SWsoft Hosting Solutions for SaaS

Software as a Service (SaaS)Strategies for Hosting ProvidersDouglas Johnson, SWsoft

Steve Merkel, Data393

Tuesday, May 8, 2007

http://www.microsoft.com/

http://www.amd.com/

http://www.intel.com/

http://www.novell.com/

http://www.ibm.com/

http://www.verisign.com/

http://www.paypal.com/

http://www.comodo.com/

http://www.sedo.com/

http://www.thewhir.com/

http://www.open-xchange.com/

May 2007 Software as a Service (SaaS) Strategies for Hosting Providers2

What is SaaS?

Application 1

Customer Site

Server

ClientPC

Traditional Deployment

Application 1

Hosting Provider Site

Server

InternetInternet

SaaS Deployment

Server Application

• What has changed from ASP model of a few years ago?– Customer readiness– Improved network capacity– Improved software delivery platforms

Software deployed as a hosted service and accessed over the Internet


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

0%

5%

10%

15%

20%

25%

2005 2011

SaaS % of Business Software Marketopportunity: $8B increasing to $40B


SaaS – The Track to Higher Revenue

4

Customer Needs Web PresenceEmail E-commerce Collaboration Application Mgmt

Rev

enue

Opp

ortu

nity

(S

MB

: 20

Use

rs/M

onth

)

$10

$100

$1,000

DomainRegistration

$1-$3

Shared StaticWeb Hosting

$3-$10

Shared DynamicWeb , DB, Apps

$5-$20

Virtual PrivateServers

$15-$100

Dedicated & Managed Server

$100-$500

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

$150-$300

Add Business Collaboration(i.e. SharePoint, LCS, VoIP)

$200-$500

Advanced Apps(CRM, ERP, vertical)

$250-$1500+

Infrastructure

SaaS


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


SaaS – Applications

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

Web Conferencing• WebEx• LiveMeeting• Spreed

CRM• Salesforce.com• SugarCRM• Microsoft CRM

Email / Collaboration• Exchange• SharePoint• OpenXchange

HR Portals• Employease• Taleo• Workstream

E-commerce, E-marketing• Miva, OScommerce• ExactTarget

Business Admin• NetSuite• Hosted Quickbooks

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

Hosting Infrastructure• Shared web hosting• Database hosting• Streaming


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?


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?


Hosting Requirements for SaaS

Stepping up fromTraditional Hosting to Software as a Service

TraditionalHosting

Licensing and Applications• Pay based on usage• Pay based on accounts• Pay based on resources• Quality of service parameters

Platform and Service Delivery• Standards based• Multiple installations per server• Application isolation• Quality of service parameters

Provisioning• Rapid• Driven by workflow• Automated or manual• Services delivered as soon as users requests them

Service Management• Self service • Non-technical• Single sign on to all services

Back office support• Billing and accounting• Inventory management• Customer service

Migration• Onsite to hosted• Hosted to hosted

Softwareas a

Service


Cost Drivers:• Hardware• Licensing• Maintenance• Management

Traditional Configurable Multi-Tenant

SaaS Deployment Types

Virtualizationeffect

Automationeffect

NoteConverting traditional applications to multi-tenant applications is more

expensive than virtualizing.

Reducing SaaS Costs


SaaS – SWsoft Delivers Solutions

Categories of SaaS Applications

Configurable applications- Guest books, polling, chat, blogs,

photo galleries, site builders- Ecommerce solutions- Content management systems

Multi-tenant applications- Email (Exchange with HMC)- Collaboration (SharePoint with HMC)- VoIP- Web conferencing

Traditional applications- Accounting packages, photo editing

software, etc.- Other stand-alone software not

converted to multi-tenant

SWsoft Delivers

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

Automation and Self Service- All features provided above

Isolated Environment- Environment variables (memory, CPU, disk space,

directories, processes, etc.)


Application Repository

SaaS Application Type – Multi-Instance (Configurable)

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

Customer Web Directories

Application Repository

Web ApplicationWeb

ApplicationWeb Application

User 1 Directory User n Directory

…

Web Application

Web Application

External Application Site

Web Application

Web Application

• Deployment can be from internal or external mirrors

• Applications can be configured as they are deployed

• Upgrades initiated by users• Application standards

provided by OPEN FUSION• Automation provided by

PEM

PEMManagement

Node

Internet

Customer 1 Customer 2 Customer n…


• Step 1: Select Application to Install

Demo – SWsoft Delivers Web Applications

• Step 2: Select Application Configuration Options• Step 3: Install Application (automatic) • Step 4: Manage Application


SaaS Application Type – Multi-Tenant

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

• Requires multi-tenant application and security

• Centralized upgrades• Fault tolerance• Application standards

provided by OPEN FUSION• Billing, provisioning, and

maintenance orchestrated by PEM

Storage Area Network


Customer Configuration

Application Server

Application 1

User 1 Directory User x Directory

…

Application Storage

PEMManagement

Node

Internet

Customer 1 Customer 2 Customer n…

Application n

…C1 Storage

Config 1Config nConfig x

Cx Storage


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


Hardware Costs

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

Architecture - 11 servers + SAN ~5,000 users

Server Type Quantity Unit Price Total Price

Active Directory Servers 2 $3,168.00 $6,336.00

Microsoft Provisioning Server 1 $3,768.00 $3,768.00

Exchange Front End Servers 2 $3,168.00 $6,336.00

Exchange Back End Servers 2 $3,888.00 $7,776.00

PEM Operations Support System 1 $3,908.00 $3,908.00

PEM Business Support System 1 $3,908.00 $3,908.00

DNS Servers 2 $2,734.00 $5,468.00

SAN 1 $20,000.00 $20,000.00

Total 11 $57,500.00


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


Application ServerPEM

ManagementNode

Application

End User Customers

ServiceProvider

Provisionapplication

Phonecall

VE1 VE 2 VE n

Application1

Instance1

Application1

Instance2

Websitetransaction

Automatedprovisioning

andmaintenance


Case Study

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

Case Background:

Colocation

Dedicated Hosting

Firewall Application Management (Powered by API)

Full, Half, Third Cabinets Highly Redundant Power Options

Private Cage Space

Linux and Windows Plesk Tools

High performance hardware options

Managed Services

18,000+ Sq. Ft. Raised Floor 24/7 Staffing 23gbps to the backbone

Advanced Monitoring Load Balancing SAN/NAS WAN Connectivity Data Protection


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

Our Solution: BillingAndCustomerOnlineNotification Engine


Case Study


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

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

3. Virtualization.


Case Study – The Solution

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

Immediate Benefits:

1. 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.

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

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

4. 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”.


Case Study – The Wrap Up

Observations:

1. 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.

2. 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).

3. 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.


Option 1(provide VE and deploy applications)

Sample Product Offerings for Traditional Applications

Option 2(provide applications with environment)

Step 1: Server Environment

Silver Server - $49 / month1GB RAM, 200GB disk space, 200 CPU units

Gold Server - $99 / month2GB RAM, 400GB disk space, 500 CPU units

Step 2: Select Applications to Deploy

Application 1 - $99 / monthCollaboration and more …

Application 2 - $149 / monthBusiness process and CRM

Application 3 - $499 / monthWeb conferencing

Application Cost Users Total

Application 1100MB disk space per mailbox

$10 5 $50

Application 22GB traffic per user

$15 10 $150

Application 31 enterprise license

$140 1 $140

TOTAL (per month) $340


SaaS – The SWsoft Platform

• OPEN FUSION provides a standards base • Virtuozzo provides a flexible and manageable platform • PEM delivers automation and service delivery

OPEN FUSION Standards

Application Format and Packaging

Common Licensing Models

Code Re-UsabilityShared Code Base

AuthenticationSingle Sign On

Standard Update Process

End User Customers

ISVs

Hosting Providers

and

Resellers

SWsoft PEM

Service Plan Management BillingControl

Panels(end user,reseller,service

provider)

Storefront

Reseller Module

Payment Gateway Interface

Domain Registration

Interface

Business Rules

(workflow)

Reporting

SWsoft Virtuozzo

Application Density

Application Isolation

Quality of Service

Parameters

Service Portability


SaaS – Barriers to Adoption

-- IT manager

I will lose my job if we implement SaaS.

-- Compliance manager

We need to keep our data in our facilities.

-- Datacenter manager

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

-- Datacenter manager

What if the service goes down?

• 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


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 OPEN FUSION will help you grow

your business and benefit from trends such as SaaS

SWsoft Hosting Solutions for SaaS

Documents

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