understanding the business implications of saas multi-tenancy
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Business Implication of SaaS
Multi-Tenancy
July 16 2009
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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
Scio Consulting International, LLC. All rights reserved.2
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Speakers
Mike Dunham –» Principal Consultant at Scio Consulting» [email protected]» http://www.sciodev.com
Lincoln Murphy –» Managing Director of Sixteen Ventures» [email protected]» http://www.sixteenventures.com
Rick Chapman» Managing Director of Softletter & SaaS University» [email protected]» http://www.softletter.com
Scio Consulting International, LLC. All rights reserved.3
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Q & A
Your input and feedback makes this a much better forum!
Scio Consulting International, LLC. All rights reserved.4
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What is Software as a Service (SaaS)?
July 2009
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What is Software-as-a-Service?
Software as a Service (SaaS) is a model of softwaredelivery 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
Scio Consulting International, LLC. All rights reserved.2
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SaaS Evolution
Scio Consulting International, LLC. All rights reserved.3
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Business View – Traditional Model
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Business View – SaaS Model
Scio Consulting International, LLC. All rights reserved.5
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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
Scio Consulting International, LLC. All rights reserved.6
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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
Scio Consulting International, LLC. All rights reserved.7
Maturity
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Existing Product - Levels of “SaaSification”
8Scio
Characteristic Hosted (ASP Model)
Application Virtualization
Approach
Full SaaS Approach
Tenancy Model Single Tenant Single Tenant with Tenant Mgmt. Tools
Multi-tenant
Modification Required to Existing App
Minimal Minimal Moderate to Extensive
Operations Overhead
Highest Moderate Lowest
Scalability of the Approach
Lowest Low Highest
Initial Investment
Lowest Moderate Highest
“SaaSification” Levels
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Key Technical Aspects of SaaS
Multi-tenancy Scalability
» Load balancing» Routing
Availability Performance Configuration-driven
Customization» look and feel» Functionality
Integration Security
» Identity management
Usability Communication
» e-mail, sms, etc.
Globalization Audit and compliance Backup and recovery
9Scio
These factors influence App Architectureas well as Infrastructure Architecture
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SaaS Application Stack
Scio Consulting International, LLC. All rights reserved.10
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Multi-Tenancy in SaaS: The Business Case
Presented July 16, 2009 via WebinarHosted by Scio (http://sciodev.com)
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IntroductionLincoln Murphy, Founder & Managing Director
Sixteen Ventures
Copyright© 2009 Lincoln Murphy / Sixteen Ventures. All Rights Reserved.
15+ Years On-Demand Product
Development
Started and Sold F1000-targeted SaaS Company
SaaS Business Architect
I help SaaS Vendors make more money!
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What SaaS Is Not
Pricing Model Revenue Model
Anything on the Web, in the cloud, etc.
Copyright© 2009 Lincoln Murphy / Sixteen Ventures. All Rights Reserved.
Software Delivery Method
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What SaaS Is
Business Architecture
Intellectual Property
Technology
Copyright© 2009 Lincoln Murphy / Sixteen Ventures. All Rights Reserved.
Business Model
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What SaaS Is
Functionality delivered via web
Commercially focused
InherentlySocial
Copyright© 2009 Lincoln Murphy / Sixteen Ventures. All Rights Reserved.
Single-Instance, Multi-Tenant
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Decision Time:Are you a SaaS Vendor or not?
Hybrid is hard; pick one
Mindset and Focus
Revenue Recognition
Issues
Copyright© 2009 Lincoln Murphy / Sixteen Ventures. All Rights Reserved.
Make the decision and stick with it
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Remember!
Copyright© 2009 Lincoln Murphy / Sixteen Ventures. All Rights Reserved.
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.
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Multi-Tenancy Considerations
Application Data Layer
Infrastructure
Copyright© 2009 Lincoln Murphy / Sixteen Ventures. All Rights Reserved.
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Multi-Tenancy Infrastructure
Economies of Scale
Resource Efficiency
Copyright© 2009 Lincoln Murphy / Sixteen Ventures. All Rights Reserved.
Implementation AgnosticVirtualization
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Multi-Tenancy Application
Ease of SDLC Management
Human Resource Efficiency
Business Scalability
Copyright© 2009 Lincoln Murphy / Sixteen Ventures. All Rights Reserved.
No Customized Versions
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Multi-TenancyData Layer
Aggregate Data Track Usage
Implementation Agnostic
Advanced Monetization
Strategies
Copyright© 2009 Lincoln Murphy / Sixteen Ventures. All Rights Reserved.
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Multi-TenancyData Layer Implementation
Must be Single Instance
Unique Database per
Tenant
Multi-Tenant Database,
unique Schema
Multi-Tenant Database, Shared
Schema
Copyright© 2009 Lincoln Murphy / Sixteen Ventures. All Rights Reserved.
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Remember!
Copyright© 2009 Lincoln Murphy / Sixteen Ventures. All Rights Reserved.
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.
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ASP Model
Multi-Instance, Single-Tenant
Non Web-native Applications
No Inbuilt Revenue Models
Copyright© 2009 Lincoln Murphy / Sixteen Ventures. All Rights Reserved.
Customizations cause Business
Scalability Issues
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SaaS BusinessArchitectureConsultants
http://sixteenventures.com
http://twitter.com/lincolnmurphy
http://linkedin.com/in/lincolnmurphy
lincolnmurphy (972) 200-9317
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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
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All numbers referenced are from The 2009 Softletter SaaS Report
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47%
53%
Requirements Integrated
YesNo
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0%
10%
20%
30%
40%
50%
60%
70%
80%
38%
61%
76%
200620072008
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7%18%
23%28%
24%
Major Upgrade
Less than once a year
Once a year
Twice a year
Three times a year
No set release schedule; as developed
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67%
33%
Agile?
YesNo
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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
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The TRUE Apotheosis of the Customer
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You are, of course, lying
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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
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SaaS is 24/7/52 SaaS is persistent across the world SaaS IS A COMMUNITY Inherent in the model
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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
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Voting Polls Forums Peer to peer communities Chat
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Combined with extensive data mining of their customer base
This combination has never been seen by the industry before
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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
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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
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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
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Who do you think knows more about your system, you or your users?
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I bet they do (collectively) You’re an expert at building your system Think you’re smarter? Test and measure (and be accountable)
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Mult-tennant BI Community system
Voting Polls Councils Reputation management Maven management Peer to peer FAQ/Wiki/Blogs
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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