As traditional on-premise independent software vendors begin to realize they must transform their products to the new “cloud” business model, they may rush to bring Software-as-a-Service (SaaS) offerings to market prematurely. Unfortunately, the DNA of an ISV is radically different from that of a service provider. ISVs are mostly in the business of writing software. And while the intellectual property remains important, efficient operating practices are also essential to success in SaaS.
Often, the “efficient operating practices” half of the SaaS equation isn’t recognized by the traditional ISV that aspires to become a service provider. As a result, vendors with an on-premise software application are seduced by the apparent low barriers to entry into the SaaS market with an architecture that leverages virtualization (such as VMware). This approach allows a software company to quickly offer subscription-based services to their initial customers. In the long run, however, this multi-instance approach simply won’t scale economically. A SaaS provider who leverages virtualization puts the long-term viability of the business at risk as more efficient SaaS competitors enter the market.
Faced with this dilemma, a strategy for deploying a “true” multi-tenant architecture becomes the obvious choice as it yields the most cost-effective approach to SaaS. However for most aspiring SaaS companies, this realization typically occurs far too late in the game. The ISV may already be far into the cumbersome and expensive process of modifying the application to support multi-tenancy. Or an extended delay occurs because the potential disruption to the business, to implement multi-tenancy, is deemed too risky. For these reasons, any ISV making the transition to SaaS should explore how best to achieve “true” multi-tenancy as early as possible.
Limits of Virtualization
Virtualization technologies evolved to help IT organizations improve the efficiency of their hardware resources by partitioning hardware to simultaneously support multiple applications and their corresponding software stacks (operating system, database, application server, etc.). Although superficially attractive for use in a SaaS environment, as the SaaS provider gains momentum with new customer acquisitions, it exponentially increases the complexity of its operations. This is especially daunting for the typical ISVs whose traditional business model was not focused on operations. However, the virtualization approach to SaaS appears to offer some benefits:
- Time to market: With this approach, there is no requirement to modify the application code.
- Low barrier to entry: The cost and risk associated with this approach are far less than the alternative of re-writing the application.
By leveraging this approach, the ISV can meet the market demand of delivering an application as a subscription-based service; from the client’s perspective, the application is running in the cloud. But the ramifications of this approach have serious pitfalls for the SaaS provider over the long term:
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