taming the saas delivery - hcl technologies€¦ · taming the saas delivery channel ... a product...

Agora is designed to help Independent Software Vendors (ISVs) ride the SaaS wave confidently and effortlessly. Complete with modules for aspects like cus‐tomer management, OEM & partner management, metering, billing and sup‐port, Agora helps ISVs monetize their SaaS channels in a matter of weeks as opposed to months.

Taming the SaaS Delivery Channel

MADHAVA VENKATESH R, RAJESH VENKATESAN

IP GROUP

SAMARTHA VASHISHTHA ATG TECHNICAL RESEARCH


© 2008, HCL Technologies Ltd.

July, 2008

Contents

Introduction ................................................................................................................................................................ 3

Early trends in SaaS adoption ................................................................................................................................. 3

Growth outlook .......................................................................................................................................................... 3

Key drivers for SaaS .................................................................................................................................................. 4

Inhibitors ..................................................................................................................................................................... 4

Why SaaS makes sense for ISVs ............................................................................................................................. 4

But creating a SaaS offering remains a challenge... ............................................................................................. 5

SaaS as an emerging market .................................................................................................................................... 5

Agora—streamlining the complete SaaS lifecycle ............................................................................................... 6

Agora technology stack ......................................................................................................................... 6

Key features ................................................................................................................................................................ 7

Service lifecycle management .............................................................................................................. 7

Customer lifecycle management .......................................................................................................... 8

Metering and billing .............................................................................................................................. 8

Customer service .................................................................................................................................... 9

Integrated Security ................................................................................................................................. 9

Services integration ................................................................................................................................ 9

Tenant provisioning ............................................................................................................................... 9

OEM and reseller management ......................................................................................................... 10

Integration with back‐office systems ................................................................................................. 10

Essentials of service integration ............................................................................................................................ 10

Counting the benefits ............................................................................................................................................. 11


3

Introduction

Fueled by the popular interest generated by some recent offerings, Software as a Service (SaaS) has emerged as one of the buzzwords of the Web 2.0 lingo. The SaaS channel holds a special promise for ISVs, since it provides them with a mode of reaching out to a wider customer base, including small and medium businesses (SMB), whose collective strength is significant.

Early trends in SaaS adoption

Application areas such as Customer Relationship Management, Video Conferencing, Human Resources, IT Service Management, Accounting and Email are some of the initial areas where SaaS has shown signs of success.

Initially, it looked like SMBs would be among the first to adopt SaaS offerings in a major way. In actual fact, however, large enterprises have emerged as the largest class of adopters. A 2005 Forrester survey indicates that 25% of large enterprises in the US have already adopted SaaS in one form or another1. Interestingly though, SaaS adoption by the SMB segment has also shown a healthy growth of 58% between 2006 and 20072.

SMBs have traditionally found shrink‐wrapped enterprise applications priced out of their com‐fort range, but SaaS may actually encourage them to embrace IT to a greater extent. In fact, from this point of SaaS adoption in the SMB segment is a huge opportunity waiting to be capitalized.

Growth outlook

Gartner has predicted that SaaS will have CAGR of 22.1% through 2011 in the enterprise seg‐ment. The forecast is double that of the growth rate for the total enterprise software market. In terms of business software, trends indicate that by 2011, 25% of all new business software will be delivered as SaaS.3

1 Liz Herbert, “SaaS Gather Steam in Large Enterprises” http://www.forrester.com/go?docid=39701 June 23, 2006, page 1 [May 2008] -> represents when this site was accessed.

2 Michael Speyer, “SMB SaaS Adoption—Road Bumps Ahead in 2008” http://www.forrester.com/go?docid=42925, February 7, 2007, page 1 [May 2008].

3 Ben Pring and Alexa Bona, ”Six Business Challenges of SaaS for ISVs http://www.gartner.com/DisplayDocument?ref=g_search&id=517035, August 30, 2007, page 1 [May 2008].

http://www.forrester.com/go?docid=39701


http://www.gartner.com/DisplayDocument?ref=g_search&id=517035


4

A Forrester research indicates that HR, CRM and collaborative applications have emerged as the pioneering areas for SaaS adoption4. As far as verticals go, energy, utilities, and retail have paved the way for SaaS adoption5.

Key drivers for SaaS

The high penetration of broadband Internet among enterprises is a key factor that makes SaaS a viable delivery medium. There are several issues that confront the traditional on‐premise soft‐ware solutions. Such solutions require vendors to make upfront financial commitments for an‐cillary services such as support, integration, upgrades, and the like services.

Furthermore, customers are often unable to fully utilize the traditional, shrink‐wrapped appli‐cations6. Reasons include, though not limited to, over‐enthusiastic sales strategies like discounts and package deals to boost sales. For customers, SaaS brings the flexibility of paying just for the software they require and for the time they use it. That translates into a significant cost advan‐tage for enterprises of all sizes.

Inhibitors

The debate on whether or not SaaS offerings compromise the security of critical data is still going on. Enterprises are skeptical about transferring control of their information re‐sources to SaaS vendors.

Enterprises that require extensively customized applications are hesitant to adopt SaaS

The rise of reliable ʺshrink wrappedʺ open source applications may affect the growth of the SaaS market. SMBs in particular have demonstrated significant interest in free and open source software.

Why SaaS makes sense for ISVs

For ISVs, SaaS promises quicker monetization of their offerings and the opportunity to tap smaller enterprises. Trends indicate that SaaS will become a significant part of the ISVs offerings portfolio, but it will not replace the on‐premise software model anytime soon7.

4 Liz Herbert, “Competing in the Fast Growing SaaS Market” http://www.forrester.com/go?docid=44254, March 12, 2008, page 2 [May 2008].

5 Ibid, page 3.

6 Ben Pring and Alexa Bona, Six Business Challenges of SaaS for ISVs, Op cit, page 2. 7 Ibid, page 1.



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SaaS is also attractive to ISVs since it lets them offer incremental functionalities at incremental price increases over the base price. For this reason, some of the smaller accounts that are deemed to be unviable for the “boxed” software approach begin making sense under the SaaS model. Such accounts, often referred to as “the long tail,” by experts8, may help ISVs penetrate the SMB segment effectively9.

But creating a SaaS offering remains a challenge...

Although it makes sense for software vendors to adopt the SaaS distribution channel, they need to overcome several challenges. SaaS adoption calls for:

Access to the right tools to streamline adoption.

A product that meets the minimum technical criteria for SaaS enablement. Such criteria could include multi‐tenancy capabilities, configurability to support customization needs and easy deliverability over the Web.

Standardization of software across verticals to the maximum extent possible to reduce the need for custom variants. As a rule of thumb, software should be 90% standardized, with the remaining 10% requiring configuration for a domain. The key point here is to gather extensive cross‐domain knowledge.

Prior experience in hosting infrastructure with suitable monitoring and management ca‐pabilities. Traditionally, these areas have not been the strong points of ISVs.

Aspects such as service management and customer management to be automated using a service delivery platform.

The ‘delivery platform’ holds special significance for ISV’s offering services to the SMB seg‐ment, since the number of customers here is likely to be large. A suitable platform drives effi‐ciency through automation of critical processes and helps ISVs manage volumes effectively.

SaaS as an emerging market

While SaaS enablement is a relatively new and uncontested space, several players have already made an entry and some of them have started to offer consultancy services for implementing and maintaining SaaS products10. By contrast there are just a handful of companies that have

8 Chris Anderson, http://www.thelongtail.com/about.html, June 2008.

9 Ibid, page 3. 10 Dana Stiffler and Rob Bols, “Consulting in the Cloud: The Emerging SaaS Consulting Product

Development and Outsourcing Ecosystem”

http://www.thelongtail.com/about.html


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gone so far as to build a complete platform to address the salient aspects of SaaS enablement. Let’s look at a few of those players.

Opsource is a notable name in the space; more so after its acquisition of La Cayle, another early starter in the SaaS enablement area. Wrapped Apps offers a SaaS delivery platform incorporat‐ing features for customer management, relationship management and metering. Aria Systems and Jamcracker also have a considerable presence in the space. Leading enterprise software out‐fits like BEA (now acquired by Oracle) have also begun to turn their attention towards creating SaaS enablement frameworks. All these players are actively enhancing their products and ex‐panding the scope of their offerings through new and innovative features. All indications are that the list of SaaS players will only grow in the very near future.

HCL’s foray into the SaaS enablement space is a result of its long‐standing relationship with ISVs across several business domains. As a result, the company has been able to crystallize its rich experience in the area to develop an integrated platform that will help ISVs tap the SaaS channel quickly and with minimal efforts.

Agora—streamlining the complete SaaS lifecycle

Agora, HCL’s service delivery platform, has been built keeping in mind global best practices in software architecture. The framework, built on top of a service‐oriented architecture, is designed to give ISVs a head start by automating critical aspects of SaaS enablement. Agora is technology neutral and, as shown in Figure 1, it gels seamlessly with existing ERP, CRM and other back‐office applications via its Integration Service Bus, thereby effectively protecting exist‐ing ISV technology investments.

Support for open source platforms gives Agora a distinct cost advantage and ensures that the framework will not suffer from vendor lock‐in.

Agora technology stack Agora leverages open source technologies extensively. JBoss and MySQL enable its key frame‐work, while GWT 1.4, Google’s open source AJAX and JavaScript toolkit, powers the Agora Web UI.

In addition,

http://www.amrresearch.com/Content/View.asp?pmillid=21583. This paper takes a look at the SaaS strat‐egies of major consulting and third‐party services companies like IBM Global Business Services, HCL Technologies, Infosys, Wipro and Cognizant.

http://www.opsource.net/

http://www.wrappedapps.com/

http://www.ariasystems.com/

http://www.jamcracker.com/

http://www.amrresearch.com/Content/View.asp?pmillid=21583

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The Spring Framework enables inversion of control

Hibernate provides object/relational persistence

Mule serves as the enterprise service bus for the integration backbone

Acegi provides user authentication, SSO and identity management capabilities

Figure 1: Agora Architecture

Key information like customer registration, subscription and addition/ removal of users is pub‐lished to the Integration Service Bus (powered by Mule ESB), from where it is integrated into ISV’s products for provisioning and back‐office processing needs.

Key features

Some of the key Agora features are discussed below under heads relevant to a typical SaaS deli‐very paradigm.

Service lifecycle management Agora’s rich set of functionalities makes it a breeze for ISVs to deliver services over the Web to multiple tenants, i.e. customers who have subscribed to a service.


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Service definition and management

Agora gives ISVs the flexibility of defining new services on top of the platform and of associat‐ing them with relevant attributes. Attributes of the services define the SLAs and also the meter‐ing parameters.

Service plan definition and management

A service plan is an instance of a service that customers subscribe to. Agora lets ISVs define ser‐vice plans combining multiple services and also the validity periods for the plans. Agora sup‐ports the multiple subscription‐model including trial editions.

Offers

ISVs can define offers applicable for certain durations. Offers can be conditionally controlled based upon relevant service attributes.

Service catalogue

ISVs can group service plans into a service catalogue and offer them to the targetted customer segments.

Customer lifecycle management Agora facilitates end‐to‐end customer life cycle management, including functionalities to man‐age:

Sign‐up/registration

Subscription to one or more services

Management of account information and subscription

Creation, deletion and updates to user list and management of user permissions for ser‐vice access

Usage details

Suspension of accounts and unsubscription from services

Metering and billing Metering the consumption of services accurately and billing customers accordingly are critical for any SaaS offering. Agora provides the following functionalities to simplify metering and billing.

Metering consumption based upon parameters such as the number of users, total usage and number of transactions


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Integration with any metering mechanism through the extensible collector interface

Support for multiple billing cycles

Ability to define usage ratings specific to services

Easy integration with various payment gateways

Customer service Agora facilitates both reactive and proactive customer support. The platform comes with an in‐built notifications system that sends downtime and upgrade notifications to customers. The no‐tifications feature can also be used to send periodic newsletters to customers, prospects and leads.

Agora also offers a self‐service interface that customers can use to log tickets for issues related to services. The ISV can then take an appropriate action and close the tickets.

Integrated Security Agora supports SSO / delegated authentication to control customer access to services. Besides other security features, the following key considerations were incorporated into the design of the platform.

Multiple levels of security

o Customer specific Security: Ability to define customer specific policies and roles

o Security for Service providers: service provider level access control and service provider‐specific rules and policies

Fine grained access control through roles and privileges

Unified authentication and authorization

Services integration Agora is technology neutral and can be integrated seamlessly with services developed using any technology stack (J2EE, .NET or LAMP). It also works across different protocols like TCP/IP, HTTP and secure HTTP.

Tenant provisioning Agora facilitates the provisioning of tenants for a chosen application instance. It also routes te‐nant requests to the home instance and maintains tenant relationships.


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OEM and reseller management ISVs engage with OEMs and channel partners to resell their services. Due to their local reach and vertical capabilities, value added resellers are particularly useful in building localized ser‐vices and for tapping SMBs, a key customer‐base for SaaS offerings. Some of the reasons why ISVs will find Agora’s reseller management features attractive are as follows.

Creation of a Master Service Plan between the reseller and the ISV

Automated propagation of metering information to partners and consolidated part‐ner billing

Functionality for partners to create an isolated market place using the instance of Agora hosted by the ISV

Functionality for partners to re‐brand the interface to suit their branding guidelines

Integration with backoffice systems Agora addresses the ISVs’ need to integrate their SaaS business with existing back‐office systems. Agora is built using an event driven mechanism, wherein all key events from Agora are pushed to the Mule‐based enterprise service bus. The bus can be integrated easily with the ISV’s back‐office applications.

Essentials of service integration

There are three basic steps involved in integrating an ISV product with Agora.

The product needs to delegate authentication and user management to Agora. Alternatively, the product could base its authentication on a standard SSO server sup‐porting custom authentication modules.

The second step involves the automation of the provisioning process by enabling the propagation of customer, user and application configuration data to the SaaS enabled product.

Finally, the product should be able to provide custom metering information to Agora through an adaptor


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Counting the benefits

As a SaaS service delivery platform, Agora brings a host of benefits to ISVs.

Faster time to revenue, since Agora helps ISVs to launch SaaS delivery in as early as six weeks

Lower TCO, since it runs on the standard opens source source stack and is easily confi‐gurable, instead of requiring expensive and time consuming customization

Reduced revenue losses through rule‐based delinquency management and real‐time au‐thorization of services

High quality customer experience through a highly configurable user interface

Ability to tap new channels through integrated partner management

Easy integration with existing applications and back office infrastructure through a ser‐vice‐oriented architecture and bundled service bus

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