Understanding the Business Implications of SaaS Multi-Tenancy

Business Implication of SaaS Multi-Tenancy July 16 2009

Agenda  Speaker Introductions » Mike Dunham » Lincoln Ventures » Rick Chapman  Scio Consulting - Presenter: Mike Dunham » Software as a Service - What is it? » SaaS & Multi-tenancy • Why is multi-tenancy important for SaaS? » Multi-tenancy Approaches  16 Ventures - Presenter: Lincoln Murphy » Business implications of the tenancy models for a SaaS provider  Softletter - Presenter: Rick Chapman » Impact of Communities and Business Intelligence in SaaS  Q&A 2 Scio Consulting International, LLC. All rights reserved.

Speakers  Mike Dunham – » Principal Consultant at Scio Consulting » mdunham@sciodev.com » http://www.sciodev.com  Lincoln Murphy – » Managing Director of Sixteen Ventures » lincoln@sixteenventures.com » http://www.sixteenventures.com  Rick Chapman » Managing Director of Softletter & SaaS University » rickchapman@softletter.com » http://www.softletter.com 3 Scio Consulting International, LLC. All rights reserved.

What is Software as a Service (SaaS)? July 2009

What is Software-as-a-Service?  Software as a Service (SaaS) is a model of software delivery that allows applications to be provided as a service to customers across the Internet.  It is a Deployment/Delivery model » Hosted and Managed by vendor » Delivered across the Internet  It is a Service Model » End-User support and service moves to the vendor  Usage-based pricing (vs. perpetual license model of on- premise software) » Per user per month » Per transaction » Per GB of storage per month 2 Scio Consulting International, LLC. All rights reserved.

SaaS vs ASP  ASP: Application Service Provider » Single-tenant architecture (one customer per instance) » Multiple instances running (as many as there are clients), typically hosted by third parties  Disadvantages » Significant management overhead » Difficult maintenance » No economies of scale 6 Scio Consulting International, LLC. All rights reserved.

Multi-Tenancy  Naïve » Single Database & Code Structure – Serving Multiple Customers  Split » Single Application Database & Code Structure • Unique DB per Tenant • Unique Schema per Tenant  Virtualized » Hardware and Network Abstraction  Rational » Scalable Instances, Virtualized Infrastructure, Tuned for Reliability Maturity 7 Scio Consulting International, LLC. All rights reserved.

Existing Product - Levels of “SaaSification” “SaaSification” Levels Characteristic Hosted (ASP Application Full SaaS Model) Virtualization Approach Approach Tenancy Model Single Tenant Single Tenant Multi-tenant with Tenant Mgmt. Tools Modification Minimal Minimal Moderate to Required to Extensive Existing App Operations Highest Moderate Lowest Overhead Scalability of Lowest Low Highest the Approach Initial Lowest Moderate Highest Investment Sci 8

Key Technical Aspects of SaaS  Multi-tenancy  Integration  Scalability  Security » Load balancing » Identity management » Routing  Usability  Availability  Communication  Performance » e-mail, sms, etc.  Configuration-driven  Globalization Customization  Audit and compliance » look and feel  Backup and recovery » Functionality These factors influence App Architecture as well as Infrastructure Architecture Sci 9

Multi-Tenancy in SaaS: The Business Case Presented July 16, 2009 via Webinar Hosted by Scio (http://sciodev.com)

Introduction Lincoln Murphy, Founder & Managing Director Sixteen Ventures 15+ Years On- Started and Sold Demand Product F1000-targeted Development SaaS Company I help SaaS SaaS Business Vendors make Architect more money! Copyright© 2009 Lincoln Murphy / Sixteen Ventures. All Rights Reserved.

Decision Time: Are you a SaaS Vendor or not? Hybrid is hard; Mindset and pick one Focus Revenue Make the Recognition decision and Issues stick with it Copyright© 2009 Lincoln Murphy / Sixteen Ventures. All Rights Reserved.

Remember! The further you stray from this clear definition of SaaS, the harder it will be for you to truly reap the benefits of being a pure-play SaaS Vendor. Copyright© 2009 Lincoln Murphy / Sixteen Ventures. All Rights Reserved.

Multi-Tenancy Data Layer Implementation Unique Must be Single Database per Instance Tenant Multi-Tenant Multi-Tenant Database, Database, Shared unique Schema Schema Copyright© 2009 Lincoln Murphy / Sixteen Ventures. All Rights Reserved.

Remember! The further you stray from this clear definition of SaaS, the harder it will be for you to truly reap the benefits of being a pure-play SaaS Vendor. Copyright© 2009 Lincoln Murphy / Sixteen Ventures. All Rights Reserved.

ASP Model Multi-Instance, Non Web-native Single-Tenant Applications Customizations No Inbuilt cause Business Revenue Models Scalability Issues Copyright© 2009 Lincoln Murphy / Sixteen Ventures. All Rights Reserved.

SaaS Business Architecture Consultants lincoln@sixteenventures.com http://sixteenventures.com http://twitter.com/lincolnmurphy http://linkedin.com/in/lincolnmurphy lincolnmurphy (972) 200-9317

This Changes Everything Rick Chapman www.softletter.com rickchapman@softletter.com

 At our SaaS University conference in Atlanta, Patrick Fetterman, head of marketing of Plexus, now Plex, said the following:  “We are managing 100K feature requests per year without product managers  Not possible in his space (ERP) with a licensed product

All numbers referenced are from The 2009 Softletter SaaS Report

Requirements Integrated 47% Yes 53% No

76% 80% 70% 61% 60% 2006 50% 38% 2007 40% 2008 30% 20% 10% 0%

Major Upgrade Less than once a year 7% 24% 18% Once a year Twice a year 28% 23% Three times a year No set release schedule; as developed

Agile? 33% Yes No 67%

 Release cycles are going away  The pace of SaaS development exceeds anything ever seen in the industry previous The most successful SaaS companies will structure their operations in ways previously talked about, but never executed

 The TRUE Apotheosis of the Customer

 You are, of course, lying

 In a desktop and licensed world, it’s very difficult, if not impossible  The tools available simply don’t work very well  Forums  E-mail  Screaming  Surveys  Screaming

 SaaS is 24/7/52  SaaS is persistent across the world  SaaS IS A COMMUNITY  Inherent in the model

 They have transformed their community into an active marketplace of ideas that manages, in the main, itself  Requirements management driven by the community  Implementation driven by community  Innovation driven by community

 Voting  Polls  Forums  Peer to peer communities  Chat

 Combined with extensive data mining of their customer base  This combination has never been seen by the industry before

 Product management is fundamentally transformed  No MRDs  No “tick list” management  No acting as a stand in for the “Voice of the Customer”  No acting as a stand in for the customer in the Agile model

 Product management is fundamentally transformed  Your PM organization flattens out  No “tick list” management  No acting as a stand in for the “Voice of the Customer”  No acting as a stand in for the customer in the Agile model  No MRDs  Requirements management goes back to development  PMs aren’t good at use cases  They’re not Rational mavens

 Product management is fundamentally transformed  Your traditional PM role disappears  The PPM becomes the PM  Customer community advocate/maven  User of the community management system and wizard of insights and support  Refiner of the system  PMs (and everyone else becomes accountable)  Business analysts may be needed

 Who do you think knows more about your system, you or your users?

 I bet they do (collectively)  You’re an expert at building your system  Think you’re smarter?  Test and measure (and be accountable)

 Mult-tennant  BI  Community system  Voting  Polls  Councils  Reputation management  Maven management  Peer to peer  FAQ/Wiki/Blogs

 All tightly integrated directly into your system  I mean “into”  This approach becomes integral to your marketing, sales, and development DNA  Once implemented, traditional PM training programs become obsolete

Understanding the Business Implications of SaaS Multi-Tenancy

by ScioSales on Aug 26, 2009

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Understanding the Business Implications of SaaS Multi-Tenancy — Presentation Transcript