Charting the Course to SaaS

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It seems the only certainty in today's business environment is uncertainty. Market volatility, rising operating costs, regulatory compliance, globalization and escalating competition have combined to put enormous pressure on today's enterprise businesses.

Despite the challenges posed by the accelerating pace of change, most companies are energized by the turbulence, and are aggressively seeking out ways to improve their competitive positions. Technology-fueled innovations and alternatives -- like on-demand software models -- are not only cutting costs, but creating new revenue-generating opportunities.

SaaS for success

Driven by a growing frustration with the costs and complexities associated with traditional, on-premise applications, traditional business models for selling software products and applications are being replaced by incremental pay-per-use service models like Software-as-a-Service (SaaS). In fact, Gartner predicts that 33 percent of all Independent Software Vendor (ISV) applications will be optionally or exclusively offered as SaaS within next three years.

Enterprises are adopting SaaS solutions faster than any other software delivery model. Yet, the hurdles for ISVs are substantial when considering a move to SaaS. From revenue interruption to customer and data migration, the business challenges are as complex as the technical issues.

Fortunately, a recipe for success may be easier than you think. Understanding the critical stages involved -- from preparation to consumption to delivery -- will enable enterprises to effectively navigate the transition to SaaS, in order to address new markets and substantially reduce infrastructure costs.


A typical ISV application today is based on the conventional three-tier architecture. The application is either consumed completely over the web, entirely deployed on premise on the desktop, or a hybrid approach. While the usage of well-known patterns already manifests into loose coupling of the components within the architecture, the advent of software oriented architecture (SOA) and web services has made loose coupling increasingly widespread.

Even with the loose coupling and the modularized service based architecture, only a single tenant can be served by the compete architecture -- this could mean either a single user for a desktop application or a complete enterprise for applications like CRM or ERP. Thus, in order to serve multiple tenants, an organization requires multiple instances of the same bits that constitute the application.

In the service world, while it is feasible to offer SaaS while having one instance per tenant, the economics is simply not practical after a certain volume of users. Not only would the resources not scale, but the management of delivering the service and managing multiple instances would make it a "show stopper."

Fortunately, SOA and web services do provide the right technology foundation for SaaS. With a combination of appropriate data and service architecture and a deployment model, the same application can be delivered as SaaS in a much more economical manner.


From an enterprise perspective, the "no software" model of SaaS application provides several advantages. Specifically, a range of SaaS applications integrated across the key business processes provide the complete range of functionality desirable for the enterprise. And, a Business Process Management System (BPMS) embedded in the SaaS application provides just the right amount of flexibility to support the specific customizations for each enterprise.

This right-sized customization increases the attractiveness of SaaS for dynamic applications, which are also referred to as "enterprise mashups." SaaS forms the cornerstone of the composite application because it can cross ISV boundaries where a set of applications from ISV A are "mashed up" with a select application from ISV B and C to form a value centric ecosystem.

For example, a CRM application would need a lot of integrated functionality related to office productivity applications. It makes a lot of sense for the SaaS vendor of the CRM application to combine functionality of online office applications from an established ISV in the office space, rather than reinventing the wheel. This would be achieved by creating a mashup of the office tools with the core CRM application.


Following SaaS enablement, it needs to be on boarded to a delivery platform. ISVs offering a complete portfolio of applications may consider using a SaaS enabled application platform (SEAP) to create their own SaaS offerings. However, in some instances it may make more sense to leverage an existing platform as a service (PaaS) vendor. In each of these scenarios, the functionality related to ordering, provisioning, reporting and analytics of usage related to these applications needs to be built out.

Subscription and usage based offering is a basic tenet of any SaaS application. To enable this, the application needs to support creation, aggregation and management of usage events. The granularity of this depends entirely on the nature of the application and the service offering team should define configurable policies to enable collection of the usage events.

Certainly, once enabled, SaaS offers several advantages to IT buyers, including more frequent upgrades, a lower cost of ownership and a higher level of service from vendors that must become more responsive to customer needs or risk losing subscription revenues. Countering these benefits however, are the acknowledged risks of reliability and security.

To address the reliability issue, different sets of usage data need to be generated related to the health of the service and data layers. This should feed into a service and business management system and form the basis for overall monitoring, troubleshooting and assurance for the SaaS enabled application. The monitored data could be used by a self service application to report usage per tenant, as well as performance management, capacity planning and tracking SLAs.

From a security perspective, there needs to be isolation between the various tenants at the data layer (including tenant metadata as a well as tenant/end user transactions), at the service layer and the user interface layer. In the SaaS world, the ability of a rogue tenant to get past the identity layer and view business data to invoke business services for other tenants poses the biggest risk. The SaaS enablement should therefore focus on implementing role based identity coupled with privileges and access control along with resource based isolation.

The bottom line

Clearly, there are many paths open to enterprises as they chart the best course for success in today's highly competitive global marketplace. None however offer the compelling advantages to ISVs in the software applications and services market as the on-demand delivery model. Its usage-based metaphor is a natural evolution of business and is much more economical (compared with investing in expensive infrastructure), enabling businesses to enter cost sensitive markets that were once out of reach and to focus on innovation, not infrastructure.

The increasing momentum of SaaS is fueling the rise of a new generation of platforms to develop, integrate, deploy and host applications. These SaaS platforms come in several flavors, from managed hosting and cloud computing to development and application-led platforms. Each option brings its own unique value proposition as well as its own set of challenges.

Fortunately, there are experts out there who can help sort out the options and plan and accelerate your move to an on-demand delivery model. Companies like Persistent (the company I work for) can assist with your SaaS road map to define a model that allows short, medium and long term deployment goals to be realized cost-effectively, with minimum risk and a focus on ROI.

About the Author

Dr. Srikanth Sundararajan, Chief Operating Officer of Persistent, has amassed more than 20 years of innovative international IT experience with Hewlett-Packard (HP), Informix (his own successful startup), HCL Technologies and Cognizant Tech Solutions. During this tenure at HP, he was a part of the original team that architected and implemented the first IDE on Unix for C/C++/Cobol called SoftBench. This core technology was licensed by industry leaders such as IBM, CDC, Informix and Honeywell-Bull. At Informix, he ran the tools side of the business and delivered the first Graphical 4GL development environment as a product line. Srikanth founded a winning software product services business. Over a nine year period, his company provided design/architecture/implementation consulting expertise to companies like SUN, SGI, HP, and SAIC, registered triple digit growth six straight years, and gained recognition as one of the Top 100 Private Companies in the Bay Area three years in a row. His firm was acquired in 2001 by a BEA Systems Inc spin off. Subsequent to this, he transitioned to India as the Chief Technical Officer of HCL responsible for delivery and all strategic technology initiatives. He was responsible for the consolidation of the services revenue stream and technology initiatives between the HCL group companies. Following this, Srikanth became the worldwide CTO for Cognizant, where he drove all technology initiatives for customers and provided a technology roadmap for competitive advantage. He was also responsible for setting up and driving world wide product development for International Decision Systems, a financial services product company. Srikanth earned a B.Tech degree from IIT Madras, and attained his MS and PhD in Computer and Information Sciences from University of Illinois, Urbana-Champaign.

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