A Cloud POS is a Point of Sale software based on Cloud Computing and managed through Internet.<\p>
A native Cloud POS is designed from the ground to take advantage of new paradigms like Multi-tenancy, rapid elasticity and expose standard and open APIs.
A hosted Cloud POS is a classic software hosted in a datacenter or in a public IaaS (Infrastructure as a Service) based on Thin Client or Client / Server traditional architectures.
In both cases the “Cloud” before “POS” indicate automatic deployment and continuous data exchange.
The question is: Why to debate native vs. hosted, if the user does not feel any difference? Why worry about the engine if the machine works? As always, the devil is in details and in medium/long term overall quality and cost.
Any software application can be hosted in a datacenter and offered in SaaS (Software as a Service) mode as in last century ASP (Application Software Provisioning), but traditional software is usually designed for company internal use and for restricted integration with the outside world. Traditional architectures are not well suited to a connected world that include customers, suppliers, service providers, … even if hosted in the Cloud.
Only native Cloud services are designed for a wide audience (thousands of companies and millions of users) and interoperability for easy and direct intercompany cooperation. In this scenario high scalability and high SLA (Service Level Agreement) are not nice to have features but a must. This demand a software architecture born in this century: the SOA (Service Oriented Architecture), based on standard web services and asynchronous messages.
High Scalability and SLA request a middleware between the base Operating System and the applications software, that handle automatically, among others, load balancing, rapid elasticity, hardware failures and software upgrades without any interruption for a true 24 x 7 service. Platform as a Service (PaaS) are this middleware for the Cloud, but to get its value, application software must be radically redesigned.
As cost is always a primary driving force, Scalability and SLA are not achieved through a brute force approach but through rapid elasticity and high hardware/software sharing (Multi-tenancy).
PaaS are ideal to add rapidly new Cloud resources when sales volume increase and release to the general pool when not necessary any more, reducing drastically the average daily cost. The more the applications and users, as in Public Cloud, the more stable the average load and the better is the utilization factor, as in public power plants.
The other fundamental efficiency driver is Multi-tenancy: the same software and hardware resources sharing among different companies. Stores activity is quite sparse and multi-tenancy allows a good utilization factor of various service roles composing the whole SOA based application. This is very different from traditional software where chains/stores are assigned to each machine. Multi-tenancy imply a single software version with a wide parameters choice for meeting different chains needs ending long, expensive and locking customizations. Standardization is the way to speed projects, but especially to get continuous and economically sustainable evolution.Advantages far outweigh disadvantages.
Software is moving from craft to industry and economical laws still holds: small investment for hosting a traditional application translate in high service cost, while high initial investment for a native Cloud application gives lower running cost.
Public Cloud is intrinsically more efficient than Private Cloud in basic resources provisioning and Multi-tenant applications are more efficient than Single-tenant ones in its usage. This is like to say that a Native Cloud POS in a Public Cloud has a double efficiency advantage over a Private Cloud hosted solution and a much higher SLA.
Another advantage of a software applications radical redesign is the better chance to develop new User Interfaces in line with user expectation brought by consumer applications: the IT consumerization.
Traditional software offering for small retailers are radically different from solutions aimed at medium and large chains, posing hard choices to many. For the first time native Cloud POS SaaS allows a small retailer to use the same services adopted by a big competitor, while paying a fraction of the cost. Scalability is not his main concern but she/he contribute to economy of scale, lowering the cost also for the large chains, as demonstrated for the first time by SalesForce in the CRM sector.
The final remark is that Cost is important, especially in current economic environment, but a native Cloud POS main advantages are on direct Customer connections through any fixed or mobile channel, integration with supply chain and the emerging Cloud service ecosystem that enable new business models and new competitive advantages.
P.S. Cloud SLA is only part of the picture, connectivity SLA is the other. As POS are mission critical and speed is a vital feature, they should be intelligent Apps designed to work seamlessly connected and disconnected.