Five More Myths About SaaS and Cloud Computing

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1 A For Senior Corporate Decision-Makers and Cloud Computing What You Really Should Know To Compete In Today s Rapidly Changing Marketplace An Independent analysis published on behalf of SoftServe.

2 Executive Summary Despite the rapid growth of Software-as-a-Service (SaaS) and a widening array of Cloud Computing alternatives, there are still many myths about these web-based services and solutions which prevent organizations from fully capitalizing on these powerful resources. This whitepaper will examine and dispel five of the most common myths pertaining to SaaS and the Cloud so organizations of all sizes across every industry can optimize the value of them to gain a competitive advantage in today s rapidly evolving marketplace. These myths are: 1. Major Infrastructure-as-a-Service (IaaS) providers handle application availability and scalability automatically. 2. The best way to develop SaaS applications is by using a Platform-as-a-Service (PaaS). 3. The business models and pricing practices for IaaS/PaaS/SaaS are consistent, easy to understand and compare. 4. Independent software vendors (ISVs) are well-prepared to deliver and operate SaaS-based solutions. 5. SaaS is an either/or challenge to an organization s use of on- premise applications. Myth #1: Major IaaS Providers Handle Application Availability & Scalability Automatically Many enterprises and ISVs are under the misimpression that any of today s leading IaaS providers can handle their application and scalability requirements in an automated fashion which fully alleviates them of the responsibility of ensuring the reliability and performance of their software solutions. While there is no question that today s leading IaaS providers offer a wide array of powerful computing services on an on-demand basis at very attractive prices, users must keep in mind that they get what they pay for. The widely reported recent service outages of Amazon Web Services (AWS), Microsoft s Azure platform and others clearly demonstrate that the IaaS capabilities which underlie these offerings require additional management skills and resources to safeguard against availability and scalability issues. The caveat emptor of the IaaS world is that the services which offer the most attractive prices are those which also include the least service level assurances or management controls. Therefore, users of today s IaaS alternatives must recognize that the burden of service availability and scalability falls on their own shoulders, and will p.2

3 require additional investments in IaaS management skills and tools, or add-on IaaS management services. In fact, software and business decision-makers should be aware that IaaS comes in many shapes and sizes, ranging from public unmanaged services such as AWS EC2 to private managed IaaS offerings from companies like Rackspace and others. Navigating through the right IaaS options to match an organization s application requirements requires specialized experience. For instance, as SaaS providers evolve from a collection of lighthouse customers to hundreds or thousands of users, or tenants, there is a greater need for high availability, SLA fulfillment, data durability, and operations automation to ensure customer satisfaction. Depending upon the nature of the SaaS application, zero downtime and survival of data center outages can be absolute requirements. This means that proactive failure detection and rapid traffic rerouting to hot standby server farms may be required. SoftServe has helped many of its enterprise and SaaS/ISV clients design, develop and deliver their applications via a wide array of IaaS solutions. For example, Soft- Serve helped a fast-growing SaaS social commerce provider automate the IaaS operations of its worldwide server farm infrastructure for the SaaS vendor s platform on multiple IaaS provider data centers. It also deployed Content Delivery Network (CDN) technology to improve website read efficiency through caching, and support instant failure detection and traffic rerouting to other IaaS resources. When the majority of business applications were deployed inside private enterprise networks, public visibility into application downtime was non-existent. As organizations deploy more critical enterprise applications on IaaS resources, downtime is an increasingly public event because it can impact a greater number of users. Now, there are rising expectations for application uptime and transparency regarding application performance. Since individual IaaS providers do not provide instant or built-in solutions to meet these availability and durability requirements, SoftServe has developed automated operations frameworks to meet these requirements. Myth #2: The Best Way to Develop (SaaS) Applications Is By Using a PaaS Today s PaaS offerings can certainly make it easier to develop new applications, just as their IaaS counterparts can make it easier to access raw compute power and service delivery capabilities. Many believe the best way to deliver a robust SaaS application in a short timeframe is by using a PaaS tightly integrated with IaaS. However, an important set of concerns can arise when considering the widening assortment of PaaS offerings in the marketplace. First and foremost is the concern about vendor lock-in. When an ISV or enterprise decides to build an application on a PaaS, it is placing its trust in the financial viability and future direction of the PaaS vendor. While many of the leading PaaS vendors will certainly be around for a long time to come, their corporate strategies will cer- p.3

4 tainly change and users of their PaaS capabilities will be at the mercy of the PaaS vendor s shifting priorities. For instance, PaaS vendors who also offer their own applications might decide to pursue new market opportunities which could make them an unwitting competitor of an ISV which is using their PaaS solution. It is for these reasons that many ISVs and enterprises are refraining from relying entirely on a single PaaS. Instead, they are leveraging multiple PaaS offerings and pulling them together with a variety of integration tools to meet their unique business requirements. SoftServe recently created a multi-tenant, SaaS application for an international media company with a substantial education business unit. The application helps educators identify students at risk of dropping out of school, and delivers precise student progress information to guide corrective processes. The key requirement of the new SaaS app was completion within a three-month development and delivery timeframe in time for the new school year. SoftServe met the tight timetable by extending an existing open source Java SaaS framework. This framework extension approach resulted in the delivery of a fully functional SaaS application on Rackspace s IaaS in just 90 days, without relying on a proprietary PaaS. It also provided sufficient horizontal scaling to support up to three million students. Myth #3: The Business Models & Pricing Practices for IaaS, PaaS, SaaS Are Consistent, Easy To Understand & Compare While today s IaaS, PaaS and SaaS offerings are all based on the same fundamental Cloud Computing concepts, they are not necessarily packaged and priced the same way. In fact, the Cloud market is experiencing rapid growth and a proliferation of players, causing a Cloud Rush affect that is confronting ISVs and enterprises with a confusing array of price and packaging models for various bundled and unbundled offerings. The fundamental and essential characteristics of any true Cloud solution are: Resource Pooling Rapid Elasticity Broad Network Access On-Demand Self-Service Measured Service While these may imply a subscription pricing model, the packaging and pricing of Cloud services can vary widely and may not include a pay-as-you-go option. And, in some cases a pay-as-you-go model may not be the most economical if an ISV or enterprise plans to deliver or utilize an IaaS, PaaS or SaaS on an ongoing basis. Today s pricing models include multiple usage methods, subscriptions, perpetual p.4

5 licenses, support options, and more.figure 1 illustrates packaging and bundling options analysis for IaaS. Figure 1 IaaS Comparison Source: SoftServe Therefore, it is important for users and vendors of these Cloud services to select the right options based on the pricing models and service bundles which match their unique business requirements. SoftServe helps ISVs and enterprises compare the price/performance characteristics of different IaaS, PaaS and SaaS options to fit their operating requirements and achieve their business objectives. Myth #4: ISVs are Well-Prepared to Deliver & Operate SaaS- Based Solutions Developing and delivering a SaaS solution is fundamentally different than creating and selling a traditional, on-premise application. It not only entails a different set of development skills, but also an entirely different go-to-market approach. Few established ISVs have succeeded in adding a true SaaS solution to their product portfolio through organic development. And, even fewer have succeeded in migrating their entire product portfolio from an on-premise application to an on-demand service. Instead, most ISVs have encountered a number of significant structural challenges attempting to develop and deliver new SaaS solutions. These challenges include transitioning from: p.5

6 Single tenant and dedicated hardware resources to multi-tenant and shared/virtual machine resources. Enterprise IT to vendor deployment and support operations responsibility and burden for success. Periodic updates and upgrades to continuous product enhancements. ISVs must not only re-architect their software and restructure their operations, they must reorient their corporate cultures to be more service-oriented and realign their financial reporting methods to comply with service revenue recognition requirements. This means the ISV can no longer report the full value of the software acquisition costs upfront to help finance their operating costs. Instead, they can only record revenues incrementally over the duration of the subscription period. This places added financial pressures on ISVs which also must become more agile to keep pace with rapidly evolving customer requirements and escalating competitive offerings. SoftServe frequently helps ISVs address the unique development and delivery challenges associated with new SaaS initiatives, including: Agile development training and process management User-interface experience testing Security and scalability planning Service level assurance programs Performance monitoring and measurement SaaS Operations Framework Myth #5: SaaS Is an Either/Or Challenge to an Organization s Use of On- Premise Applications Although it might be ideal to develop and deliver a true, Cloud-based, multi-tenant SaaS solution to meet the rapidly changing needs of today s software decision-maker, it may not be feasible or necessary in every case. In some cases, the application user is simply looking for a web-based application which can be acquired on-demand, but doesn t require a multi-tenant solution. In other cases, the user may prefer to acquire and download an application from the Cloud behind their firewall and obtain regular updates via a subscription service. In either case, most organizations will continue to operate in a hybrid environment with a mix of on-premise and on-demand hardware and software resources. Therefore, nearly every organization will need to have their new SaaS applications integrate with an assortment of legacy systems, software programs and data sources that are already deployed in their operations. Figure 2 illustrates some of the common SaaS integration patterns. p.6

7 Figure 2 Common SaaS Integration Patterns Source: SoftServe The SaaS market is starting to see a new generation of on-demand solutions emerge which can be deployed anywhere behind the firewall, in the Cloud, or a hybrid and integrated mixture. The important point is that ISVs and enterprises must carefully determine the right deployment model(s) to achieve their business objectives, and design or select the right SaaS development and delivery methodology to meet their needs. SoftServe frequently helps ISVs and enterprises identify the best SaaS design and integration methodologies to create successful hybrid environments that can absorb new on-demand solutions which enhance and extend the useful life of existing onpremise applications. Summary and Conclusions Although SaaS is gaining widespread acceptance and experiencing tremendous growth, many myths about today s on-demand solutions still linger. These misconceptions either discourage ISVs or enterprises from migrating to SaaS, or the myths prevent them from gaining the full business benefits of today s leading SaaS solutions and strategies. This whitepaper has attempted to dispel five of the most common myths about SaaS, PaaS and IaaS so software decision-makers can fully capitalize on them. p.7

8 *************** This independent analysis was sponsored by SoftServe. About SoftServe, Inc. SoftServe is a leading global provider of proven high quality software development, testing and consulting services. At SoftServe, we are passionate and committed to bringing the best commercial software to market for new and established independent software vendors and softwareenabled businesses. To accomplish this, we created AbilitonTM, an approach that develops an assessment and certification framework making it simple to create the right standards, certifications, tools and team structure to repeatedly deliver development success for our clients. Through the years, SoftServe has partnered with hundreds of companies globally on a wide range of products and technologies, successfully completing over 2000 projects. Founded in 1993, SoftServe is headquartered in Fort Myers, Florida, with an award-winning development organization based in Ukraine and the Philippines. For more information, please visit About THINKstrategies, Inc. THINKstrategies is a strategic consulting services company formed specifically to address the unprecedented business challenges facing IT managers, solutions providers and investors today as the technology industry shifts toward a services orientation. The company s mission is to help our clients re-think their corporate strategies, and refocus their limited resources to achieve their business objectives. We help enterprise decision-makers with their sourcing strategies, IT solutions providers with their marketing strategies, and venture firms with their investment strategies. THINKstrategies is also the founder of the Cloud Computing Showplace ( the largest vendor-independent, online directory and best practice information resource center. For more information regarding our unique services, visit, or contact us at info@thinkstrategies.com. p.8