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Software as a Service (SaaS) Strategies for Hosting Providers

Software as a Service (SaaS) Strategies for Hosting Providers

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Software as a Service (SaaS) Strategies for Hosting Providers

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  1. Software as a Service (SaaS)Strategies for Hosting Providers Douglas Johnson, SWsoft Steve Merkel, Data393 Tuesday, May 8, 2007

  2. 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

  3. 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

  4. 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

  5. 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

  6. 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

  7. 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

  8. 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

  9. 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

  10. 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

  11. 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

  12. 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

  13. 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

  14. 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

  15. 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

  16. 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

  17. 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

  18. 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

  19. 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

  20. Case Study Software as a Service (SaaS) Strategies for Hosting Providers

  21. 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

  22. 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

  23. 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

  24. 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

  25. 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

  26. Job will get more interesting. • Why sell to IT? • 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

  27. 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