The key characteristics of cloud software, according to IDC, include:
- network-based access to, and management of, commercially available software
- activities that are managed from central locations rather than at each customer's site, enabling customers to access applications remotely via the Web
- application delivery that typically is closer to a one-to-many model (single instance, multi-tenant architecture) than to a one-to-one model, including architecture, pricing, partnering, and management characteristics
- centralized feature updating, which obviates the need for downloadable patches and upgrades.
- Cloud is often used in a larger network of communicating software - either as part of a mashup or as a plugin to a platform as a service. Service oriented architecture is naturally more complex than traditional models of software deployment.
Cloud applications are generally priced on a per-user basis, sometimes with a relatively small minimum number of users and often with additional fees for extra bandwidth and storage. Cloud revenue streams to the vendor are therefore lower initially than traditional software license fees, but are also recurring, and therefore viewed as more predictable, much like maintenance fees for licensed software.
In addition to the characteristics mentioned above, Cloud software turns the tragedy of the commons on its head and frequently has these additional benefits:
- More feature requests from users since there is frequently no marginal cost for requesting new features;
- Faster releases of new features since the entire community of users benefits from new functionality; and
- The embodiment of recognized best practices since the community of users drives the software publisher to support the best practice.