SaaS Blogs

Conversations in the SaaS enablement space tend to focus on companies offering cloud application platforms (such as our very own SaaSGrid), enablement technologies such as billing services offered by folks like Aria Systems, or players like Amazon that are pushing “closer to the metal” cloud utilities like file storage via S3 or virtualization constructs via EC2. Notice something? No mention of any hosting companies! Surely to some degree the infrastructure required to run SaaS offerings is “enablement”, so why so little discussion? Generally, it’s because there has been little innovation by hosting companies to date. Many hosting companies have yet to explicitly acknowledge SaaS as something that requires more than ping, power and pipe (3P). Others that have are just starting to formulate plans around SaaS. Folks like Rackspace, NaviSite, Peer1, 7Global, Attenda, and ServePath that have self-identified as “SaaS hosts” in recent history focus on professional services around SaaS as well as highlighting why their 3P is better than others and how it will help reliability for SaaS offerings. Even companies with deeper SaaS focus like OpSource haven’t gone the extra mile to truly have huge industry impact (although they have done more than most). Little has been done to address core enablement needs required by SaaS vendors, and SaaS enablement as an initiative has basically been dealt with as a new tab on hosting companies’ corporate websites that do little more than decorate old services with SaaS marketing. I think that in the near future, however, this will all change.

Hosting companies frequently get written off as dinosaurs lacking innovation and understanding, and instead are simply here to provide “raw resources” via their 3P offerings. I couldn’t disagree more. First, from the business standpoint, hosting companies have invested millions of dollars in leveraging infrastructure and highly tuned infrastructure staff. This, if exploited, can lead to awesome economies. Furthermore, they have a history of understanding what it means to be a provider of outsourced needs and acting as an extension of their customers business, as well as dealing with “recurring revenue” models. To me, all of this identifies a clear alignment of what SaaS enablement (particularly in a PaaS world) is to those that consume it.

The big question is whether hosting companies will evolve into something beyond 3P and tackle core issues in SaaS enablement. I believe they will. We’re starting to see evidence of this in some of the initiatives that hosts are pushing. Take Rackspace, for example, who recently announced CloudFS, an infinitely scalable cloud storage solution. That’s a degree of innovation that we should all appreciate. Although it’d be interesting to see if it succeeds, what excites me most is that some hosts like Rackspace are starting to “rock the boat” and seem to yearn for an evolution (or even a revolution) toward complex value propositions that matter to SaaS vendors. I’m confident that over the next 1-2 years, we’ll see some pretty cool initiatives come directly from hosts; I can’t imagine that they plan on handing over the biz to whomever wants it and that they’re content with the idea of going gently into the night.

I just read a post over at PaaSTalk that painted a scary picture in Germany. A recent survey showed that almost half of the ISVs have no plans for SaaS offerings. Granted, some subset of those probably are in a business where SaaS doesn’t fit at this point, but I imagine the remaining ISVs are resisting change.

The problem with resisting is how staying in the on-premise world interacts with what the SaaS paradigm does to market sizes. SaaS is an amortization of sorts when compared to on-premise licenses (from the expense perspective), and as a result absolute market size shrinks or growth rate is dampened because of the marked differences in license costs (think of it as market level cannibilization). As SaaS continues to spread across the space and end users continue to accept the model, resistant ISVs have to battle shrinking market size where their on-premise license charges are significantly disproportionate. I’m not sure how those ISVs intend to deal with this and compete. My guess is that resistant ISVs will have their “lunch eaten” by a new player in the space who clobbers them with a SaaS offering.

One thing I’m curious about is the “why” aspect of those resistant ISVs for which SaaS does make business sense. Is it because of the difficulty of transitioning (cannibilization, rehashing their company to be service focused, etc.)? Is it because they think SaaS is a “fad”? Are the hurdles technical in nature? If you had to guess, why do you think ISVs generally resist the transition?

As the founder of a PaaS company, these curiosities are multi-level: why would some people stay away from SaaS and is there something that a PaaS offering can do to alleviate their concerns?

We’re in an interesting transition within the software space. Specifically, we’re all in agreement that SaaS is changing the industry in a very positive way. More importantly, however, is the recent evolution of platform as a service (PaaS), which is where Apprenda lives. Recently, we’ve seen more and more noise around PaaS (both consumer and enterprise PaaS offerings) with players such as Google via their AppEngine, Salesforce via Force.com and Amazon via EC2 introducing PaaS flavors at different levels in the PaaS taxonomy. As I’ve mentioned on other occassions, I enjoy looking at the histories of other industries and looking for lessons. One analogous situation that is chock full of lessons is the business of electricity, it’s generation and it’s distribution.

Now that more companies are throwing their hats into the PaaS arena, I’m keeping an eye on what could become a disturbing scenario. Greg Matter from Sun Microsystems wrote a blog post about a year and a half ago where he stated that “…there will be, more or less, five hyperscale, pan-global broadband computing services giants.” For the most part, this is an ok scenario at a specific layer - the delivery platform layer. Disturbingly, what we’re seeing is that some of the major players like Google and Amazon are approaching the market in a monolithic stack fashion. That is, even though their PaaS offerings are in their infancy, they seem to be adamant at controlling all aspects of the PaaS stack. AppEngine creates a set of libraries, which sits on a service delivery layer sitting atop of Google’s compute resources. Force.com creates a library and language layer, which sits atop a delivery platform, which sits atop compute resources. What I’m seeing is a disturbing trend that as an industry we should avoid. Let’s take a page from the history (and future) of the electric industry.

Transmission of electricity and power in the United States has faced two major outages; one in the 1970’s in New York City and another in 2003 that affected a majority of the Northeast. In the U.S., electricity generation and distribution are separated from transmission, thus creating functional decentralization. However, generation and distribution is highly centralized. The problem with this is that it creates large single points of failure with significant, non localized downside in the event of malfunction, is conducive to congestion, and unmanageable complexity. Now, some of these problems predominantly affect efficiencies (such as being too complex) while others affect customers (single point of failure) in near catastrophic ways. Both the blackout of the 70’s and of 2003 were costly and devastating, bringing parts of the U.S. to a veritable halt.

In 2003, I was working in Manhattan during the blackout and ended up having to walk across the Brooklyn Bridge in what almost seemed to be a pre-apocalyptic scene from a movie. This was a direct result of a poorly designed system that outgrew itself and couldn’t scale well because the centralized nature of the grid. As a result of these issues, many have suggested introducing decentralization to America’s power systems: individuals such as Al Gore have made it a key point to create a decentralized “electranet” while action groups such as the Union of Concerned Scientists have pointed to decentralization as necessary and critical to insure reliable power. We created a system that did not anticipate our massive energy needs and that unecessarily coupled at strategic layers. Now we have to do significant work to try and correct errors and prevent the cost of failure that is growing superlinearly with our growth in consumption. A majority of proposed corrections have to do with breaking a part a monolithic electric grid stack into manageable layers. Notably, this partitioning may even help create a scenario that is much more free trade friendly and more efficient: the notion that somehow this monolithic approach created some sort of benefit through tight coupling and specialization is absurd.

PaaS and SaaS (which in the future will all most likely be hosted via one platform or another) create a producer -> distributor -> consumer scenario familiar to those in electric power distribution. From my perspective, the idea that PaaS providers want to establish monolithic stacks is akin to the centralization of power generation and distribution, which comes with all the associated downside and ris. From the top down, most complete PaaS offerings will come with an API/service integration layer, a service delivery platform (SDP) layer, and a compute layer. But are these layers unnecessarily coupled?

When looked at it from the strictest sense, APIs and the underlying platform establish a well known functional contract between the application and the SDP. If a software company looking at a PaaS offering agrees to that functional contract and can extract all functionality they need from the PaaS, they commit to the PaaS at that level. Once built, applications are deployed, managed and operated through the PaaS. Service contracts exist between the SDP layer and the compute resources that the SDP lives on. This is an ongoing relationship that carries  good level of risk not measurable by commitment to the PaaS at the functional contract level. Once up and running, the opaque nature of the compute resources from the applications perspective creates a scenario where the application and its creator have little control and recourse.

A PaaS provider may start off giving you exceptional service, but over the course of a few years, performance degrades drastically. This degradation tends to occur at the compute resource layer or at the linkage between the SDP and compute resources layer. You’ve committed to the API and SDP, making it difficult to decouple. Worse yet, being on a monolithic PaaS stack, you can’t alleviate the degradation in service contract since the provider is one and the same in an exclusive relationship where by virtue of agreeing to the functional contract, you’ve agreed to the service contract both current and future. This is the same ridiculous architecture we’ve inherited in power generation and distribution. If Greg Matter is correct and things shakeout to 5 (more or less) PaaS providers, I sure hope it’s not 5 monolithic stacks. I’d hate to see the results of the first blackout. My goal is to push toward a much more resilient mechanism for PaaS, avoiding the pitfalls that come with gross centralization that is present in purely monolithic stacks. Yes, some might say “But company X would NEVER fail us” - I’m sure people also said “Our electric grid will never go down” and “Enron is too big to go out of business.” History is the world’s teacher, and if we’re wise, we’ll be attentive students.

Do you feel that it will be ok to function atop a few monolithic stacks, or should the PaaS focus be on decentralized PaaS mechanisms? What are your predictions for the future of SaaS and PaaS?

Ok, I admit that I have a fetish for buzz acronyms, but I promise the use of service oriented architectures (SOA) and SaaS in this posts title is appropriate and introduces an important topic! Specifically, I’d like to tackle SaaS implementation approaches and how these different approaches relate to a SaaS business.

When deciding on how to technologically tackle a SaaS implementation, a software company should understand their marketplace and business strategy needs. B2B SaaS offerings that focus on businesses small and large generally bump into questions like:

1. Does your SaaS offering have an API?
2. Is cross-application interoperability important?
3. Do you need interoperability across broad technologies or are you targeting a single technology for interoperability?

In today’s on-demand world, companies like Salesforce have established an expectations baseline. B2B applications are expected to have APIs, as well as the ability to bridge technology divides from an integrations standpoint, and provide policy control over functional parts of an application. This provides a technological foundation for strategic partnerships that not only serve to tackle markets that may require legacy support, but actually deliver value at the same time (imagine that). Implementing a SaaS offering from a technical viewpoint can be divided, at the highest level, into two very broad categories: non-SOA and SOA.

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Looking purely (from a 30,000 foot vantage point) at the positive attributes that SOA and non-SOA implementations bring to the table, in my opinion pursuing a SOA implementation does wonders for setting up a technological foundation that can be used to promote effective business strategies. Taking the non-SOA approach is great for getting to market quickly, but in the B2B space it can become increasingly cumbersome to support new initiatives and plans. To some degree, the market is starting to agree with this concept: SaaS offerings and consumer Web 2.0 apps expose a variety of interfaces as business expansion points. New SaaS implementations should seriously consider SOA as a foundational architecture if the company expects to encounter some of the business needs mentioned.

Do you agree that technology and architecture choices can significantly impact business strategy, or are they inherently uncoupled?