Xero: Utilising Microsoft technologies as the platform for a global SaaS offeringCraig WalkerChief Technology Officer, Xero

Alastair GriggChief Operating Officer, Xero

VOC203

Agenda

What is Xero?What is SaaS?Why an IPO?The Xero FrameworkProduct Development StrategyBeta ProgramService Delivery PlatformGlobal Vision

What is Xero?

Web based accounting software for SME’s

simple to usesecure always accessiblelow cost

What is Xero?

What is Xero?

Revolutionising the way small businesses are managed

Business management, not just compliance

Staff and advisors all connected

Unconstrained by legacy processes or technology

Scalability - getting the server to do the work

A New Zealand business with Global aspirations

What is Software-as-a-Service?

Software that is deployed as a hosted service, accessed over the internet and paid for on a subscription basis

The keyword is “service”

What is Software+Services?Microsoft’s services platform strategy

Next generation of Software-as-a-Service

Convergence of Software-as-a-Service (SaaS), service-oriented architecture (SOA) and Web 2.0 technologies

Xero is Software-as-a-Service ANDSoftware+Services

SaaS business modelShift the "ownership" of the software from the customer to the ISV and from software to data

Reallocate responsibility for the technology infrastructure and management from the customer to the ISV

Reduce the cost of providing software services, through specialisation and economies of scale

Go after the "long tail" of smaller businesses, by reducing the minimum cost at which software can be sold

The Long Tail

Your Large Customers

Dozens of markets of millions or millions of markets of dozens?

$ /

C

usto

mer

# of Customers

Your Typical Customers

(Currently) “non addressable” Customers

What if you lower your cost of sale (i.e. lower barrier to entry) and you also lower cost of operations

New addressable market >> current market

SaaS is Web 2.0!

Social Media Designware Learning SaaS

MySpace Threadless Wikipedia Xero

YouTube Etsy MIT Open University Google

Last.fm Ponoko Salesforce

Facebook 37 Signals

Why an Initial Public Offering?

Establish a credible, secure service provider

Most appropriate means of funding build platform & accelerate growth

profile and attract international talent

First public company in the space wins

Xero Framework

To understand the optimal architectural & technological implementations required to deliver a solid platform for building SaaS applications

Real R&DTook the time to do real R&D

Looked at what other Web 2.0 and SaaS providers were doing

Looked at the technologies being used and how they were being used

Why choose Microsoft?Proven Technologies

SQL Server 2005, ASP.NET 2.0, .NET 3.0, Windows 2003Unparalleled developer tools

Visual Studio 2005, Team SuiteScale

Microsoft technologies are used by some of the biggest websites in the world (MySpace, MSN, Windows Live)

Microsoftrelationship with Microsoft strategicgoal from day 1 to be a Microsoft Gold partner leverage the resources of Microsoft at a marketing level to gain access to new markets

Pragmatismwe believe we have some of the best developers in the country - why waste all that experience on making everyone learn a completely new framework?

Xero Framework

Pure end-to-end web development framework incorporating existing Microsoft technologies (SQL Server 2005 and ASP.NET 2.0) as well as aspects of the Rails framework

”Convention over configuration””

Multi-tenanted data modelISV providers must leverage multi-tenant, single instance database structures because they provide the maximum efficiency and value derivation

Single instance of the application serves every customer

All data is logically partitioned by customer ensuring each customer’s data is kept separate from that of other customers

Made possible through SQL Server 2005

Object relational modelLLBLGen Pro 2.0 from Solutions Design http://www.llblgen.com/

Integrated designer and generator – makes schema changes apply almost immediately

XSLT & ASP.NET

Combined with integrated conventions XSLT have us a robust and fast view engine

Allows our designers to incorporate their designs into the application without needing to be programmers

It’s all about painting screens

Other cool bitsCustom validation system integrated throughout framework

“Componentized” XSLT templates for reusability

Community based JavaScript libraries:Prototype http://www.prototypejs.org/Script.aculo.us http://script.aculo.usPrototype Window http://prototype-window.xilinus.com/

Other uses of MicrosoftWord 2007 for writing contextual help

WCF for secure server-to-server communication

Output to Excel – providing functionality that benefits those users that have Microsoft software

It’s all about open standards

Third party

Mobile device

s

Rich-clientor gadgets

Browser Suppliers

Banks

Government

WCF / WS-*

HTTPS

HTTPS

WCF / WS-*

WCF / WS-*

WCF / WS-*

HTTPS

HTTPS

What’s nextSQL Server 2008

Resource Governor, Declarative Management, Transparent Data Encryption, Non-relational Data Types

Windows 2008IIS7, Server Core, Powershell, Virtualization

Visual Studio 2008LINQ, .NET Framework 3.5, WCF, WWF

SilverlightNext generation technology for rich internet applications

Product development strategy

Current +1 release 4-12 weeks 3 months plus

Project Management

Product Management

Product Strategy

Prioritisation Debate

TIMELINE

Design led, feature driven• Fortnightly release cycle• Listen, prioritise, respond

Interaction design

Rapid prototyping and rapid development to achieve rapid improvement

Let users decide:Quickly get people using itQuickly get feedbackQuickly make it better

Look at the numbers

Rapid prototyping

Xero beta program

Closed beta release program

130 SME companies involved over 5 months

Understanding SME accounting ‘pain points’

Invoicing

Receipting and reconciling cash

Who owes me money?

Self Hosted

Beta released

Validate minimum production release scope

Learning to perform frequent production releases

Establish core build back office systems

Transition from beta to Limited Production Release

The tip of the iceberg …SaaS changes the way ISV’s have to think about running their businesses

Xero Application

All the other stuffBilling

MeteringSupport

Salesetc etc

How do you make the boat go faster?

Realizing SaaS

Business Model

Operational Structure

Application Architecture

Software

Service Delivery Platform

The Service Delivery Platform (SDP) is the platform that allows for the deployment and delivery of the Xero application

A good SDP disconnects the delivery model from the application, allowing application developers the ability to concentrate on their application functionality and not SaaS intricacies

Microsoft's SDP model

Infrastructure-as-a-Service

Xero’s SDP

Hoster

Network Services

Availability

Fault Tolerance

Storage

SLA Monitorin

g

Capacity Planning

Community

Network Effect

Word of mouth

Xero

Customer Services

Application Services

Business Services

Billing

MeteringMarketin

g

Branding

Sales

Logging

Monitoring

Alerting

Order Mgmt

Access Control

Usage Tracking

Provision-ing

Identity Mgmt

ForumsIssue Mgmt

Incident Tracking

Customer Mgmt

Security

CRM

Xero Application

EX

TER

NA

L

INTER

NA

L

ResourcesMicrosoft SaaS On-Ramp Programhttp://www.microsoft.com/serviceproviders/programs/saasonramp.mspx

Microsoft Empower for ISVshttps://empower-isv.one.microsoft.com/isv/programguide/Default.aspx

SaaS Architecturehttp://msdn2.microsoft.com/en-us/architecture/aa699384.aspx

SaaS Sample Application: LitwareHRhttp://msdn2.microsoft.com/en-us/architecture/bb229292.aspx

Global aspirations

SMEs are the most common form of business organisation

90%+ of businesses in OECD countries

Accounting software is still desktop based

Accounting practices are very similar across many geographies

Opportunity for a fast-moving, well funded service provider, without legacy business models to address the migration by SMEs to online accounting

Beyond accounting

Banks

Customers &

Suppliers

Trusted Advisors

Online Services

Xero

Small Business Community

Evaluation Forms

Questions?

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