What’s cloud-native SaaS

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What’s cloud-native SaaS and why is it a core trait of composable commerce?

commercetools speaker image Micheal Scholz
Michael Scholz
VP, Product & Customer Marketing, commercetools
Published 21 August 2023
Estimated reading time minutes

Composable commerce is widely viewed as a component-based solution design approach that arose as a response to the shortcomings of monolithic platforms. While this is correct, it only tells part of the story. This is because, as composable commerce grows and evolves, it’s actually more than the sum of best-of-breed parts. In fact, for a composable solution to be truly and authentically composable, it needs to be cloud-native and tech-agnostic, too.

In this article, we zoom in on one of the core traits of a genuine composable commerce system: Cloud-native SaaS. Let’s explore what cloud-native actually is, the differences between cloud-native and cloud-hosted, and how leading businesses benefit from a true composable infrastructure with commercetools.

What’s cloud-native SaaS

What’s cloud-native SaaS?

Being cloud-native refers to a modern approach to building and running software applications that leverages the flexibility, scalability and resilience of cloud computing. As software/SaaS that runs in the cloud, all of its functionalities are natively integrated with core components of cloud providers, such as Google Cloud and Amazon Web Services (AWS). 

A cloud-native SaaS is built using modern principles, such as:

  • Microservices: An application development approach with modular components or services. 

  • Containerization: A type of software that can virtually package and isolate applications for deployment. 

  • Continuous delivery: A software delivery approach in which development teams produce and test code in short and continuous iterations. 

  • DevOps: A methodology that promotes collaboration between development and operations teams. 

How does this translate into business terms? In a nutshell, cloud-native SaaS is one of the elements behind the scenes that enable companies to scale commerce capacity at speed (say, during Black Friday) without having to provision hardware and software internally. Businesses can essentially outsource the heavy lifting of data center operations to a cloud provider and capitalize on autoscaling, high availability, reliability and security, as well as the agility of distributed architecture across the globe to support agile development, innovation, and more. 

So, why is being cloud-native a core trait of composable commerce? It’s because cloud-native architecture is what enables companies to scale their independent components, meeting changing customer demand and managing fluctuations. In addition, a cloud-native application ensures that different components can be deployed separately and scaled independently, maximizing flexibility and agility for your technology infrastructure. 

For example, a business integrating checkout may need to scale this functionality to meet a high customer influx. If the component is just hosted on the cloud or managed on-premise, then it may face difficulties to respond to a Black Friday-like traffic spike and therefore may experience slowdowns or even downtime. 

In short, simply having independent and interchangeable components is not enough for your tech stack to be composable: It needs to be cloud-native as well to provide truly outstanding customer experiences. 

What's on-premise infrastructure and why are companies shifting to the cloud?

On-premise IT, commonly referred to as “on-prem,” is situated within the physical premises of an enterprise or hosted in servers in a remote facility. While enterprises have tighter control over their infrastructure, they lack the scalability needed for spontaneous and high-volume sales, as well as the flexibility to create, adapt and customize commerce functions. 

When businesses rely on these inflexible and unscalable infrastructures, they frequently face capacity constraints to meet online traffic peaks. In the on-premise world, it could take weeks or even months to order new servers, put them into a data center and provision them with all the necessary software in order to meet the capacity needed for a Black Friday-like event. 

In such cases, companies simply guess what their peaks will be and then multiply that by five to size their production environments. Hardware is statically deployed, sitting idle except for the few hours of the year when it spikes up to accommodate seasonality periods. Not only does this require meticulous planning months in advance but the hosting and maintenance costs end up bloating the IT budget. 

While cloud-hosted solutions are a first step away from the inflexible on-prem infrastructures, they still face constraints to leverage the benefits of cloud-native. 

What’s the relationship between cloud-native SaaS and multi-tenancy?

One of the main differentiators of cloud-native is the concept of multi-tenancy. In short, multi-tenancy allows multiple customers (or “tenants”) to share the same application or infrastructure while keeping their data and processes separate and secure.

To achieve this, each tenant project can be provisioned with a unique logical database, which shares the same infrastructure resources but are otherwise logically separated projects. Overall, a multi-tenant system has much higher limits for scalability than a single-tenant system. 

The differences between multi-tenancy and single tenancy

What’s the difference between cloud-native and cloud-hosted?

Not every cloud model is created equal. In reality, there exist various types of cloud application models, “cloud-native” and “cloud-hosted” being the most common. 

As the name suggests, “cloud-hosted” are applications hosted on cloud infrastructure instead of on-premises servers. These applications are usually designed for on-premises environments and later migrated to the cloud, which often involves lifting and shifting existing applications to cloud servers without significant architectural changes, such as distributed and modular infrastructure. 

Here’s an overview:

The differences between cloud-hosted and cloud-native

In other words, cloud-hosted applications (on the cloud) are unable to take full advantage of the cloud-native architecture (in the cloud), such as faster time-to-market, fault isolation and more. 

Why is cloud-native SaaS essential for businesses to succeed in digital commerce?

The customers of today, no matter if they’re in B2C, D2C or B2B, require fast, mobile-first and omnichannel experiences. To deliver on these requirements, businesses must become agile and flexible, which is difficult to achieve with on-premise IT, as well as cloud-hosted solutions. 

In a nutshell, this is how cloud-native SaaS enables businesses to fulfill the top prerequisites for commerce success:

  • Perform the heavy lifting of data center operations like racking, stacking and powering servers. This allows brands to focus on their customers and core business projects rather than on IT infrastructure, consuming capabilities and services via an API endpoint. 

  • Elastic cloud access provides far more computing resources and power, whether automatic scaling or geographic reach without the need to pre-provision environments for traffic that may or may not come. 

  • Bringing in-store POS (point-of-sale) to the cloud and blending it with eCommerce with a centralized commerce backend running in the cloud allows companies to synchronize and share data across channels. 

  • Serving multiple locales around the world requires an infrastructure that enables fast response times. If a business is based in Europe but would like to target audiences in the US and APAC, a cloud-native infrastructure provides a better option to reduce latency and response times

  • In addition to scalability, companies need to adapt rapidly to new customer requirements and market forces. To achieve this, the agility of distributed and component-based architecture is crucial because they enable your company to develop and deploy components independently. 

How does cloud-native SaaS auto-scale online capacity and performance?

Using a cloud-native architecture enables brands to auto-scale online capacity to meet traffic spikes during high-demand seasonal events such as Black Friday, as well as sudden sales surges, without performance issues or downtime. That means it’s possible to meet your online traffic demands, even when workloads are constantly changing, without the need to manually provision capacity. 

Technically, this is achieved with the ability to auto-scale and distribute workloads across multiple instances at the cloud computing provider of your choice: 

  • Google Cloud’s Load Balancing routes its workload by balancing it across zones and regions in real-time, so brands can scale up or down using Google Cloud’s intelligent auto-scaling integrated with the Cloud Content Delivery Network. 

  • AWS Auto Scaling automatically increases the capacity of constrained resources so shoppers can benefit from high-quality service, plus automating consumption plans, scaling policies and targeting based on customer preferences. 

In short, cloud service providers provide a range of options for swiftly and efficiently scaling resources up and down. These options, such as auto-scaling, load balancing and elastic computing, empower enterprises to adapt their resource allocation dynamically based on the fluctuating demands of their customers. 

How can cloud-native SaaS reduce TCO?

Businesses relying on on-prem and even cloud-hosted solutions have to predict their resource needs for relevant seasonal events well in advance. This often means investing in hardware that would only be utilized during that specific time, leaving it unused for the rest of the year. What’s more, on-premise solutions are notably more expensive, as they have to cover the installation and upkeep of a company’s own servers, hardware and software maintenance, as well as hiring IT staff to oversee the solution. 

Cloud-native SaaS addresses these problems head-on with an elastic infrastructure, as you can scale capacity up and down according to customer demand. In other words, you’re not paying for extra hardware, software, hosting and provisioning costs when you don’t need them. 

Moreover, as a multi-tenant solution, cloud-native SaaS enables companies to typically consume fewer resources, which reduces costs. Because a multi-tenant system ensures maintenance is carried out, you’re always up-to-date on the latest version and don’t have to pay additional costs for updates or upgrades. 

In short, cloud-native solutions can be accessed via the internet and get all the maintenance and upgrades without the effort or cost of doing it in-house. Such a move to the cloud offers significantly lower TCO(total costs of ownership) to businesses as they can invest in less hardware or software and do not need such a large IT team to manage internal infrastructure.

How secure is cloud-native SaaS?

Security is a major concern for businesses when it comes to digital commerce. Although on-premise solutions might appear more secure as they are hosted on the company’s own servers, they do come with inherent security risks. For instance, if the company’s servers are targeted and hacked, the entire eCommerce platform becomes vulnerable. 

In contrast, cloud-native systems are hosted by third-party providers with a strong security focus and framework, which includes:

  • Substantial investments in encryption, access controls, backup and disaster recovery to safeguard clients’ data. The built-in security of the underlying cloud provider, such as access and data control, encryption, privacy, firewalls, anomaly detection and other protective measures, is leagues ahead of what traditional on-prem can deliver.

  • Cloud-native platforms perform regular updates to address potential vulnerabilities at a much faster pace than a standard company would. 

  • The distributed nature of cloud-native solutions means that even if one component is compromised, it’s much harder for attackers to take the entire system down. 

  • Compliance with regulations like GDPR, as well as achieving essential certifications like ISO/IEC 27001 and SOC II. 

Being multi-tenant ensures a high level of data separation, especially when data for each project is stored in a separate database, so projects are only accessible to the customer who created them, and complete isolation and segregation of persistent data are assured and regularly checked. In addition, cloud network setups can take advantage of automated code scans, security-relevant logs, and vault and credential rotation for extra protection.

How does cloud-native SaaS enable businesses to become more resilient and adaptable?

Cloud-native applications are designed with a component-based approach, enabling businesses to: 

  • Run fast development, deployment and updates on the fly without the effort and cost of on-prem infrastructure. Such infrastructure enables companies to quickly adapt to changing market conditions, customer preferences and emerging technologies. 

  • Benefit from an inherently resilient, redundant and fault-tolerant system. In case of hardware failures or disruptions, the application can automatically recover, reducing the risk of data loss and minimizing downtime, ensuring uninterrupted service for customers.

In addition, cloud infrastructure means you get access to the best equipment available: The newest Intel processors, the most optimized RAM memory, solid-state drive (SSD) storage, arrays of graphics processing units (GPUs) and even cloud-programmable hardware. This comes with managed databases and warehouses, orchestration platforms, caching, queuing systems, and just about anything you need for any software architecture. The impact on your business when moving to the cloud can be immediate, especially if you operate in a competitive market that is advancing swiftly.

Another benefit of cloud-native infrastructure is that technical teams aren’t focused on maintaining IT infrastructures or disaster recovery; their focus changes from maintenance and bug fixing to innovation output. By moving to the cloud, your business can concentrate on what it does best and put efforts into growth and customer experience, instead of trying to keep up with in-house, on-prem architecture. 

Also, a cloud-native architecture helps you take advantage of emerging technologies such as artificial intelligence, augmented reality and Internet of Things (IoT). These technologies can enhance customer experiences, provide personalized recommendations and enable new and innovative ways of conducting digital commerce.

What benefits have businesses gained with commercetools Composable Commerce powered by cloud-native SaaS?

commercetools has been built as a truly multi-tenant platform that runs in certified data centers in Europe, the US and APAC, and is hosted on Google Cloud and Amazon Web Services (AWS). This cloud-native technology has been a game-changer for commercetools customers, reaping the rewards of improved scalability, agility and reliability. 

Ulta Beauty, one of the largest US retailers, modernized its eCommerce solution, taking advantage of cloud-native technology powered by Google Cloud. Now, Ulta Beauty is prepared to handle surges in traffic through auto-scaling while maintaining high-speed performance during the holiday shopping season.

With these changes [cloud-native commerce], we are ready for a holiday season that everyone — even those of us in IT — gets to enjoy. We’re positioned to continuously focus on new, better ways to serve our guests.
Sethu Madhav Vure

IT Architect, Ulta Beauty

The online food ordering and home delivery business Just Eat Takeaway.com implemented commercetools Composable Commerce on AWS in its B2B marketplace, enabling restaurant owners to purchase products from third-party sellers across multiple countries. Hosted on AWS, the marketplace has an uptime of 99.999% and is highly scalable and secure.

With rapid changes in the food delivery market we needed a system that can scale with us to even better support the needs of our partner restaurants. As a headless system, commercetools gives us the flexibility, scalability and speed to support our ambitions.
Rick Koopman

Global Head of eCommerce Partner Marketing, Just Eat Takeaway.com

The greeting card retailer Moonpig experienced massive traffic spikes during seasonal events like Valentine’s Day and Mother’s Day but struggled to accommodate growth with a limited-capacity platform. To handle its thriving traffic to webshops in the UK, US and Australia, Moonpig leveraged cloud-native SaaS based on AWS and now benefits from a flexible, adaptable and elastic cloud infrastructure that delivers a responsive web experience over peak periods. 

The forward plan is where we’re leveraging more cloud infrastructure. We’re moving to a kind of platform as a service and serverless infrastructure where all the instructions are in code and we can spin up new services when needed. We’re not paying for massive data centers when we don’t need them during peaks. And so we now have all of our kinds of legacy architecture on AWS. But we’re going to move into this new architecture to make it faster, more scalable and more cost-efficient.
Ronan Tighe

CPO, Moonpig

These examples show how businesses can benefit from true composable commerce based on cloud-native SaaS. In addition to the ability to auto-scale capacity, the tenets of cloud-native infrastructure are essential for businesses to scale not only capacity but innovation and growth possibilities. 

Are you ready to take your business to cloud nine? Experience the benefits of cloud-native SaaS with commercetools Composable Commerce with our 60-day free trial. Get started today! 

commercetools speaker image Micheal Scholz
Michael Scholz
VP, Product & Customer Marketing, commercetools

Michael Scholz is the VP of Product & Customer Marketing for commercetools. With two decades of experience in retail & software at SAP, Hybris, SuccessFactors and Sift, he has been leading software development, presales, consulting, marketing & strategic alliances.

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