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Software as a Service (SaaS) Strategies for Hosting Providers. Douglas Johnson, SWsoft Steve Merkel, Data393 Tuesday, May 8, 2007. What is SaaS?. Software deployed as a hosted service and accessed over the Internet. Traditional Deployment. SaaS Deployment. Customer Site.

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Software as a service saas strategies for hosting providers

Software as a Service (SaaS)Strategies for Hosting Providers

Douglas Johnson, SWsoft

Steve Merkel, Data393

Tuesday, May 8, 2007


What is saas
What is SaaS?

Software deployed as a hosted service and accessed over the Internet

Traditional Deployment

SaaS Deployment

Customer Site

Hosting Provider Site

Internet

Server

Server

Application 1

Application 1

Server Application

Client

PC

  • What has changed from ASP model of a few years ago?

    • Customer readiness

    • Improved network capacity

    • Improved software delivery platforms

Software as a Service (SaaS) Strategies for Hosting Providers


Saas the opportunity

SaaS % of Business Software Market

opportunity: $8B increasing to $40B

SaaS – The Opportunity*

  • 2005 – 5% of new business software deployed as a service

  • 2011 – 25% of new business software deployed as a service

  • Opportunity

    • $8B (2006) -> $40B (2011)

    • 50 million SMB customers

  • Types of applications

    • CRM, web conferencing, web content management, HR, supply chain, collaboration, email, and others

* Gartner Release, September 2006

Software as a Service (SaaS) Strategies for Hosting Providers


Saas the track to higher revenue
SaaS – The Track to Higher Revenue

Advanced Apps(CRM, ERP, vertical)$250-$1500+

$1,000

Add Business Collaboration(i.e. SharePoint, LCS, VoIP)$200-$500

SaaS

Business-Class E-mail(i.e. Hosted Exchange)$150-$300

Dedicated & Managed Server$100-$500

Revenue Opportunity (SMB: 20 Users/Month)

$100

Virtual PrivateServers$15-$100

Infrastructure

Shared DynamicWeb , DB, Apps$5-$20

Shared StaticWeb Hosting$3-$10

DomainRegistration$1-$3

$10

Application Mgmt

Email

Web Presence

E-commerce

Collaboration

Customer Needs

4

Software as a Service (SaaS) Strategies for Hosting Providers


Saas the benefits
SaaS – The Benefits

  • End User Benefits

  • Budgeting - predictable recurring fees

  • Easy to evaluate – online demos

  • No involvement with software deployment and maintenance

  • Higher level of service and better scalability

  • 24x7 support – without waking the IT guy

  • ISV Benefits

  • New channel for software distribution

  • New market reach – SMBs

  • Lower costs for software distribution and deployment

    • Upgrade all customers in an environment

  • Recurring revenue

  • Faster release cycles

  • Hosting Provider Benefits

  • Additional revenue

    • Higher average revenue per customer

  • Provides stickier services

  • Attracts new types of customers

Software as a Service (SaaS) Strategies for Hosting Providers


Saas applications
SaaS – Applications

Most software (including IIS/Apache) can be installed or hosted

  • Hosting Infrastructure

  • Shared web hosting

  • Database hosting

  • Streaming

  • Email / Collaboration

  • Exchange

  • SharePoint

  • OpenXchange

  • Business Admin

  • NetSuite

  • Hosted Quickbooks

  • Web Conferencing

  • WebEx

  • LiveMeeting

  • Spreed

  • E-commerce, E-marketing

  • Miva, OScommerce

  • ExactTarget

  • CRM

  • Salesforce.com

  • SugarCRM

  • Microsoft CRM

  • HR Portals

  • Employease

  • Taleo

  • Workstream

  • Traditional Apps Deployed in Virtual Environments

  • Accounting, business administration, remote desktops, inventory management, document management, games, CAD/CAM, statistics, publishing, media editing, more … think customized line of business applications

Software as a Service (SaaS) Strategies for Hosting Providers


Hosted application opportunity
Hosted Application Opportunity …

  • Step 1: Google “plumber inventory management software”

  • Step 2: Navigate to software solutions

  • Step 3: Think … do plumbers want to install and manage software?

Software as a Service (SaaS) Strategies for Hosting Providers


Hosted application opportunity1
Hosted Application Opportunity …

  • Step 1: Google “dental patient management software”

  • Step 2: Navigate to software solutions

  • Step 3: Think … do dentist offices have IT experts?

Software as a Service (SaaS) Strategies for Hosting Providers


Hosting requirements for saas
Hosting Requirements for SaaS

Software

as a

Service

  • Migration

  • Onsite to hosted

  • Hosted to hosted

  • Back office support

  • Billing and accounting

  • Inventory management

  • Customer service

  • Service Management

  • Self service

  • Non-technical

  • Single sign on to all services

  • Provisioning

  • Rapid

  • Driven by workflow

  • Automated or manual

  • Services delivered as soon as users requests them

  • Platform and Service Delivery

  • Standards based

  • Multiple installations per server

  • Application isolation

  • Quality of service parameters

  • Licensing and Applications

  • Pay based on usage

  • Pay based on accounts

  • Pay based on resources

  • Quality of service parameters

Traditional

Hosting

Stepping up from

Traditional Hosting

to Software as a Service

Software as a Service (SaaS) Strategies for Hosting Providers


Reducing saas costs

Virtualization

effect

Automation

effect

Reducing SaaS Costs

Note

Converting traditional applications to multi-tenant applications is more expensive than virtualizing.

  • Cost Drivers:

  • Hardware

  • Licensing

  • Maintenance

  • Management

Traditional

Configurable

Multi-Tenant

SaaS Deployment Types

Software as a Service (SaaS) Strategies for Hosting Providers


Saas swsoft delivers solutions
SaaS – SWsoft Delivers Solutions

Categories of SaaS Applications

SWsoft Delivers

  • Configurable applications

  • Guest books, polling, chat, blogs, photo galleries, site builders

  • Ecommerce solutions

  • Content management systems

  • Automation and Billing

  • Automated ordering and provisioning

  • Automated domain registration

  • Automated workflow management

  • Automated billing and account management

  • Customer Self Service

  • Self service control panels

  • Self ordering and upgrades

  • Self service application installation

  • Resource Management & Licensing

  • Management of application servers and resources

  • Standards for ISVs for hosted service delivery

  • Multi-tenant applications

  • Email (Exchange with HMC)

  • Collaboration (SharePoint with HMC)

  • VoIP

  • Web conferencing

  • Automation and Self Service

  • All features provided above

  • Isolated Environment

  • Environment variables (memory, CPU, disk space, directories, processes, etc.)

  • Traditional applications

  • Accounting packages, photo editing software, etc.

  • Other stand-alone software not converted to multi-tenant

Software as a Service (SaaS) Strategies for Hosting Providers


Saas application type multi instance configurable

Customer 2

Customer n

SaaS Application Type – Multi-Instance (Configurable)

  • Lightweight web applications can be deployed on demand directly into the customer’s web environment

Internet

Customer 1

Hosting Provider Site

Customer Web Directories

PEM

Management

Node

  • Deployment can be from internal or external mirrors

  • Applications can be configured as they are deployed

  • Upgrades initiated by users

  • Application standards provided by OPENFUSION

  • Automation provided by PEM

User 1 Directory

User n Directory

Application Repository

Web Application

Web Application

Web Application

Web Application

Web Application

External Application Site

Application

Repository

Web Application

Web Application

Software as a Service (SaaS) Strategies for Hosting Providers


Demo swsoft delivers web applications
Demo – SWsoft Delivers Web Applications

  • Step 1: Select Application to Install

  • Step 2: Select Application Configuration Options

  • Step 3: Install Application (automatic)

  • Step 4: Manage Application

Software as a Service (SaaS) Strategies for Hosting Providers


Saas application type multi tenant

Customer 2

Customer n

SaaS Application Type – Multi-Tenant

  • Larger applications can be deployed by providing access rights to a single app instance

Internet

Customer 1

Hosting Provider Site

Customer Configuration

PEM

Management

Node

  • Requires multi-tenant application and security

  • Centralized upgrades

  • Fault tolerance

  • Application standards provided by OPENFUSION

  • Billing, provisioning, and maintenance orchestrated by PEM

User 1 Directory

User x Directory

Config 1

Config n

Config x

Application Server

Application 1

Application n

C1 Storage

Cx Storage

Application Storage

Storage Area Network

Software as a Service (SaaS) Strategies for Hosting Providers


Example multi tenant architecture
Example: Multi-Tenant Architecture

Deployment Example – Hosted Exchange

  • 12 server deployment

    • 2 Exchange front end servers

    • 2 Exchange back end servers

    • 2 DNS servers

    • 2 Active Directory servers

    • 1 Provisioning server

    • 1 PEM front end server

    • 2 PEM back end severs

  • 3 optional servers

    • 1 BlackBerry messaging server

    • 1 SharePoint front-end server

    • 1 SharePoint back-end server

  • Capacities

    • 5,000 mailboxes

    • 500 BlackBerry users

  • Redundant and scalable

Software as a Service (SaaS) Strategies for Hosting Providers


Hardware costs
Hardware Costs

  • The cost of a fully redundant, fully automated Exchange architecture should be split among multiple users

Software as a Service (SaaS) Strategies for Hosting Providers


Saas application type single instance traditional

Website

transaction

Phone

call

Service

Provider

End User Customers

Provision

application

SaaS Application Type – Single Instance (Traditional)

  • Traditional applications require an isolated operating environment

  • Issue: one application, one server

  • Solution: Virtualization

  • Issue: manual application provisioning, high service costs

  • Solution: Automation

Hosting Provider Site

Application Server

PEM

Management

Node

Application

VE1

VE 2

VE n

Application

1

Instance

1

Application

1

Instance

2

Automated

provisioning

and

maintenance

Software as a Service (SaaS) Strategies for Hosting Providers


Case study
Case Study

Case Background:

Data393 is a premier provider of Managed Infrastructure Solutions, that owns and operates its own state-of-the-art data center in Englewood Colorado.

  • 18,000+ Sq. Ft. Raised Floor

  • 24/7 Staffing

  • 23gbps to the backbone

Colocation

  • Full, Half, Third Cabinets

  • Private Cage Space

  • Highly Redundant Power Options

Dedicated Hosting

  • High performance hardware options

  • Linux and Windows

  • Plesk Tools

Managed Services

  • Firewall

  • Application Management (Powered by API)

  • Advanced Monitoring

  • Load Balancing

  • SAN/NAS

  • WAN Connectivity

  • Data Protection

Software as a Service (SaaS) Strategies for Hosting Providers


Case study the problem
Case Study – The Problem

Data Protection:

Using EMC’s Avamar backup software, Data393 provides a super efficient, and highly reliable off-device backup service to servers located within the data center, or at any remote site that has some type of Internet connectivity.

The Problem:

We needed a way to bill our customers for their overages, and provide their different ‘users’ with meaningful notifications based on their role within the company.

Known Issues:

Avamar did not have any charge-back support when we purchased the software back in January of 2005. (This has subsequently changed).

Our Solution:

Billing

And

Customer

Online

Notification Engine

Software as a Service (SaaS) Strategies for Hosting Providers


Case study1
Case Study

Software as a Service (SaaS) Strategies for Hosting Providers


Case study the analysis
Case Study – The Analysis

Realization:

Although we had built in some features to enable us to have a reseller program, we quickly saw that resellers (and large enterprises) would want direct access to the tool so they could tweak settings/pricing/notifications often.

Required Considerations:

  • More robust authentication/authorization system.

  • Mechanisms for handling data for multiple tenants:

    • Restoring single customer’s data.

    • Purging single customer’s data.

    • eDiscovery issues.

  • Mechanisms to ensure customer separation.

Possible Solutions:

Redesign and rewrite from the ground up to allow multiple tenants on a single instance of the software.

Deploy multiple instances using IP based, or Name based hosting facilities within Apache.

Virtualization.

Software as a Service (SaaS) Strategies for Hosting Providers


Case study the solution
Case Study – The Solution

We have chosen to deploy an instance of the software for each customer within a Virtuozzo virtual environment.

Immediate Benefits:

With virtualization now mainstream, the questions about customer isolation tend to go away. And even if they do arise, there is significant documentation on how virtualization technology maintains environment isolation.

Management tools included with Virtuozzo simplify day-to-day operations of our service.

We were able to go to market immediately with our service, without having to re-write any of the existing code.

We have the ability to move an entire environment (OS, Application Frame Work, Apache, etc.) from Build to QA to Production - practically eliminating initial release issues related to the configuration of the ancillary services within the “environment”.

Software as a Service (SaaS) Strategies for Hosting Providers


Case study the wrap up
Case Study – The Wrap Up

Observations:

There are a significant number of things a developer must consider when looking to extend their application to support multiple end-user organizations. This process is non-trivial, and may require an extensive rewrite.

When speaking to ISV’s about our own SaaS experience, they tend to take a long, hard look at this type of approach. (Service providers: This increases revenue and increases customer stickiness).

For certain applications, some companies *may* not be ready to intermingle data with other organizations. Virtualization is a great approach to provide “isolation” between customers and seems to squash many customer concerns.

Software as a Service (SaaS) Strategies for Hosting Providers


Sample product offerings for traditional applications
Sample Product Offerings for Traditional Applications

Option 1

(provide VE and deploy applications)

Option 2

(provide applications with environment)

Step 1: Server Environment

Silver Server - $49 / month

1GB RAM, 200GB disk space, 200 CPU units

Gold Server - $99 / month

2GB RAM, 400GB disk space, 500 CPU units

Step 2: Select Applications to Deploy

Application 1 - $99 / month

Collaboration and more …

Application 2 - $149 / month

Business process and CRM

Application 3 - $499 / month

Web conferencing

Software as a Service (SaaS) Strategies for Hosting Providers


Saas the swsoft platform

Application Format and Packaging

Common Licensing Models

Code Re-Usability

Shared Code Base

Authentication

Single Sign On

Standard Update Process

SWsoft PEM

End User Customers

Control Panels

(end user,

reseller,

service provider)

Storefront

Service Plan Management

Billing

Business Rules

(workflow)

Hosting Providers

and

Resellers

Reporting

Reseller Module

Domain Registration Interface

Payment Gateway Interface

SWsoft Virtuozzo

ISVs

Application Density

Application Isolation

Quality of Service Parameters

Service Portability

OPEN FUSION Standards

SaaS – The SWsoft Platform

  • OPENFUSION provides a standards base

  • Virtuozzo provides a flexible and manageable platform

  • PEM delivers automation and service delivery

Software as a Service (SaaS) Strategies for Hosting Providers


Saas barriers to adoption

  • Place data on customer premises

  • Use virtualization to isolate data

  • Has expertise ever left a company?

  • Does owning software benefit customers?

  • Odds of a service failure are higher for company owned applications.

  • 24 x 7 datacenters

-- IT manager

-- Compliance manager

-- Datacenter manager

-- Datacenter manager

I will lose my job if we implement SaaS.

We need to keep our data in our facilities.

We already know how to run this application and want to own it.

What if the service goes down?

SaaS – Barriers to Adoption

Software as a Service (SaaS) Strategies for Hosting Providers


Questions and answers
Questions and Answers

Conclusions:

  • Hosting providers are perfectly positioned to benefit from the SaaS trend

  • ISVs will benefit from SaaS by gaining customers in new markets

  • Automation and virtualization are keys cost containment and SaaS success

  • SWsoft and OPENFUSION will help you grow your business and benefit from trends such as SaaS

Software as a Service (SaaS) Strategies for Hosting Providers