understanding the business implications of saas multi-tenancy

Business Implication of SaaS

Multi-Tenancy

July 16 2009

Agenda

Speaker Introductions» Mike Dunham» Lincoln Ventures» Rick Chapman

Scio Consulting - Presenter: Mike Dunham

» Software as a Service - What is it?» SaaS & Multi-tenancy

• Why is multi-tenancy important for SaaS?» Multi-tenancy Approaches

16 Ventures - Presenter: Lincoln Murphy

» Business implications of the tenancy models for a SaaS provider

Softletter - Presenter: Rick Chapman

» Impact of Communities and Business Intelligence in SaaS

Q&A

Scio Consulting International, LLC. All rights reserved.2

Speakers

Mike Dunham –» Principal Consultant at Scio Consulting» [email protected]» http://www.sciodev.com

Lincoln Murphy –» Managing Director of Sixteen Ventures» [email protected]» http://www.sixteenventures.com

Rick Chapman» Managing Director of Softletter & SaaS University» [email protected]» http://www.softletter.com


mailto:[email protected]

http://www.sciodev.com/


http://www.sciodev.com/

http://www.softletter.com/


Q & A

Your input and feedback makes this a much better forum!


What is Software as a Service (SaaS)?

July 2009

What is Software-as-a-Service?

Software as a Service (SaaS) is a model of softwaredelivery that allows applications to be provided as a service to customers across the Internet.

It is a Deployment/Delivery model» Hosted and Managed by vendor» Delivered across the Internet

It is a Service Model» End-User support and service moves to the vendor

Usage-based pricing (vs. perpetual license model of on-premise software)» Per user per month» Per transaction» Per GB of storage per month


SaaS Evolution


Business View – Traditional Model


Business View – SaaS Model


SaaS vs ASP

ASP: Application Service Provider» Single-tenant architecture (one customer

per instance)» Multiple instances running (as many as

there are clients), typically hosted by third parties

Disadvantages» Significant management overhead» Difficult maintenance» No economies of scale


Multi-Tenancy

Naïve» Single Database & Code Structure – Serving Multiple

Customers

Split» Single Application Database & Code Structure

• Unique DB per Tenant• Unique Schema per Tenant

Virtualized» Hardware and Network Abstraction

Rational» Scalable Instances, Virtualized Infrastructure, Tuned

for Reliability


Maturity

Existing Product - Levels of “SaaSification”

8Scio

Characteristic Hosted (ASP Model)

Application Virtualization

Approach

Full SaaS Approach

Tenancy Model Single Tenant Single Tenant with Tenant Mgmt. Tools

Multi-tenant

Modification Required to Existing App

Minimal Minimal Moderate to Extensive

Operations Overhead

Highest Moderate Lowest

Scalability of the Approach

Lowest Low Highest

Initial Investment

Lowest Moderate Highest

“SaaSification” Levels

Key Technical Aspects of SaaS

Multi-tenancy Scalability

» Load balancing» Routing

Availability Performance Configuration-driven

Customization» look and feel» Functionality

Integration Security

» Identity management

Usability Communication

» e-mail, sms, etc.

Globalization Audit and compliance Backup and recovery

9Scio

These factors influence App Architectureas well as Infrastructure Architecture

SaaS Application Stack


Multi-Tenancy in SaaS: The Business Case

Presented July 16, 2009 via WebinarHosted by Scio (http://sciodev.com)

http://sciodev.com/

IntroductionLincoln Murphy, Founder & Managing Director

Sixteen Ventures

Copyright© 2009 Lincoln Murphy / Sixteen Ventures. All Rights Reserved.

15+ Years On-Demand Product

Development

Started and Sold F1000-targeted SaaS Company

SaaS Business Architect

I help SaaS Vendors make more money!

What SaaS Is Not

Pricing Model Revenue Model

Anything on the Web, in the cloud, etc.


Software Delivery Method

What SaaS Is

Business Architecture

Intellectual Property

Technology


Business Model

What SaaS Is

Functionality delivered via web

Commercially focused

InherentlySocial


Single-Instance, Multi-Tenant

Decision Time:Are you a SaaS Vendor or not?

Hybrid is hard; pick one

Mindset and Focus

Revenue Recognition

Issues


Make the decision and stick with it

Remember!


The further you stray from this clear definition of SaaS, the harder

it will be for you to truly reap the benefits of being a pure-play SaaS

Vendor.

Multi-Tenancy Considerations

Application Data Layer

Infrastructure


Multi-Tenancy Infrastructure

Economies of Scale

Resource Efficiency


Implementation AgnosticVirtualization

Multi-Tenancy Application

Ease of SDLC Management

Human Resource Efficiency

Business Scalability


No Customized Versions

Multi-TenancyData Layer

Aggregate Data Track Usage

Implementation Agnostic

Advanced Monetization

Strategies


Multi-TenancyData Layer Implementation

Must be Single Instance

Unique Database per

Tenant

Multi-Tenant Database,

unique Schema

Multi-Tenant Database, Shared

Schema


Remember!


The further you stray from this clear definition of SaaS, the harder

it will be for you to truly reap the benefits of being a pure-play SaaS

Vendor.

ASP Model

Multi-Instance, Single-Tenant

Non Web-native Applications

No Inbuilt Revenue Models


Customizations cause Business

Scalability Issues

SaaS BusinessArchitectureConsultants

http://sixteenventures.com

http://twitter.com/lincolnmurphy

[email protected]

http://linkedin.com/in/lincolnmurphy

lincolnmurphy (972) 200-9317

http://sixteenventures.com

http://twitter.com/lincolnmurphy


http://linkedin.com/in/lincolnmurphy

This Changes Everything

Rick Chapmanwww.softletter.com

[email protected]


At our SaaS University conference in Atlanta, Patrick Fetterman, head of marketing of Plexus, now Plex, said the following:

“We are managing 100K feature requests per year without product managers

Not possible in his space (ERP) with a licensed product

All numbers referenced are from The 2009 Softletter SaaS Report

47%

53%

Requirements Integrated

YesNo

0%

10%

20%

30%

40%

50%

60%

70%

80%

38%

61%

76%

200620072008

7%18%

23%28%

24%

Major Upgrade

Less than once a year

Once a year

Twice a year

Three times a year

No set release schedule; as developed

67%

33%

Agile?

YesNo

Release cycles are going away

The pace of SaaS development exceeds anything ever seen in the industry previous

The most successful SaaS companies will structure their operations in ways previously talked about, but never executed

The TRUE Apotheosis of the Customer

You are, of course, lying

In a desktop and licensed world, it’s very difficult, if not impossible

The tools available simply don’t work very well Forums E-mail Screaming Surveys Screaming

SaaS is 24/7/52 SaaS is persistent across the world SaaS IS A COMMUNITY Inherent in the model

They have transformed their community into an active marketplace of ideas that manages, in the main, itself

Requirements management driven by the community Implementation driven by community Innovation driven by community

Voting Polls Forums Peer to peer communities Chat

Combined with extensive data mining of their customer base

This combination has never been seen by the industry before

Product management is fundamentally transformed No MRDs No “tick list” management No acting as a stand in for the “Voice of the Customer” No acting as a stand in for the customer in the Agile model

Product management is fundamentally transformed Your PM organization flattens out No “tick list” management No acting as a stand in for the “Voice of the Customer” No acting as a stand in for the customer in the Agile model No MRDs

Requirements management goes back to development PMs aren’t good at use cases They’re not Rational mavens

Product management is fundamentally transformed Your traditional PM role disappears The PPM becomes the PM Customer community advocate/maven User of the community management system and wizard of

insights and support Refiner of the system PMs (and everyone else becomes accountable) Business analysts may be needed

Who do you think knows more about your system, you or your users?

I bet they do (collectively) You’re an expert at building your system Think you’re smarter? Test and measure (and be accountable)

Mult-tennant BI Community system

Voting Polls Councils Reputation management Maven management Peer to peer FAQ/Wiki/Blogs

All tightly integrated directly into your system I mean “into” This approach becomes integral to your marketing,

sales, and development DNA Once implemented, traditional PM training programs

become obsolete