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This is a presentation that I delivered as part of Softletter's SaaS University event in Washington, D.C. on July 20th, 2010. I discussed the challenges for most software companies of moving to a SaaS model and what choices they have for hosting the infrastructure required for the new solution.
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Your SaaS Infrastructure Choices:A Comparative Analysis
Bob RoudebushDirector of Sales Engineering, BlueLock, LLC
Agenda• The SaaS Shift• Cloud Computing for
SaaS Companies• PaaS versus IaaS– Characteristics– Cost
• Cloud Objections• Summary / Q&A
Key Takeaways
Cloud Is More Than
a Fad
Economics Beats
Technology
Trust and Experience
Matter
The SaaS Shift: What It Means for ISVs
New Business Models• Product
Pricing• Sales Model &
Compensation• Terms of
Service• Billing and
Reporting
Development Changes• Single-
Instance or Multi-Instance
• Multi-Tenancy• Web Services
Integration• Client-Server
versus Web-Based
Operational Discipline• Systems
Management• Security• Disaster
Recovery• Change
Management• Call-Center
Support
A Lot of Choices for SaaS Providers
Traditional Computing Model v. Cloud Computing Model
Application
Operating System
Hardware
Facility
Software-as-a-Service
Platform-as-a-Service
Infrastructure-as-a-Service
Value of Cloud Computing for SaaS Companies
Opex instead of Capex
Opportunity to Lower Costs
Align Expenses with Revenues
Improved Speed-to-Market
Competitive Advantage
The PaaS Option: Characteristics• True “Elastic” Scalability– Particularly suitable for “scale-out”
• Popular for Web-based Applications– Ruby on Rails, .NET Azure, etc.
• Reduces Development Time– Bundled Services: Security, Content Distribution, etc.
• Impacts Application Architecture– Configuration as Coding, Session State / Caching– Platform/Vendor Lock-in
The IaaS Option: Characteristics• Evolution of Existing Hosting Model– Virtualized x86 hardware on a standard OS– Deploy application “As-Is”: .Net, LAMP, etc.
• Increased Flexibility / Customization– Scale-Up or Scale-Down, Dedicated Compute Capacity– SaaS Vendor owns the “OS-App-Data” Stack
• Can Include Managed Services– Passes burden of operational discipline to provider– SPLA programs allow shift of software costs to provider
Relative Cost of the ChoicesComponents Colocation PaaS IaaS
Hardware & Software
License
Place
People
TCO
Capital Expense Operational Expense
Relative Cost: Hard Numbers for 5 and 10 Servers (1st Year)
Components Colocation PaaS UnmanagedIaaS
Managed IaaS
Hardware
License
Place
People
Total First Yr.Ongoing cost
$266.5k/$513k$120k/$213k
$106k/$172k$106k/$172k
$131.5k/$213.5k$131.5k/$213.5k
$63.5k/$117.5k$63.5k/$117.5k
$100k/$200k
$60k/$100k
$6.5k/$13k
$100k/$200k
$30k/60k
$6k/$12k
Included
$70k/$100k $100k/$150k
Included
$1.5k/$3.5k
$30k/$60k
Included
Included
$1.5k/$4.5k
$62k/$113k
Capital Expense Operational Expense
Cost Differential – Managed versus Unmanaged
Source: Toigo Partners International and HP
A Real World Example: Projetech
• 30 Servers Moved to BlueLock Virtual Cloud• Capital Avoided: $150K-$300KOpex instead of Capex
• Margin Improvement: 35%Opportunity to Lower Costs
• New Servers Provisioned when Client SignsAlign Expenses with Revenues
• Deployment Time Down to ~24 HoursImproved Speed-to-Market
• Winning on Agility and CostCompetitive Advantage
Typical Objections to Cloud Computing
Security• Understand risk
profiles• Take ownership of
security with provider• The right provider may
make you more secure
Reliability• Part infrastructure part
architecture• There’s “no such such
thing as a free lunch”• Perfect is the enemy of
Good
Control• How open is the
organization to outsourcing?
• Keep an eye on the “magic sauce”
• IaaS is a balanced approach
Summary• What’s your core competency?– Software versus Infrastructure
• Know what to look for.– Service Level Agreements– Security and Control– Expert Services/Support
• There are tangible benefits to Cloud for SaaS.– Ability to change cost structures– Economics will win over technology
• Analysts: by 2012, 80% of Fortune 1000 enterprises will be leveraging cloud computing in some way.
• BlueLock, founded in 2006, provides multiple IaaS cloud hosting offerings for SaaS companies.