SaaS: A Boon Or A Curse For ISVs?

June 3, 2008 at 9:02 pm 1 comment

SaaS is the latest buzzword in the ISV space. There are lots of articles on the benefits of SaaS for ISVs which I will not go in to in this post. However, as some of my previous articles have discussed, there are some real problems with SaaS as well, which sometimes makes me think that SaaS is not always a boon for ISVs. Not having a well thought out SaaS strategy can be a real problem for ISVs who take the plunge without due consideration. So what are some of the real challenges for ISVs that are thinking about SaaS?

  • 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.

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

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1 Comment Add your own

  • 1. saasy  |  July 25, 2008 at 2:01 pm

    Any thoughts on the complexity of testing in a SaaS environment?..if you think this topic deserves a separate post

    Reply

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