• Multi-tenant Architecture: I discuss this in detail in my another blog post, so I will not elaborate on this, but suffice to say that for on-premise ISVs, this sort of architecture poses many challenges such as designing for scalability, availability, security, etc.
• Customization: Many ISVs are challenged with their customers constantly asking for customization at the UI level, at the workflow level and/or at the database level. What are the approaches to architecting such customization abilities? What the are pros and cons of such approaches? What are the alternatives?
• Operations: Managing and operating infrastructure was never a core competency for many ISVs but having to do this due to SaaS brings many challenges and possibly a few options/solutions.
• Security: Another common issue with SaaS that ISVs are faced with – safeguarding their customer’s data.
• Integration: This is the focus of this post. Integration becomes challenge because at the end of the day, the ISV’s customers need to use their product, integrate it in to their enterprise architecture and get at the data. Or, the ISV often times need to make their product flexible enough from an architectural standpoint to integrate with multiple legacy systems, ERPs, CRMs, etc. Every customer might have different legacy systems with different data formats. How does the ISV get insight into these systems which are behind firewalls while architecting their products? When it comes to integration, this is one of the fastest growing areas in 2008 for ISVs to deal with.

So, what options does an ISV have to deal with the integration headache?

• Let the customer deal with it. There are many ISVs out there that just do not have the technical know-how, the time, the money or the resources to take on this additional burden. They let their customers figure out how to handle the integration challenges. This is fine for many ISVs, but the reality is that more and more customers are getting tired of having to figure out the integration issues by themselves. The other thing is that if ISVs want to really start differentiating themselves from the competition, they need to figure out how to help their customers with this problem. Any ISV that sells packaged integration solutions along with their product (for an additional cost of course) would get the attention of their customers and race ahead of their competition (given that they have a comparable product to their competition).
• Engage professional services: Some ISVs might have the time, money and resources to recruit, train and deploy their on professional services arm to augment their product sales. This is a dual strategy for earning revenue for the ISV (think IBM, BEA, etc) – both via their products and their professional services. But the challenge for the ISV is again time, money and resources. Smaller ISVs just do not have that kind of money and resources to build out their own professional services team. And even if they do, they are often a small team that are probably accruing Platinum Elite status on Northwest Airlines flying around all the time and being stretched to the max, thereby keeping customers waiting for someone to be available once they get off a project.
• Partner with System Integrators: This is a very feasible solution to this problem. SIs are working on integration issues day in, day out with customers in different verticals and it makes sense that they have the expertise and know-how to either go from customer to customer and help them build out these integration bridges or maybe even work with the ISV to build out a custom integration solution for different legacy platforms.
• Build their own integration platform: This would be the ideal solution for ISVs. Take the time to build out our own integration solution/platform/adapters and sell these or give them away for free to your customers as a value add to stand out from your competition. This is just as, if not more intensive as the option above and you will not see many ISVs take this approach.
• Leverage Integration-as-a-Service vendors: This is another feasible approach to the problem. Partnering with such vendors allows the ISV to get different kinds of integration goodies on demand. As and when ISVs need to add integration for additional legacy applications, ISVs an leverage the integration services provides by such vendors to solve the integration challenge.

In essence, I think that just like infrastructure and operations is not a core competency of many ISVs and many such ISVs are looking to outsource that by using managed hosting or cloud computing and virtualization services, integration too is not a core competency of many ISVs and pursuing an integration partnership with an SI like Patni would make sense for many ISVs. Patni has a deep understanding of legacy integration challenges and we have solutions to integrate to many different legacy environments, which can be packaged and sold as a value added service to the consumer of the SaaS product.

So who are the different players in the SaaS world:

• ISVs: These are the people that are building the products that are being offered as a service. They are the ones that are writing the code and creating a product which can be offered via the Web as a service for consumption.
• Hosting Providers: More often that not, I see ISVs teaming up with hosting providers to host their solution. Let’s face it – hosting, managing the infrastructure and data centers is not a core competency for ISVs. Plus, this is the commoditized part of the SaaS equation, where there is no real competitive differentiation for an ISV to do all this heavy lifting. In a previous post, I talk about this in more detail. An ISV can choose to host their own product, but there are advantages to outsourcing this to the players who are dominant in this space and that in turn allows the ISVs to focus on their competitive advantage – their IP and how to transfer that IP to code.
• Consumers: These are the people that want to consume the products that ISVs are building. They can be categorized into those who are money conscious, data security conscious and SMBs. Money conscious consumers are typically in the B2C space. They want to pay next to nothing to consume the product and are ok with viewing advertisements or providing marketing data in turn for free usage. On the other side, you have the large enterprises who are very concerned about the privacy of their data and are willing to pay for securing their data and using the product. Then, you have the small business in between who are cost conscious, but also want some level of data security.
• Integrators: I will dedicate a whole new topic to this area, but I will come out and say this for now – integration is probably the biggest challenge that both the ISVs and customers face when considering SaaS. Whereas it is just not feasible for ISVs to focus on building out a complete integration layer for their product, I predict that 2008 and 2009 will be the year that Integration-as-a-Service vendors will crop up with the intention of easing these integration challenges that ISVs and their customers face.
• SaaS Marketplace: This is a new and emerging area in the SaaS space which acts as a broker, bringing SaaS service providers in touch with service consumers – sort of like a registry of services in SOA. This is the monetization aspect of SaaS and it is an interesting and emerging area.

Ok, so now that we have identified the core actors, what are the concerns of each? The concerns really fall in to 4 main categories:

• Build: This is where the ISVs fall. They are concerned with architecting a SaaS product. So their concerns are primarily around technical aspects such as how do I create a multi-tenant architecture? How do I secure the data? How do I build a product that scales from an architectural perspective (scaling from an infrastructure perspective can also be the concern of the ISV if they are hosting the SaaS product). How do I monetize the product? How do I provide for customization at various levels? What do I use to build out a rich user interface to provide a more compelling user experience?
• Run: This is the area of concern for the hosting provider (which, in some cases, might be the ISV themselves). Do you buy your own servers? What type of SLAs do you provide? Do you depend on cloud computing infrastructure for storage as a service? How about providing a platform to ISVs to help them with security (security as a service), logging, etc that every ISV has to deal with. Then, there is always the usual – scalability, availability, performance, etc from an infrastructure perspective.
• Integrate: Once you build your SaaS solution and host it and get it ready for consumption, you will need to address integration issues that your customer will face. There are a few options for ISVs, one of which is to partner with companies who focus on providing solutions for these integration issues.
• Consume: At the other end of the spectrum are the consumers. As identified earlier, they can be B2C customers or SMBs and large enterprises. For SMBs and large enterprises, there are a few core areas of concern:
  • Integration – Whereas SaaS is all about a service based architecture and the promise of SOA is easier integration, this is true to a certain extent with SaaS (in that SaaS is an enabler of integration) but the reality is that there are still many integration challenges with SaaS from a consumer perspective, and the problem is a 2 way street – consumers need to integrate the SaaS services in to their back end systems and legacy products, but often do not want to deal with the headache of doing so or some times might not even have the technical capabilities to do so. On the other hand, ISVs know that they have to integrate their product with legacy applications in their customer’s enterprise landscape, but often times, these legacy systems are behind firewalls and the ISV has no clue as to what these systems look like or what the data residing in those systems look like. There are some ways to overcome this that will also be discussed in subsequent post. So, the integration problem is real and is one that is both the ISVs and consumers need to deal with if the ISV wants to go to the next level. ISVs and consumers need to have an integration architecture or blueprint in place to solve common integration challenges. ISVs that provide this blueprint and/or the underlying components will stand out from the competition.
  • Security – I already touched upon this earlier, but SaaS data security and privacy concerns are a big part of the SaaS picture. A whole topic will also be dedicated to this area, but the challenge here is again a 2 way problem – both the consumer is worried about their data security and the ISV needs to architect data security in to their SaaS product. Multi-tenant single instance architectures are often touted as the best approach to SaaS, but in my mind, this is somewhat debatable. I am not saying that that is not a good architecture to follow. I am saying that ISVs should not blindly follow that architecture all the time since there might be some real benefits to be gained by using a single database per tenant model. These issues will be explore more in further posts.
  • Compliance – Aside from the above concerns, enterprise level consumers also need to adhere to SOX, HIPAA and all sorts of other regulatory compliance and having your data now live outside your firewall causes all sorts of concerns for enterprise consumers.
• Monetize: As mentioned earlier, this is an emerging area of SaaS. There are companies out there that are providing a lot of the services that an ISV needs when thinking of building a SaaS solution. Things like billing and metering, managing subscriptions, etc. In addition, some of them act as registries of services. Just like a SOA registry allows service consumers to search for and utilize a service, these companies provide registries of SaaS services pertaining to specific business verticals using metadata. So the companies that operate in this space are concerned with many things, amongst them being development, architecture, integration and security.

For service companies like Patni, each of these areas provide unique challenges and hence our service offerings on SaaS are built around each of these areas. At Patni, we realize that SaaS is a multi-faceted, multi-pronged approach and that is why our service offerings are centered around the areas of business enablement, technology enablement and operational enablement. Feel free to contact me for a more detailed description of our offerings and how Patni can help you with your SaaS initiatives.

]]> http://sumanchaudhuri.wordpress.com/2008/05/29/saas-ecosystem/feed/ 1 sumanchaudhuri http://sumanchaudhuri.wordpress.com/2008/01/02/it-focus-for-2008/ http://sumanchaudhuri.wordpress.com/2008/01/02/it-focus-for-2008/#comments Wed, 02 Jan 2008 17:30:02 +0000 sumanchaudhuri http://sumanchaudhuri.wordpress.com/2008/01/02/it-focus-for-2008/ ]]> I thought I’d start off the new year with a post on my thoughts for where the IT focus will be for 2008. There are articles that discuss IT trends for 2008 such as Web 2.0, green IT, etc. However, I do not think that these areas are going to be a focus for most corporations in 2008. They will definitely be a focus for some, but for the majority of companies, I think that these topics are going to be on their radar and they might start experimenting with it, but nothing more than that.

So having said that, here are the topics that I think will be high on the agenda of most CIOs:

• Integration: Yes, it’s still an issue given aging systems, legacy applications, emerging platforms, M&A activity, need for integrating external partners and need for business agility. With all the talk around SOA and integration, it’s easy to forget how many companies yet have not adopted SOA and are still struggling with integrating their heterogeneous systems. Whether it is via adopting SOA or homegrown means, integration will continue to be a focus for 2008 for most CIOs.
• Cost Containment: Ask most CIOs what is one of their top 3 initiatives and most will reply cost containment. The need to manage the cost of IT is high on their agenda and should continue to be so this year as well. The trick is to figure out how to use technology to achieve this business goal. SOA for business agility? Virtualization for hardware and software consolidation? SaaS for increased business channels? Open Source to reduce licensing costs? Better customer service using BI? Reduce energy costs? Manage vendor better via standardization? Pursue an outsourcing strategy? All of these will keep the CIO up at night.
• Process Automation: Current processes are manual, cumbersome and error prone at many companies. The need to automate these and hence cut costs, save time and improve customer service (both internal and external customers) will continue to drive focus in business process automation. In an effort to align business and IT, CIOs not only need to figure out how to automate their processes, but also how to translate the process automation from concept (business folks explaining what needs to be done) to the implementation (how IT folks will get it done).
• Business Intelligence/Data Mining: In order to improve customer service, you need to know your customer. What better way to do so than to pursue a BI/DM strategy to clean up your data, structure it for on-demad reporting and surface that via a myriad of fancy dashboards? BI/DM will continue to be popular this year.
• Virtualization: I think that CIOs realize the full value of virtualization already. It is a matter of putting it into practice. A lot of companies already have a virtualization strategy and those that do not will start looking into it this year. Data center virtualization, OS virtualization, application and JVM virtualization, along with sophisticated monitoring and management tools (the most important piece of a virtualization solution) will continue to grow.
• SaaS: Software as a Service will build on the SOA foundation to provide increase revenue channels for many companies. Despite its complexities (getting used to a different business model, proper infrastructure, licensing models, security, etc), many companies should pursue SaaS this year.
• Open Source: Statistics say that one in three small and medium sized business are adopting open source as their platform of choice. With the obvious cost savings, increased developer pool, more control over patches and deployment and faster time to market as a result of increased ramp up in infrastructure (think open source ESB, portal, CRM, etc), many companies will need an open source strategy to become more innovative in 2008.
• M-Commerce: Especially in banking and retail, I expect this to be a major focus this year, given the immense popularity of cell phones, increased band width and customer openness to doing business on the web. Security will still be a concern, but I expect a lot of focus on building out mobile software and infrastructure this year. Add to this the popularity of Mobile 2.0 and Web 2.0 mashups, along with an insatiable appetite of the Gen Y population to get things done while on the move and you can see why reaching customers via mobile phones will be a top focus area for many companies.
• Security: With the focus around SOA, SaaS, M-Commerce, increased integration between lines of business, exposing data as a service and other key initiatives, security should remain a focus as it is deeply ingrained in each of these areas for the initiatives to be successful.

What!?? No Web 2.0?? No social networks?? Don’t get me wrong. Web 2.0, green IT, etc are all cool and trendy, and they definitely will appeal to a section of companies out there. Web 2.0 will definitely find applicability in the BI space, as well as in areas of marketing, consumer based applications, building brands and areas where people buy products because they trust their friends and social networks, but I do not think that these are going to be the main agenda items for most CIOs who are focused on the enterprise. Web 2.0 is a trend as are social networks and I think that in the coming years, they will become a focus for many, but for now, I feel that they will remain a trend in 2008.

If you feel differently, or feel that I’ve missed out on some key topics, then I’d love to hear your opinions.