SaaS Enablers: An ISV’s fast track to going on-demand

By Kanchana Rajagopalan

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While the ISVs are aligning their strategies to the changing market forces, they are faced with several challenges. The move to SaaS is not simple and straightforward. An ISV is not only required to change the way software is deployed but also evaluate and re-define its approach to sales, software pricing, operations, product development, marketing and customer support – pretty much build a new business and technical plan around the SaaS delivery model.

The SaaS enablers

The momentum thus created in the emergence of SaaS delivery model has given rise to a range of SaaS enablers that assist software vendors to embrace and offer SaaS solutions. In addition to re-engineering existing on-premise software to an on-demand web-based software, the basic SaaS tenets like Tenant Provisioning, License Management, Configuration and Extensions, Data access Management, Billing, Metering, Payment Processing, and so on can easily take up over 30% of the overall development effort. While building a SaaS solution from “scratch” is an option, the idea sounds time-consuming and creates a fear of staying behind in the SaaS race. SaaS enablers, hence, come as silver lining to software vendors.

SaaS enabler is defined here as a technology or an application using which ISVs can quickly build/deploy and offer their software as an on-demand Software-as-a-Service model. These enablers provide an accelerated path to achieving the SaaS objectives for software vendors.

Virtualization

While this is not an exact fit among “true” SaaS enablers, many established on-premise software vendors prefer this approach for reasons like market experimentation, faster time-to-market and limited engineering budgets. In this approach, a single instance of the software is configured and deployed on the web for each customer. With the advent of cloud infrastructure providers, ISVs can now even leverage on-demand hosting services for virtualization.

Positive Scores:  An easy path for ISVs to test if a hosted model is a workable business model. This approach gives the vendor the advantage of managing multi-instance environments from a virtualized infrastructure. The customers are free of managing the IT infrastructure and still retain the flexibility to modify, customize, and make changes to the code.

Negative Scores: The TCO becomes expensive compared to a “True” multi-tenant SaaS solution and maintainability becomes an issue with the increase in number of deployments.

Examples:  Virtualization providers - VMware, Hyper-V, IaaS providers - Rackspace, Amazon, OpSource

Platform as a Service (PaaS)

PaaS provides a ready-made infrastructure on which a software vendor can rapidly and quickly build and deliver a SaaS solution. In this approach, developers are able to harness the web itself as the operating system and build a SaaS solution with the basic tenets that characterize a SaaS solution. The developers are able to focus on the business logic of the application and not bother about the underlying infrastructure and deployment. 

Positive Scores: Avoid re-inventing the wheel, PaaS charges Software vendors on a pay-as-you-go basis and hence, is a great attraction for new ISV start-ups. Established ISVs also find it useful to test and run PoCs, leveraging the low cost benefits as well as faster time-to-market. 

Negative Scores:  Vendor “lock-in”, fear of a PaaS vendor going “out-of-business” (like Coghead) and less control on the SLAs are some of the biggest risks in engaging PaaS. The underlying technology is also usually proprietary demanding developers to acquire new skillsets.

Examples: Force.com, Longjump, Rollbase, SaaSgrid

SaaS Solution Accelerators

Solution Accelerators are packaged building-block components that provide a consistent framework with underlying technology necessary for SaaS such as Tenant Provisioning, License Management, and so on and enable the developers to concentrate on the business logic of the software. SaaS solutions built using Solution Accelerators can be deployed with any cloud infrastructure (IaaS) like Amazon EC2 or hosting providers or even hosted on a private data center.

Positive Scores: Avoid re-inventing the wheel, the pre-built SaaS frameworks give the best of both worlds to ISVs enabling custom development of the business logic in traditional technologies with pre-built SaaS framework that saves over 30% of development effort. The underlying architecture is usually traditional/familiar programming languages like Java and .NET. 

Negative Scores:  Hardware Infrastructure is not included and potential lack of access to source code for developers

Examples: PropelSaaS, Corrent SaaS Engine, Alice

Other Innovative SaaS accelerators

Certain ready-made software products can be leveraged as 3rd party plug-ins to accelerate SaaS development. Specifically, software applications addressing complex pricing requirements of SaaS or integration service or even certain security applications can be grouped under this category. They are typically called as Billing-as-a-Service, Integration-as-a-Service, Security-as-a-Service, and so on. Here is a highlight about billing applications.

Billing-as-a-Service

For an established ISV, arriving at a pricing structure that does not cannibalize the existing on-premise software and to price the software based on the utilization of software service instead of perpetual pricing is a big challenge. This implies that ISVs need to build a utilization based billing and metric solution to charge the customers on-demand. Depending on the complexities of the pricing model and the software, the need for a sophisticated billing solution becomes a key to the success of a SaaS model.  Fortunately, there are ready-made billing and metering software solutions available that typically can be plugged into a SaaS solution and offer subscription-based billing solution, perpetual licensing as well as hybrid based billing solution.  Often, it makes sense for ISVs to utilize such “off-the-shelf” software to achieve the billing requirements of their SaaS solution.

Positive Scores: Avoid re-inventing the wheel, billing software solution providers have thought about a variety of billing and subscription management solutions that SaaS providers cannot imagine. These are available to SaaS providers on a pay-as-you-go contract terms.

Negative Scores: ISVs are limited to price their SaaS solution based on the capabilities of the billing solution chosen.

Examples: Vindicia, Zuora, Aria Systems, eVapt

Many such SaaS enablers assist ISVs in shrinking the time-to-market and slash the cost and effort involved. However, sometimes it does make sense for companies to go for custom development, starting from ground-zero. It is important for ISVs to understand the SaaS development and infrastructure eco-system in order to choose the best transition path.  Companies need to draw a decision tree with different approaches available, weighing different factors that influence each migration path.  Aspire Systems conducted a webinar titled “Going on-demand: IaaS, PaaS or Solution Accelerators”, where we discussed the various reasons behind choosing a preferred path to SaaS.  It is certainly clear that every ISV is in the game of moving to SaaS. However, we need to wait to see who is making the smart moves.

About the author

Kanchana Rajagopalan spearheads marketing for SaaS Services at Aspire Systems. She can be reached at kanchana.rajagopalan@aspiresys.com.