Transition to SaaS: The Challenges and Solutions

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Transition to SaaS The Challenges and Solutions
Panelists Dani Shomron SaaS Expert, Calia
Consulting Janaki Jayachandran Head SaaS
Specialization, Aspire Systems Moderator Kancha
na Rajagopalan Marketing, Aspire Systems
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Conference ID 30300218 Date Thursday,
September 24th, 2009 Time 1200 noon ET/ 0900
AM PT/ 0500 PM BST/ 0930 PM IST

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About Aspire

• Thought leader in Outsourced Product
  Development
• 1100 product releases to date
• 80 customers 475 producteers
• 63 CAGR over the last six years
• Offices in Chennai (India), San Jose, CA, and
  London, UK
• ISO 90012000 certified

Awards
Ranked 7th in Business Today Survey featuring the
Best Companies to work for in India in 2005
Ranked in the top 500 fast growing technology
companies in Asia Pacific for 3 years in a row
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Panelist

• Dani ShomronSaaS Expert, Calia Consulting
• A recognized thought leader on the issue of SaaS,
  posting his ideas on Danis 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.

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Transition to SaaS The Impact on the ISV

• Dani Shomron
• June 2009

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Agenda

• Do or Die
• The paradigm shift
• Changes across the organization
• Recipe for failure
• How do we succeed?

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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

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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

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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

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QA

• Shorter release cycles
• Support single platform (multiple browsers)
• Performance and Load testing
• Security testing
• Test interaction between H/W S/W

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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 RD, QA, Sales, Support, PS
• The hub of the offering, process oriented

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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

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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

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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.

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Finance

• Revenue stream and revenue recognition will
  change with an effect on the companys 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.

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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

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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.

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Success is Not Guaranteed

• The more successful the ISV, the more entrenched
  in the old paradigm (SAP)
• Not in companys 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
  RD, QA, Services, Sales. (MMS)
• Fear of cannibalization of existing sales

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So How Do You Thrive?

• Paradigm shift need CV 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

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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

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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 Aspires focus in SaaS
  and Cloud Computing. He closely monitors
  industry trends in SaaS and collaborates with
  Aspires SaaS CoE to build internal expertise

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Agenda

• Feasibility Assessment
• Architecture Aspects
• Strategic Approach
• SaaS Capabilities
• Pushing to the cloud

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Feasibility Assessment
LOW
HIGH
SaaS Benefit Scale SaaS Benefit Scale SaaS Benefit Scale SaaS Benefit Scale
Nature 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 gt10
Number of current installations 0 to 25 26 to 100 101 to 250 gt 250
Expected business growth 0 to 5 5 to 10 10 to 25 gt 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 lt 1 lt 6 lt 12 gt12
Current challenge in selling on-premise Lack of Features Customization Huge CAPEX Infrastructure Unavailability
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Architecture Challenges
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/Organalization UI/Business Rule/Workflow
Auditing Entity/Data level tracking
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Demystifying the Cloud
P R O V I D E R S
N E E D S
Application
SaaS
Your own App.
Developers, Rapid Development of Functionality
Framework
PaaS
Force.com, Google App, Long Jump
Software Architects, Tested and Proven
Architecture
Hardware
IaaS
EC2, Azure, Rackspace
Network Architects, Security, Hosting
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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
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Choosing your SaaS Maturity Level
Business Volume
Cost
Time
Product Size
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Maturity Model Factors
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
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Considerations for SaaS

• 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

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Ideal Scenario for PaaS

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

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Considerations 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

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SaaS Administration Challenges
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
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Pushing To The Cloud
Self Hosting
IaaS Providers
Data Centers
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Hosting Challenges

• 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

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For more details
Dani Shomron SaaS Expert Calia
Consulting E-mail dani_at_calia.biz Website
www.calia.biz
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For more details
Janaki Jayachandran Head SaaS
Specilization Aspire Systems E-mail
janaki.jayachandran_at_aspiresys.com Website
www.aspiresys.com
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For more details
Kanchana Rajagopalan Aspire Systems E-mail
kanchana.rajagopalan_at_aspiresys.com Website
www.aspiresys.com Ph. No 91-44-67404000
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Questions