Similarly, Cloud Computing was initially taken to mean perfectly abstracted infinitely elastic computing scale in an on-demand basis. We don’t have this yet. What we have, and Im referring specifically to IaaS since it is our basic building block, is easy to configure, easy to provision, on-demand, utility priced virtual machines. This is a great progression for the software and IT professions, but it falls short of fulfilling the fanciful capabilities drawn in people’s minds. Cloud IaaS makes it easier and cheaper to do what we’ve been doing for years, but hasn’t profoundly changed the actual requirements, workflow or operational hassles that developers and IT administrators face. As a Senior Enterprise Architect at a large enterprise remarked to me last year – “we’ve run the course with virtualization, we did that years ago.”

Making compute power available has been solved – the current challenge is to put that instant-on horsepower it to work. To be clear – this is being done fairly well in some use cases: big data crunching (CG rendering, map reduce) and consumer facing websites come to mind because they have scale mechanics that rely on simple replication and balancing.

Business applications, however, are still beholden to the underlying topology of servers that supports them. The application itself and the IT system must be intrinsically wired together in order to function properly. For example – business applications often store large amounts of data and will store data across multiple servers. If user number 523 logs in and her data is on DB server number 5, how do you fetch that data when she sends a request through UI server 3? Answer – the application has to know who she is, where her data is stored and how to retrieve it. This enmeshing is necessary to solve many similar complexities, but makes it extremely difficult to take advantage of today’s current Cloud infrastructures – without completely re-architecting and rebuilding applications from the ground up and adding multiple highly complex new systems.

In order for this current world of instant-on cloud servers to be truly impactful and revolutionary for developers and IT operators we must continue to elevate them further away from the underlying mechanics and break the bonds between application and infrastructure. In order to do this, we need some middle tier that abstracts the application away from the underlying server topology and surrounds that application with the management, authentication, user-routing and scaling mechanics needed to seamlessly take advantage of newly provisioned resources. This is why we are seeing a universal up-stack migration by the industry leaders like Amazon, Microsoft and SalesForce.com into the still-evolving realm of PaaS (platform as a service) where the original vision of throwing code into an autonomous external cloud of elastic computing power is starting to coalesce in a couple offerings.

SalesForce.com’s “Force.com” platform for instance holds true to the “deploy and forget” ideal, but ties the developer to a restricted programming environment based on their own proprietary programming language in return. To counteract this, SalesForce.com has made bold moves by first partnering with the leading provider of virtualization technology (the underpinnings of the cloud movement) VMware to create VMforce for Java and then acquiring Heroku for the Ruby programming language. It wont be long before these two additional platforms are able to take advantage of the value added capabilities built into Force.com. The last few months have also seen the acquisition of Makara (another PHP PaaS) by Redhat, giving this enterprise heavyweight a compelling Private PaaS story for their client base. Amazon, the standard in IaaS, has been building new up-stack capabilities in-house and recently released their Beanstalk service which simplifies scaling Java applications. Not to be outdone, VMware last week announced the acquisition of WaveMaker a Rapid Application Development tool that compliments their SpringSource acquisition. Its not hard to imagine a new RAD-PaaS offering with these capabilities.

Scrolling this stream of movement, it can be hard to divine where this is all heading and where the competitors will bump into one another. It all comes down to the application developers and what up-stack capabilities you can offer them that improve one or more of: their build-time productivity/speed; the business value they can incorporate into their applications or the ease/quality of the ongoing application delivery. The following graphic gives a basic snap shot of where we are and how I see this evolving.

For SaaSBlogs readers who are interested, we are holding a joint webinar tomorrow (Wednesday 3/23 at 11:00 EDT) that will cover 5 key lessons critical to the speed of transitioning to a SaaS delivery model.  The webinar is co-hosted by our partner Tenzing, a leading IaaS provider for ISVs.

If you are interested, you can register here:  https://www3.gotomeeting.com/register/897150934

Event Details:
Date: Wednesday 3/23
Time: 11:00 EDT
Location: online
Registration: https://www3.gotomeeting.com/register/89715093

Overview:
Whether your company is a SaaS start up or employs a more traditional on-premise software model, you need to find ways to accelerate and streamline your SaaS application development. The fact is software as a service is exploding; IDC estimating that by 2014, 85 percent of new software companies will be offering their product through a SaaS delivery mechanism.

This webinar explores how Apprenda’s SaaSGrid Application Delivery Fabric combined with Tenzing’s Cloud infrastructure delivers a true end-to-end SaaS delivery platform to enable ISVs to bring their SaaS offerings to market faster with the lowest ongoing cost of service delivery. Why reinvent the wheel when making the move to SaaS? If you are to survive and thrive you need to leverage best of breed technology that will get you into market faster and with the right capabilities to unlock the efficiencies of scale needed for long term success.

Join Will Childs, SaaS Practice Director at Tenzing, and Devon Watson, Director of Business Development at Apprenda, as they discuss their partnership and resulting platform that enables software vendors to dramatically accelerate SaaS delivery while reducing development cost and complexity.

Two choice excerpts:

“SuccessFactors recently gave a speech, [by CEO] Lars [Dalgaard], talking about their architecture and their approach. They have something like over a thousand customers per physical server when you net it all out and aggregate it. Andthat‘s the marginal utility, that’s the scale that you need to get to — because you need that op-ex in your business as a SaaS ISV to be in the five percent type of range. And it’s not going to happen if you’re doing a per-customer expenditure.”

“And that‘s the marginal utility, that’s the scale that you need to get to — because you need that op-ex in your business as a SaaS ISV to be in the five percent type of range. And it’s not going to happen if you’re doing a per-customer expenditure.”

Continue reading the transcript or listen to the podcast here.

]]> http://www.saasblogs.com/business/great-interview-on-the-benefits-of-multi-tenancy/feed/ 0 http://www.saasblogs.com/business/webinar-building-a-saas-business-in-2010/ http://www.saasblogs.com/business/webinar-building-a-saas-business-in-2010/#comments Mon, 25 Jan 2010 16:15:24 +0000 Devon Watson http://www.saasblogs.com/?p=277 Building a SaaS Business in 2010 – An Inside Look at the Business Model and Operations.

On Tuesday, February 2nd the authors of this blog and some of our business partners will be hosting a webinar to illuminate some of the key considerations and challenges ISV’s face when looking to bring a SaaS offering to market in 2010.  This session will include a deep dive into the SaaS business model as well as the operational side of the equation and feature key insights and lessons learned from the frontlines of managing SaaS businesses.

Although the content of the webinar is less technical than our typical fare here at SaaSBlogs, we think many of our readers will find it to be interesting and valuable material.

Additional information and registration: https://www2.gotomeeting.com/register/197663259

After that I spent 5 years as a Venture Capitalist where I worked with many companies founded on SaaS business models, but with really what amounts to a glorified ASP (application service provider) infrastructure left over from 6-8 years ago.  I have come to view this non-alignment of business model, infrastructure and operating cost as a fairly standard refrain across the software industry.

Last night I gave a talk on SaaS to about 100 members of the  NY Entrepreneurs Business Network and the NY BizSpark Meetup group at Microsoft’s office in New York (thanks to NYEBN and MSFT ISV Evangelist Gunther Lenz for inviting me).  We had a very good discussion around the progression of the software industry from Client-Server to Web Applications and the ASP’s of the late 90’s on to the current SaaS paradigm.  The changes to the leaderboard of the software industry at each step in the evolution were obvious to the crowd – Mapics?  Gone when 3 tier web apps came out.  Siebel?  Eclipsed by SalesForce.com.

 
People quickly understood how SaaS finally realizes the economies of scale and consolidated operations needed to make on-demand delivery feasible form the ISV.  However, many of the budding software entrepreneurs in the room were surprised to learn that getting a SaaS company off the ground is actually more expensive than in yester years, despite the more desirable end-state.  Of the handful of SaaS companies to have gone public the average cost of capital to reach that state was $76M….$76M!  This is due to two factors – the delay in revenue recognition inherent to the SaaS business model and the longer (and more expensive) path to market due to the complex underpinnings of a good SaaS delivery foundation.

Luckily, you no longer have to reinvent the wheel the way my first startup did 8 years ago.