Transition to SaaS: The Challenges and Solutions

Panelists:

Dani ShomronSaaS Expert, Calia Consulting

Janaki JayachandranHead – SaaS Specialization, Aspire Systems

Moderator:

Kanchana RajagopalanMarketing, Aspire Systems

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Date: Thursday, September 24th, 2009 Time: 12:00 noon ET/ 09:00 AM PT/ 05:00 PM BST/ 09:30 PM

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About Aspire

Dani ShomronSaaS Expert, Calia Consulting

•A recognized thought leader on the issue of SaaS, posting his ideas on ‘Dani’s Perspective on SaaS’ and lecturing to CIOs on SaaS.

•Held positions of VP Service Operations at a number of SaaS start-ups as well as Business and Operations Manager at Mercury Managed Services (now HP-SaaS), and has consulted on-demand companies on service operations and traditional ISVs on the transition to SaaS

•Co-authored the book ‘CIO Perspectives’ (Kendal Hunt Publishing, November 2007), contributing the chapter on SaaS and is now writing a book on SaaS Service Operations.

Panelist

Transition to SaaS The Impact on the ISV

Dani ShomronJune 2009

Agenda

• Do or Die

• The paradigm shift

• Changes across the organization

• Recipe for failure

• How do we succeed?

Do or Die

• SaaS has become mainstream. Adoption – 76%• SaaS in no longer a point solution but strategic• Within five years 95% of ISVs will be delivering software

as a service• All new S/W will be offered as SaaS. • Beyond niche markets every ISV will deliver through the

Cloud• Companies that do not, will become obsolete, irrelevant• ISVs are getting it – but a ‘me too’ approach will fail

Total Upheaval

• The transition to SaaS is a paradigm shift• Not another delivery mechanism• Selling a Service not a Product• Will affect every silo in the organization• Introduce new functions and entities

– Operations– 24X7 support– Service Marketing– Technical Account Managers– SLAs

Engineering

• Modify (rewrite?) architecture• Simpler development – single platform• Support ‘service readiness’• Support scalability & high availability• Release cycles reduced to weeks• Adopt agile S/W development (e.g. SCRUM)• Engineers interact more closely with end-users

QA

• Shorter release cycles

• Support single platform (multiple browsers)

• Performance and Load testing

• Security testing

• Test interaction between H/W & S/W

Operations

• New group with responsibility for ‘keeping the lights on’. 24X7

• Build, manage, monitor, improve.• Improve uptime, performance• DBAs, System & Network, App Engineers• Work with R&D, QA, Sales, Support, PS• The hub of the offering, process oriented

Customer Support

• User experience, customer sat and success are paramount

• Therefore support has important role, higher skills, higher pay

• All IT communications at your doorsteps• Customer services will switch to a 24X7 mode• Knowledge upgraded from installation /

maintenance to app level knowledge• Develop problem resolution skills

Sales• Substantial changes

– From Elephant hunting to cyber sales– From selling a product to selling a service– From perpetual to subscription– From hunters to farmers– From flying around the globe, wining and dining to closing deals

over the phone– Compensation up-front to spread over a year or more– Sales cycles shorten dramatically

• Partners, channels, resellers, SaaS aggregators play a more important role for maximum exposure

Marketing

• Marketing and Sales become tightly coupled with a ‘Sales 2.0’ approach

• More dependence on automation and lead generation tools• Guerilla Marketing thru web analysis tools, email

campaigns, newsletters, resource center, free trial• Less control over what information is available to potential

customers• Consider building an open community around users and

developers.

Finance

• Revenue stream and revenue recognition will change with an effect on the company’s financial outlook.

• Financial systems capturing and forecasting deferred revenue will be needed.

• Billing will become more complex, dealing with metering, collections, service level compensation and renewals

• New systems will need to integrate with the existing financial systems.

Professional Services

• Switch from installation and upgrades to application know-how

• Configuration, integration, reports.• Most of the work will be done remotely - traveling

time and costs will be reduced • Education services will drop part of the

curriculum pertaining to installation and maintenance

Legal• As the company will be selling a service, Service contracts will be

needed not software contracts. • New entities: SLAs, renewals and add-on services• Contracts with service providers such as hosting and ISPs.

Compliance• How would selling a service differ from selling a product?• Do you need to be compliant to all the requirements that your

customers are? • Would you need a SAS 70 certification?• Would your hosting provider need one?• All of these are still unclear in this emerging market.

Success is Not Guaranteed

• The more successful the ISV, the more entrenched in the old paradigm (SAP)

• Not in company’s DNA. Switch from product to service. Shift of focus to operations and customer service. Change the pace of dev and delivery.

• Expect push back - Internal resistance to change: R&D, QA, Services, Sales. (MMS)

• Fear of cannibalization of existing sales

So How Do You Thrive?

• Paradigm shift – need C&V level commitment to switch to SaaS model

• Ensure a buy-in at all levels – make it a company goal - get Sales involved at early stages

• Offer a sub-system as a POC• Most companies will go thru a hybrid phase• If possible – spin out company, whether as a

separate entity or conceptually.• Integrate existing solutions.• Get help

Summary

• SaaS is here to stay

• Transition is akin to a DNA transplant

• Expect pushback

• Get a full buy-in from key holders

• Just Do It! It is worth it – get help

Panelist

Janaki JayachandranHead – SaaS Specialization, Aspire Systems

•Currently heads the SaaS Specialization Business unit at Aspire Systems

•In his current capacity, he is responsible for the business development and delivery functions focused on SaaS

•Key person in customer interactions and new customer acquisition by getting feedback and adding value to their business

•Instrumental in defining Aspire’s focus in SaaS and Cloud Computing. He closely monitors industry trends in SaaS and collaborates with Aspire’s SaaS CoE to build internal expertise

Feasibility Assessment

Architecture Aspects

Strategic Approach

SaaS Capabilities

Pushing to the cloud

Agenda

SaaS Benefit ScaleNature of your product

Graphics Oriented Highly Interactive Highly Transactional Typical IMS

Number of customized source code versions

0 to 3 4 to 6 7 to 10 >10

Number of current installations

0 to 25 26 to 100 101 to 250 > 250

Expected business growth

0% to 5% 5% to 10% 10% to 25% > 25%

Integration requirements with external systems

Very High High Medium Low

Stage of your product Declining Matured Growth Start-up

Customer acceptance for remote storage of data

Not Acceptable Very Concerned Less Concerned No Concern

Current spend on implementation

Low Medium High Very High

Number of releases in a year

<= 1 < 6 < 12 >12

Current challenge in selling on-premise

Lack of Features Customization Huge CAPEX Infrastructure Unavailability

LOW

Feasibility Assessment

HIGH

Parameters Challenges

Scalability • Design to handle current and future loads• Optimum use of hardware and other resources

Performance • Response time with/out concurrent users• Bandwidth constraints

Availability • SLA Compliance • Offline mode of working

Security • Physical and Network Security• Role based access• Data Encryption

Integration • Support for in-bound and out-bound integration• Standards compliance (HL7, cXML, etc.)

Extensibility • Custom field support• Support for dynamic forms

Multi Tenancy • Single code base• Independent Schema/Shared Schema

Configurability • Personalization/”Org”analization• UI/Business Rule/Workflow

Auditing • Entity/Data level tracking

Architecture Challenges

PROVIDERS

NEEDS

Demystifying the Cloud

Hardware

Framework

Application

IaaS

PaaS

SaaS

EC2, Azure, Rackspace

Force.com, Google App, Long Jump

Your own App.

Network Architects, Security, Hosting

Software Architects, Tested and Proven

Architecture

Developers, Rapid Development of

Functionality

Strategical Approach – Reuse Vs. Rewrite

SaaS PaaS

Is a concept Is a software/technology

Defines only the delivery model of your software

Defines how your software will be build and delivered

Software is delivered over the internet with no setup required at the customer end

Software is build on top of the platform and delivered over the internet

Allows reusing your content software Mostly requires complete rewrite of the software

Can easily support hybrid model (on-demand and on-premise)

Will be very expensive to support hybrid model

No lock-in on technology/provider Vendor lock-in

Business Volume

Product Size

Co

st

Choosing your SaaS Maturity Level

Factors Level 1 Level 2 Level 3 Level 4

Time Very Low Medium High High

Transition Cost Very Low Low Medium Very High

Maintenance Efforts

Extremely High Medium Low Very Low

Scalability Extremely Poor Low Medium High

Engineering Skillset

NIL Medium High Very High

Customer Value Add

High Very High N/A N/A

Operational Efficiency

Very Low Low High Very High

Maturity Model Factors

Availability of Technical Skill Sets Choose the right maturity model – depending on your immediate and future

business needs Level 1 and Level 2 provide more value to customers, where as Level 3 and

Level 4 are intended to provide more value to the ISVs Evaluate virtualization as an alternate for multi tenancy Leverage pre-built SaaS Frameworks

Considerations for SaaS

Focus on functionality rather than engineering aspects Current software uses legacy technology – anyway it’s time to change Leveraging vertical/domain support by PaaS providers One stop solution for SaaS + IaaS

Ideal Scenario for PaaS

Availability of Technical Skillset Vendor Lock-In ROI (SaaS Vs. PaaS) Support for product vertical Support for Non Functional Requirements Evaluate platforms that does not mandate complete rewrite Ex: SaaS Grid Business Risk in storing data at an external location

Considerations for PaaS

Capabilities Details

Tenant Management • Adding/Removing/Modifying Tenants through software• Configuration/Customization of features

Metering • Recording of usage based on License Model• User based/Transaction based

Billing • Publish invoices based on metered usage• Payment tracking

Payment Gateway • Customers to make online payments• Integrated with Billing & Licensing

Licensing • Support for multiple license models• User based/Transaction based/Data based

Product Analytics • Usage of features/modules• Errors recorded/reported

SaaS Administration Challenges

Self Hosting

Data Centers

IaaS Providers

Pushing To The Cloud

Availability- complying with the SLAs Physical/Network Security Back-up of application and data Internet Bandwidth/Redundant Lines Storage Capacity Hardware Scalability Ease of upgrades

Hosting Challenges

Dani ShomronSaaS ExpertCalia ConsultingE-mail: dani@calia.biz Website: www.calia.biz

For more details

Janaki JayachandranHead – SaaS SpecilizationAspire Systems E-mail: janaki.jayachandran@aspiresys.com Website: www.aspiresys.com

For more details

Kanchana RajagopalanAspire SystemsE-mail: kanchana.rajagopalan@aspiresys.com Website: www.aspiresys.comPh. No: +91-44-67404000

For more details

Questions