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


Q&A

 Your input and feedback makes this a
much better forum!


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


SaaS Evolution


Business View – Traditional Model


Business View – SaaS Model


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


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


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

SaaS Application Stack


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.

What SaaS Is Not

Pricing Model Revenue Model

Anything on the
Software
Web, in the
Delivery Method
cloud, etc.


What SaaS Is

Business Intellectual
Architecture Property

Technology Business Model


What SaaS Is

Functionality Commercially
delivered via web focused

Inherently Single-Instance,
Social Multi-Tenant


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


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.


Multi-Tenancy
Considerations

Application Data Layer

Infrastructure


Multi-Tenancy
Infrastructure
Economies of Resource
Scale Efficiency

Implementation
Virtualization Agnostic


Multi-Tenancy
Application
Human
Ease of SDLC
Resource
Management
Efficiency

No Customized Business
Versions Scalability


Multi-Tenancy
Data Layer
Aggregate Data Track Usage

Advanced
Implementation
Monetization
Agnostic Strategies


Multi-Tenancy
Data Layer Implementation
Unique
Must be Single
Database per
Instance
Tenant

Multi-Tenant Multi-Tenant
Database, Database, Shared
unique Schema Schema


ASP Model

Multi-Instance, Non Web-native
Single-Tenant Applications

Customizations No Inbuilt
cause Business Revenue Models
Scalability Issues


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

Understanding the Business Implications of SaaS Multi-Tenancy

 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

 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

 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

More Related Content

What's hot (20)

Similar to Understanding the Business Implications of SaaS Multi-Tenancy (20)

More from ScioSales (10)

Recently uploaded (20)

Understanding the Business Implications of SaaS Multi-Tenancy