SaaS Ecosystem

May 29, 2008 at 9:24 pm 1 comment

Today, I wanted to spend some time setting the stage with regards to the different players in the SaaS ecosystem and the different challenges that they face. Understanding these different players/actors and the challenges that pertain to them helps us at Patni create our SaaS service offerings around these concerns, hence making our service offerings modularized and relevant by the area in which you play in.

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.


Entry filed under: cloud computing, SaaS. Tags: , , , .

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1 Comment Add your own

  • 1. Landon Hoover  |  June 3, 2008 at 4:45 pm

    First of all, this is a fantastic blog post. Thank you.

    I was curious if you could outline/discuss some of the resources that SaaS providers can utilize to overcome many of the challenges you have listed above. Specifically, if you could comment on monetizing SaaS and metering for SaaS. There are a few companies, such as evapt (, that offer such services…

    I think it would be very valuable for all your readers to understand what resources are available and how those resources can/should be compared.


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