their own risk. Most have locked-in contracts that create

a risk that the firm may have

to use a vendor that is not pro- viding them with the expected

services. Most PaaS vendors have chosen a language such as Microsoft with its Azure that limits what a company can do. A firm would not want to discard

its portfolio of applications due to the fact that the vendors product will not run the

applications either well or at all. Another important risk is the stability of the vendor. Bankruptcy is an option for many of the startups in this period. The ability to make money at the vendor level will prob- ably be difficult until the market matures in two or

three years. Thus, users may increase their risk exposure by moving to an unstable PaaS. Selecting the correct PaaS ven-

dor is a high-risk challenge at this time.

PaaS offer the advantages of let- ting the vendor worry about security updates and backup and disaster recovery plans. Such time-consuming tasks are no longer the user’s problem.

has certain disadvantages and risks. One prime concern is the reliance on the Internet backbone and plumbing. While reliability is the major responsibility of providers of the backbone of the Internet, there is always the issue of their operating error closing down a major part of the Inter- net. Natural disasters such as a solar storm or other accidents are increasingly more likely to harm the Internet as it expands in either satellite or land-based distribution systems. Also, in the future, more terrorist acts will be directed toward disabling the Internet. One electro-magnetic pulse from an atomic device would render much of the Inter- net unusable. This increasing

EXAMPLE OF A PAAS

Since what PaaS is is still being defined, it might be helpful to examine a currently viable PaaS vendor. For this we chose the offering from Salesforce.com, Force.com. It was a natural outgrowth of its success as a SaaS. Salesforce .com offers the standard SaaS for customer relationship soft- ware. Within Salesforce.com, users have a full-blown CRM tool that has allowed many

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© 2012 Wiley Periodicals, Inc.

DOI 10.1002/jcaf

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firms to achieve success that an in-house CRM probably would not have provided to the firms. However, many users have idiosyncratic needs and wish to tweak the CRM more than the preferences on Salesforce.com allow. Others have applica- tions that they would like to run in the cloud environment. Recognizing that it might lose these users, Salesforce.com made the natural progression to offer these users the ability to move to a PaaS environment by offering Force.com. To make their PaaS a prime choice, SalesForce.com acquired Heroku in 2010. This allows Force.com to offer PaaS across several platforms. One can see that Force.com is an important part of the Salesforce.com strat- egy of growing in the next few years. They believe strongly in the future of PaaS. From the user’s perspective, a testament to the advantages of Force.com collected from their site is “Avon Leadership Manager was built with Force.com and is already becoming one of the most valu- able IT tools delivered at Avon.” 4 Force.com is just one of many vendor choices available in the marketplace. In Exhibit 2, we list several and their corresponding websites. In Exhibit 3, we list the same vendors with a short sum- mary of services offered by these vendors.

STEPS TO PAAS ADOPTION

The first step is whether to move to the cloud at all. With many vendors moving to a SaaS- only distribution system for their software, that decision will be made for everyone. For those moving to the PaaS environment, there probably will be a longer period of being able to develop applications off-grid; however,

DOI 10.1002/jcaf

The Journal of Corporate Accounting & Finance / July/August 2012

of Corporate Accounting & Finance / July/August 2012 Exhibit 2 PaaS Vendors Provider AppFog Apprenda Cloud

Exhibit 2

PaaS Vendors

Provider AppFog Apprenda Cloud Foundry CodeRun Engine Yard eXo Cloud IDE Google App Engine GridGain LongJump NetSuite

Website

http://www.appfog.com/

http://apprenda.com/

http://www.cloudfoundry.com/

http://www.coderun.com/

http://www.engineyard.com/

http://www.cloud-ide.com/

http://code.google.com/appengine/

http://www.gridgain.com/

http://www.longjump.com/

http://www.netsuite.com/portal/home.shtml

OpenShift https://openshift.redhat.com/app/

SalesForce

Stackato http://www.activestate.com/stackato

Windows Azure

WorkXpress

http://www.salesforce.com/

http://www.windowsazure.com/en-us/

http://www.workxpress.com/

it’s our opinion that even this choice will diminish quicker than most think. The decision between IaaS, PaaS, and SaaS will also be one firms make based on their own criteria. Given their deci- sion to elect a PaaS scenario, the important choices will be the contract terms and the choice of software development plat- form (Ruby, Azure, Google App, or others). Those inter- ested in a much more detailed discussion of this may find the article “The Cloud: Platform as a Service Considerations” to be useful. 5 Firms will need to be extremely careful to not get locked into a contract that will make the process not cost-effec- tive. Firms need to avoid choos-

ing a company that might not

survive the relationship. Finally, the firms need to choose an envi- ronment that provides the tools and support for the language that the firm develops its applications in. While many vendors promise cross-platform reliability, it’s probably not the case. Moving

a firm’s application develop-

ment to a place where things do not function correctly is not a wise choice. PaaS is definitely

a decision that should be made

with one’s eyes wide open and questioning every aspect of the decision.

NOTES

1. Pemmaraju, K. (2011). Cloud leaders face a changing tide. Retrieved from

http://sandhill.com/article/cloud-leaders-

face-a-changing-tide.

© 2012 Wiley Periodicals, Inc.

The Journal of Corporate Accounting & Finance / July/August 2012

of Corporate Accounting & Finance / July/August 2012 Exhibit 3 Services Offered by PaaS Vendors Provider

Exhibit 3

Services Offered by PaaS Vendors

Provider

Services Offered

AppFog

Open-sourced, build and run own applications

Apprenda

An open PaaS stack, existing infrastructure to self-service cloud

Cloud Foundry

Multicloud, multilanguage, open-sourced platform

CodeRun

Develop, debug, and deploy web applications from browser

Engine Yard

Provider of platform services

eXo Cloud IDE

Platform and services provider

Google App Engine

Provider of space to run your own web apps

GridGain

Used for transactional real-time big data processing

LongJump

Database application platform for creating apps, managing data, collaboration, and reporting

NetSuite

ERP/Financials software suite

OpenShift

Free, cloud-based application platform for Java, Perl, PHP, Python, and Ruby applications

SalesForce

Platform to develop apps for a sales force and its customers

Stackato

Application platform for creating a private PaaS

Windows Azure

An open-cloud platform with a global network of Microsoft-managed data centers

WorkXpress

Prebuilt apps or app and cloud development

2. Jackson, K. L. (2012, January 25). Platform-as-a-service: The game changer. Retrieved from http://www.forbes.com/

sites/kevinjackson/2012/01/25/platform

-as-a-service-the-game-changer/.

3. Schaffhauser, D. (2011, March 16). Gart- ner: Platform-as-a-service gaining trac-

tion. Retrieved from http://thejournal

.com/articles/2011/03/16/gartner

-platform-as-a-service-gaining-traction.aspx.

4. “Avon Leadership Manager was built with Force.com and is already becoming one of the most valuable IT tools delivered at Avon.” (2012). Retrieved from http://www

.salesforce.com/showcase/#cloud=forcecom &view=grid&sort=industry&filter=. 5. Sullivan, D. (2012). The cloud: Platform as a service considerations. Retrieved from http://www.tomsitpro.com/articles/ platform-as-a-service-paas-cloud-computing

-appscale-ssl-tunnel,2-252.html.

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Kurt Fanning, PhD, CPA, CMA, CISA, CIA, is an associate professor at Grand Valley State University. He was a faculty member at Central Missouri State University and the State University of New York, New Paltz, before coming to GVSU in 2000. Dr. Fanning has written articles for publication in scholarly journals such as the International Journal of Intelligent Systems in Accounting, Finance and Management, Accounting, the Journal of Corporate Accounting & Finance, New Review of Applied Expert Systems and Emerging Technologies, and Financial Studies Journal. His primary teaching and research interests are in manage- ment fraud, accounting information systems, artificial intelligence, and managerial accounting. He also has a CPA license from New York. In addition, he holds the CMA, CISA, and CIA professional certifications. David P. Centers, MBA, is an accounting instructor at Grand Valley State University. Previously, he worked in the governmental, industrial, and not-for-profit sectors as an auditor, plant controller, and controller.

© 2012 Wiley Periodicals, Inc.

DOI 10.1002/jcaf

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