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Platform as a Service: Is It Time to Switch?


Kurt Fanning and David P. Centers

INTRODUCTION

Exhibit 1). The most


popular is SaaS,
which is now commonly 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,
2012 Wiley Periodicals, Inc.
and SaaS. Within
SaaS, users rent the
application from the
vendor, with the vendor being
select the IaaS environment and
bypass PaaS, the firms most log- responsible for maintaining the
software. The simplicity of the
ical path is to move up to PaaS.
model allows firms only needing
Thus, PaaS should follow, in the
immediate future, SaaSs growth the vendors software to plug in
and immediately get to work. At
pattern over the last few years.
Within the article, we intend the opposite extreme would be
IaaS, where users rent only the
to explain what PaaS ishow it
is similar to the cloud and how it infrastructure from the vendor.
is different from the cloud. What This infrastructure includes the
are its risks and rewards? Which servers, operating systems, storage, and network access but no
vendors are currently active in
software or application environPaaS and what does each offer
ment. The users then design and
to users? Finally, we will detail
configure applications and introsteps that users should adopt if
duce data into this rented system.
they choose to investigate PaaS.
So instead of having a server
bank at their location, the firm
THE INTERNET OPTIONS
rents it from an outside company.
Somewhere in the middle
Users interested in movis PaaS, where the vendor proing their IT processes to the
vides the infrastructure available
Internet have three choices (see

Software as a service (SaaS)or, as it is commonly called, cloud computingis becoming the


current choice for software procurement. With
cloud computing, computer services are typically
provided to users over the Internetinstead of
using software products on ones own PC. Companies 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.

Software as a service (SaaS)or, as it


is commonly called,
cloud computingis
becoming the current
choice for software
procurement. Users
are overcoming their
fears of not controlling
access to their data and
applications and viewing SaaS as way of
providing cost-efficient
and effective information technology for their employees. Due to
the success of SaaS, two similar
forms of operations, platform
as a service (PaaS) and infrastructure as a service (IaaS), are
increasingly the object of chief
information officers (CIOs) and
chief financial officers (CFOs)
interest. While there is usually more risk involved in using
either PaaS or IaaS in comparison 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
2012 Wiley Periodicals, Inc.

Published online in Wiley Online Library (wileyonlinelibrary.com).


DOI 10.1002/jcaf.21779

21

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

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 environments. 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 configures 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 software, and PaaS is both.

WHAT IS PAAS?
PaaS is a way for companies to take advantage of cloud
technologies to help contain or
drastically reduce IT expenditures. 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, MicroDOI 10.1002/jcaf

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 running and error-free.
The services range from
customers using prepackaged
business software run on the providers platform and data stored
on a provided cloud to an opensourced 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 services to meet any needs of their
customers.
With PaaS, independent software vendors and corporate IT
departments can focus on innovation instead of complex infrastructure. By leveraging PaaS,
organizations can redirect a significant portion of their budgets,
from maintaining the infrastructure to creating applications that
provide real business value.
With technology constantly
changing, there is a need for
faster and more available information. Businesses are finding 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 providing support services instead
of spending time on the hardware 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 Authorization Management Program
(FedRamp), argues that PaaS
should be the driving agent of the
governments 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 placing 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 application 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.
2012 Wiley Periodicals, Inc.

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

ADVANTAGES OF PAAS
Now that PaaSs 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 business applications where the firm
can derive its greatest benefit.
As with all Internet
options, moving the application to the PaaS environment simplifies the firms
IT structure. The firm is
no longer tied to any particular location. Rather
than spending money on
several server locations to
provide coverage for all
the firms business locations, the firms 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 application environment provides
pretested technologies and multiple tools, it lowers the risks and
costs of application development.
Since the PaaS environment has
these advantages, certain tasks
can be performed by less experienced 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.

2012 Wiley Periodicals, Inc.

PaaS offer the advantages of


letting the vendor worry about
security updates and backup and
disaster recovery plans. Such
time-consuming tasks are no longer the users 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

PaaS offer the advantages of letting the vendor worry about security
updates and backup and disaster
recovery plans. Such time-consuming
tasks are no longer the users
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 Internet. 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 Internet unusable. This increasing

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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 providing 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 probably 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 vendor is a high-risk challenge at
this time.

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 software. Within Salesforce.com,
users have a full-blown CRM
tool that has allowed many

DOI 10.1002/jcaf

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

firms to achieve success that an


in-house CRM probably would
not have provided to the firms. Exhibit 2
However, many users have
idiosyncratic needs and wish to
tweak the CRM more than the
PaaS Vendors
preferences on Salesforce.com
allow. Others have applicaProvider
Website
tions that they would like to
AppFog
http://www.appfog.com/
run in the cloud environment.
Apprenda
http://apprenda.com/
Recognizing that it might lose
these users, Salesforce.com
Cloud Foundry
http://www.cloudfoundry.com/
made the natural progression to
CodeRun
http://www.coderun.com/
offer these users the ability to
Engine Yard
http://www.engineyard.com/
move to a PaaS environment by
offering Force.com.
eXo Cloud IDE
http://www.cloud-ide.com/
To make their PaaS a prime
Google App Engine
http://code.google.com/appengine/
choice, SalesForce.com acquired
GridGain
http://www.gridgain.com/
Heroku in 2010. This allows
LongJump
http://www.longjump.com/
Force.com to offer PaaS across
several platforms. One can see
NetSuite
http://www.netsuite.com/portal/home.shtml
that Force.com is an important
OpenShift
https://openshift.redhat.com/app/
part of the Salesforce.com stratSalesForce
http://www.salesforce.com/
egy of growing in the next few
years. They believe strongly in
Stackato
http://www.activestate.com/stackato
the future of PaaS. From the
Windows Azure
http://www.windowsazure.com/en-us/
users perspective, a testament
WorkXpress
http://www.workxpress.com/
to the advantages of Force.com
collected from their site is Avon
Leadership Manager was built
with Force.com and is already
ing a company that might not
its our opinion that even this
becoming one of the most valusurvive the relationship. Finally,
able IT tools delivered at Avon.4 choice will diminish quicker
the firms need to choose an envithan most think.
Force.com is just one of many
ronment that provides the tools
The decision between IaaS,
vendor choices available in the
and support for the language that
marketplace. In Exhibit 2, we list PaaS, and SaaS will also be
the firm develops its applications
one firms make based on their
several and their corresponding
in. While many vendors promise
websites. In Exhibit 3, we list the own criteria. Given their decision to elect a PaaS scenario, the cross-platform reliability, its
same vendors with a short sumprobably not the case. Moving
mary of services offered by these important choices will be the
a firms application developcontract terms and the choice
vendors.
ment to a place where things do
of software development platnot function correctly is not a
form (Ruby, Azure, Google
STEPS TO PAAS ADOPTION
wise choice. PaaS is definitely
App, or others). Those intera decision that should be made
ested in a much more detailed
The first step is whether to
with ones eyes wide open and
discussion of this may find the
move to the cloud at all. With
questioning every aspect of the
many vendors moving to a SaaS- article The Cloud: Platform as
decision.
only distribution system for their a Service Considerations to be
useful.5
software, that decision will be
NOTES
Firms will need to be
made for everyone. For those
moving to the PaaS environment, extremely careful to not get
1. Pemmaraju, K. (2011). Cloud leaders
locked into a contract that will
there probably will be a longer
face a changing tide. Retrieved from
make the process not cost-effecperiod of being able to develop
http://sandhill.com/article/cloud-leaderstive. Firms need to avoid choosapplications off-grid; however,
face-a-changing-tide.

DOI 10.1002/jcaf

2012 Wiley Periodicals, Inc.

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

25

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). Gartner: 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.

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 management 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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