Cloud Native vs. Hosted: Pros and Cons

As more businesses move away from traditional legacy on-premises systems, the cloud is setting a new standard for how IT professionals manage and deploy new applications. There is, however, an ongoing discussion over how to best leverage the cloud. In one camp is cloud native: solutions built from the ground up specifically to leverage the cloud. In the other camp is cloud hosted: where a third party hosts company applications on dedicated servers.

Depending on the industry you work in or even where you fit within the organization, each has its own pros and cons. In this two-part series, I will be taking a deep dive into the different elements of cloud native versus cloud hosted as it applies to contact centers, and where each can best serve your business needs.

Cloud Native

Cloud-native applications are specifically designed, developed, and deployed for cloud environments. Adoption is largely driven by a number of factors – cost, scalability, flexibility – with benefits ranging from true agility to financial. Cloud-native applications are multi-tenant, where a single instance of the software serves multiple clients. A shared compute, storage, and network architecture enables true economies of scale and scope, driving instant elasticity and lowered costs. Additionally, if a fire or flood strikes, the disruption is minimal to none, ensuring true business continuity for your contact centers.

These applications are typically built in agile development environments, which makes it easy to add as well as turn up new capabilities and modules. Building new, innovative applications on top of cloud-native contact center applications becomes much easier with open APIs. However, some enterprises are hesitant to fully embrace the cloud native model. This is largely due to security concerns; they think the data is not secure if it’s not within their firewall. But cloud-native contact center vendors have dedicated money and resources to keep up with changing regulatory environment, whether it’s PCI, HIPPA, GDPR, or any other new form. They leverage economies of scale to cover the costs across multiple users.

Cloud Hosted

Cloud-hosted applications, by contrast, are more similar to legacy systems in some respects. They are designed for on-premises environments, but get deployed on dedicated servers and managed by a service provider under a cloud hood. The development of cloud-hosted solutions originally came from an effort to move from a Capex (capital expenditure) to Opex (operating expense) finance model. The goal is to move premises systems to a hosting service provider to eliminate an enterprise’s Capex costs. But, this move lacks some of the other added cloud benefits. Infrastructure, applications, and data exist in dedicated servers, similar to legacy premises systems which had all of these behind internal firewalls.

Cloud-hosted solutions are appealing for businesses looking to ensure complete isolation of company data. For example, industries that handle large volumes of sensitive data, such as finance, might choose to rely on cloud hosted for security purposes. But this limits IT’s ability to respond to immediate scale needs or innovate and develop custom, value-added applications to meet changing business needs.

For instance, whenever an upgrade is needed, the hosted service provider needs to manually tinker with the systems that only apply to you, lengthening the update cycle to months, as opposed to a blanket update within multi-tenant solutions, which is immediate and seamless to your agents and supervisors. The same applies for scaling up or down, or for a disaster recovery, impacting business agility as well as costs. Cloud-hosted solutions need ongoing investment in infrastructure, maintenance, and resources. And, integrating with multiple applications becomes a big challenge since there is a vendor lock-in and cloud-hosted solutions don’t provide open APIs.

This lack of openness and vendor lock in could lead to stagnant or no innovation. In rapidly evolving business environments, such as contact centers, this stagnation can quickly lead to lost revenue. If businesses can’t keep up with changing customer expectations and make quick updates like adding channels, adding seats, taking real-time routing decisions, or others, customers will turn to competitors that better serve them. This is where open cloud-native platforms outperform cloud-hosted solutions.

Look at Your Business Needs

For IT decision makers, enabling and fueling business growth is always a significant factor in determining whether to commit to cloud native or cloud hosted. For organizations that need the flexibility to adapt to rapidly changing customer needs and expectations, cloud native serves them best. For organizations who typically operate in more restrained, calculated environments, the isolated nature of cloud hosted may be more appealing. Every business is unique, and understanding your own strengths and weaknesses is critical in making this decision.

Stay tuned for my next article, in which I’ll look at three different departments within organizations – IT, operations, and finance – and how cloud native and cloud hosted impacts each one of them.