Category Archives: SAAS

Would you edit your video on the cloud?

Man, these days everyone want to offer everything on the cloud. Is it these type of cloud companies or the economy which is making people live in rainy days? I just came across a company that’s offering media solution on the cloud. These days everyone uses Youtube for their videos. Even large corporations are happy to use it. So, why would anyone go and host their content with some small and unknown company. Well, that’s actually not my point, everyone starts small. But the big put-off for me was about the ability to edit video online, on the cloud!

Why would I want to do that? After a lot of frustration with my 4GB laptop that couldn’t even support editing simple videos, I finally had to buy a 27″ iMac with 16 GB RAM and Core i7 CPU. With that I get a smooth HD video editing experience using iMovie. Of course, iMovie doesn’t make use of multiple cores, but I believe the latest Final Cut Pro has that ability. Even as
an amateur HD video editor I can say that the CPU and I/O are the biggest bottlenecks to edit video. Now imagine doing it on the cloud over the internet. Yes, the internet speeds are spectacular these days but still I don’t think are sufficient for editing video. In fact, some video editors can’t even provide live feedback of the editing and require special rendering step.

My suggestion would be to buy a mac and use the iMovie that comes for free with iLife and get going. If the passion or the need increases, then move to Final Cut Pro. It’s a very easy and inexpensive solution (yes, SAAS seems cost effective paying monthly, but in the long run, a year or two, you will break even).

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In SAAS, We Trust

The future is going to be dominated by SAAS, no doubt. But there will always be concerns when doing that transition. For example, would I be able to customize the solution to my needs? Am I going to have a good response time? And so on. This is regarding the concern related to the service level of the SAAS solutions.

I didn’t know till a friend of mine told me that some of the SAAS companies actually provide a status page on the availability of their systems. For example, Google provides a status info for it’s apps, Amazon for it’s web services and Sales force for it’s SAAS solution. I was doing a bit of research on all of this and today I saw something strange.

Salesforce.com has it’s status information at a website aptly named at http://trust.salesforce.com/ where they provide the number of transactions and average response time, the health status of the various servers on a daily basis. This should give a good indication to people considering SAAS solution on what they can expect. That is, if this information can be trusted.

Salesforce.com has a very impressive average response time that is less than 0.3 seconds. For an enterprise application, where many top vendors probably can’t even meet 3 seconds or even more for an on-premise hosted solution, providing a 0.3 seconds response time or less for a multi-tenant model is quite impressive. Of course, in doing so, they prevent doing certain expensive tasks (for example, a while back I checked Salesforce.com didn’t allow “select distinct” in their SQLs).

So, what’s the strange thing I am talking about you ask me? Take a look at this screen capture of their status page.

Salesforce.com System Status (Oct 16, 2010)

What you would notice is, for Oct 16, 2010 (which is the same day as this blog post in PST), the average response time is 147.575 seconds. Isn’t this amusing? As per their updates, they had some performance issues. But how can the average response time go worse by more than a 1000 times? That too, when the number of transactions executed seems to be similar to the trend (compare weekends).

Something is definitely wrong with this picture. I am sure their average response time is probably a lot more better, but if I can’t trust the numbers posted on the trust.salesforce.com, then that’s a problem. Also, if there is a performance issue, they are supposed to have a different icon. As can be seen in the screenshot, their NA6 server is supposed to have had performance degradation, but the icon shows green dot instead of blue dot.

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The Odds Of A SAAS Outage And That Effecting Me?

I am supposed to be paying estimated taxes this year. At least that’s how it looked like at the beginning of the year when the stock market was rosy. I am not sure if that situation has change with all the things happening around the world about Greece and rest of the Europe. I am afraid I would forget the T-date, June 15th. So, I even had a post-it note on my big 27″ iMac. At the beginning of this month, an email was sent as a remainder by the tax board. At that time I knew I would remember thanks to this post-it note. But guess what? On June 16th night, I finally saw the note and I was frantically trying to pay it online. But then, how much should I pay?

Well, that’s where the SAAS part comes into picture. For the last 10yrs or so, I have been using TurboTax. I am a loyal customer of theirs and I even store my tax documents online with them. So, back in April when I prepared my taxes and the estimated taxes for 2010, I didn’t bother to print the estimated tax statements. I thought that I will be paying online, so I could save some trees not printing.

So, on June 16th, one day after the deadline, when I was frantically trying to pay my estimated taxes, I tried to sign-on to TurboTax to get that magic number that they computed. Guess what happened? TurboTax and their owning company Intuit had a major infrastructure failure. You can see more on this here.

Now, what am I supposed to do? Since I am late by a day, make it two days and hope for the service to return back online on the next day? Well, I did something else which I will tell you soon.

I am not a tax expert, but I used to think that the estimated taxes are going to be the same for all the 4 installments. Well, may be for businesses it might defer, but for an employee with some capital gains from stocks, I thought that’s how easy it would be and that’s how it had been in the previous years. But this time, TurboTax calculated that the numbers are different for each quarter.

Now, back to what I did. While I didn’t have the exact number, I just wanted to pull up my previous number and then use the same. Something better than nothing right? Now, how do I get my previous number? For that, the tax board’s website requires SSN and some account id which I have no idea what it was. So, that wasn’t an option any more (luckily, for the payment itself, this account id is not needed. I guess their logic is people might want to steal personal info but not pay on behalf of someone else :)).

One more flash of genius, and I went to my bank’s website, logged in and pulled up that number and went and paid my estimated taxes for the second quarter of this year. May not be accurate, but good enough for me (as I told, since the stock market tanked, I may actually have not required to pay anything, but I just did it anyway).

Here is the thing. Even if a SAAS provider gives you a 99.999% uptime, sometimes it’s when that 0.0001% time that might really matter to you!

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Should My Software Be Offered As A SAAS Model?

I just read a post on the business of software about how to make a million and one suggestion was to get 1000 customers at $100 and a reply was, getting 1000 customers each month is difficult and that’s why SAAS is good.

That’s what prompted me to write this. Yes, SAAS makes the customer pay each month like any other utility bill. That doesn’t mean every software should be offered as a SAAS model. Actually, it can be offered, but not everyone will be ready to shell out money month after for it.

If farmers were to plant their crop once, put the water and just don’t have to bother any more, but if they charge you for their produce every week, just because you have to eat, would you like it?

What I mean to say is, if your application doesn’t require operational cost, then the customer is only ready to pay for the license. Large enterprise applications such as those offered by SalesForce.com are less than 25% development and 75% operations. They need to make sure to have the database running all the time, do the necessary performance tuning, monitor and ensure the web servers, app servers, email servers and any other technology components are smoothly running. While SAAS enablement itself adds unnecessary complexity which the end users don’t care about, overall the cost is amortized and with good execution, the economy of the scale can be achieved in the operational cost. That’s where the compelling proposition for someone to consider SAAS model. Not because your software is just offered as SAAS for you to bill each month, but because they realize that there is more cost associated with maintenance of the application.

Sure you can offer your software as a web application and claim that you are taking care of the operational aspects. But, unless what you are doing is complex enough, customers won’t buy into it. For example, if you use an open source database and other software components and build your SAAS solution on top if, what prevents the customer to not consider doing the same and hence ask for licensing and not as a SAAS solution? Sure, the customers are running their business and not a software firm. But, there is a price point at which, all these would start mattering. If a company has more than 200 users and they have to pay $50 a month, that’s $10,000 a month and $120K a year. But if the operational cost, including a dedicated IT resource is lesser than that, then your customers will start wondering which route to go and you better have a solid answer why your software should be available only as a service!

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The One Dollar SAAS Solution

Back in 98 when I signed up for a web hosting solution, I was paying about $30 a month with very little hard-disk (in MBs), bandwidth (MBs again) and CPUs (probably also in MHz though I don’t remember) shared by many others like me. But for the last two years, I have a hosting account for which I pay about $8 a month with unlimited hard-disk and bandwidth and much better CPU and what’s more unlimited domains and databases and on and on.

Yesterday I found that one of the SAAS vendors was using another SAAS vendor for one of their online services. And the pricing was about $19.95/month per single agent. That’s when I realized that in a decade from now, the SAAS landscape is going to evolve in ways similar to the web hosting solutions.

There are going to be big players and then there are going to be smaller ones. The reason why some web hosting providers are able to offer the “unlimited” promises are because they know that more than 90% of the small startups don’t use even 1% of what they were being allocated. So, collectively it would seem like unlimited resources.

Right now a lot will be invested in defining a SAAS platform and infrastructure. But in a couple of years, hopefully people will rely on more standard components. One great example I can think of is the cpanel. Today most web hosting solutions provide cpanel to manage the account. Anyone switching a hosting provider usually doesn’t have to learn a new system to manage the account. Eventually SAAS will evolve to this stage and at that time, the SAAS solutions will be offered with the “unlimited” offering and very cheap prices.

Ofcourse, just like the dedicated hosting solutions are still expensive, there will be SAAS offerings for high-end customers who would pay more.

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SAAS & Layoffs

With the economy deteriorating day by day and the layoffs increasing, my experience with on-premise applications got me into thinking some practical issues for SAAS adoption.

When an employee leaves a company on his own or due to RIF or Layoffs or Firing, whatever the case may be, the access to the internal systems are pretty much gone. Not being physically present within the office in itself restricts access to several things. One top of that, corporate firewall will prevent access to anything else, as soon as the VPN access is deleted. Ofcourse, some routine services like email and calendar are typically provided access to without first getting into the VPN connection. So, those kind of services have to be terminated as soon as possible to.

Infact, the process of termination is typically starts a few days prior and I know of some smart employees figuring out who is getting axed during a RIF by trying to do some HR transactions that would have typically got blocked towards the end.

Now what does it mean to using a SAAS application? Is your internal HR system integrated with your SAAS application such that when an employee is terminated in the HR system, the access to the SAAS application is also terminated? Now imagine a sales person being terminated but he still access to the sales force SAAS system and able to go home and download all the contacts and those of the other people working within the same organization or territory that are being shared?

So, here are a few user management features that every SAAS system must have. Before signing up with a SAAS vendor make sure some of these that are most important are available.

  • Bulk user termination. This is useful when several employees are being terminated at the same time.
  • Complete Lockdown. In SAAS solutions, typically there is always a administrator for each company. This admin should be able to place a temporary lockdown such that all the other employees of that company are not allowed to login. This would be useful if there is a need to prevent access to the system to all users for a few days while details are being worked out internally.
  • APIs to user management will help large corporations to build web service integration to tie it with their HR systems. However, it would be interesting to see what happens if one were to use two SAAS vendors, one for HCM (human capital management) and another for Sales Force Automation.

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Open Source & CIO Pays

We all know the economy is bad and we are in a recession for more than a year, but came to know about it just now, after the elections (almost as a conspiracy). And with so much meltdown there is an outcry on the CEOs pay, their way of reaching Washington for a bailout (flying corporate jets vs driving hybrid cars).

When discussing this CEO pay issue with friends, I thought that the reason that it will continue to be high and nothing can be done is because the stock holders, a major portion of them who are institutional investors like mutual and hedge fund managers probably don’t bother to care about restricting the CEOs pay because it’s going to come back and bite them when they take their hefty bonuses for the fund performance during the good years (and probably bad years as well which really upsets the common public myself whose retirement savings plummeted by half. But apparently, the real reason is that the shareholders in the US don’t have a say on the executive compensation like it is in the European countries where the ratio of salaries of rank and file employees to their executives is much lower than in the US. Hence, the “say on pay” proposition. Need to see where it goes.

Anyway, after following all this, when I recently read an article on how the companies are cutting their IT spend by adopting more and more open source, it got me thinking about the Open Source and the CIO pays.

Here is the thing. If you are a business owner and you find that you are paying 10 times more for the personnel to maintain the software than the licensing cost of the software, how would you feel? I mean, if a medium to large company uses a software like Oracle, SAP or Microsoft’s enterprise software, the cost of the software license and support is much more than the salaries of the people to manage those applications. But if the IT guys start using open source software and reduce one part of the equation, what happens to the other part? May be that’s when the CEOs will realize the extra overhead and move to SAAS and keep the IT staff to none or minimal?

Let me see, if a big company starts using SAAS for all of it’s IT requirements including email, collaboration and enterprise applications (ERP, CRM, HCM and Financials), then does it need a CIO and pay him a heft $250K salary or more?

Desperate times need desperate measures. As some political person said during the bailout discussions “the party is over”. The good for nothing and old style management should stop justifying their very existence and start embracing the new ways of doing business. It’s sometimes sickening to see a handful of people doing real work and more than double that number just introducing process after process, that seldom really works, to justify their job roles and compensation.

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SAAS & Traffic Rank

Alexa has recently changed it’s algorithm for computing the traffic rank. Instead of just relying on their toolbar and widget based traffic, they are now going to get traffic details from other sources and that would certainly make the rankings more credible.

Recently there was also some buzz on what should be considered as traffic and page views due to the heavy use of AJAX in Web 2.0 applications.

Just when you thought now we have a robust means of getting more accurate traffic rank, unique visitors, page views and related metrics, SAAS is going to start skewing these numbers. For a few of the SAAS websites I follow, anywhere from 50% to 80% of their traffic is coming either from their customers using their SAAS application (this is possible to figure out by looking at the traffic by sub-domain and most companies use a separate sub-domain per customer!) or using their forums, bug tracking (you would know if a SAAS company has development in India based on traffic by country!) and other internal applications. While this traffic is “Internet Traffic”, it is not a traffic in the traditional sense. There are not so many SAAS companies at present, but as time passes and more SAAS vendors sprout up, this is going to skew the stats a bit. Just an observation!

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Software As A Service & Businesss Intelligence (SAAS-BI)

There has been a lot of buzz around SAAS-BI. As a person with a lot of enterprise level BI experience, I want to provide a practical view on SAAS-BI. The key question is whether SAAS-BI makes sense and if so, under what scenarios.

SAAS makes sense to deliver applications over the internet for the SAAS providers and to get rid of upfront license costs and in-house IT staff to run the applications for the customers. With higher competition in the SAAS area, as time goes, the cost of the subscription is going to go down. This invariably forces the SAAS providers to cut costs and that means doing more with less. One easy way to achieve that is to host multiple customers on the same machine and potentially same database and middle-tier using such techniques as virtualization, data striping and VPD.

When people talk about SAAS-BI, there are two scenarios.

  1. Providing SAAS-BI to a in-house hosted application.
  2. Providing SAAS-BI to an existing SAAS application.

Before evaluating the challenges for each of these, let me first talk about a few challenges common to business intelligence applications. While BI is possible directly on the same database as the OLTP database, since SAAS-BI involves using a separate database, which is no different from managing a separate data warehouse, the following assumes using source and a target databases.

  1. BI is fundamentally a very CPU and IO intensive task.
  2. BI solution causes performance on source system. For companies that have 24/7 operations, timing of running the extracts is critical. A cron-job like scheduling may or may not work because, when the source system is not heavily loaded can’t be pre-determined. Several factors like pay-roll crunching, quarter/year end financial results crunching, periodic appraisals and promotions and other routine functionality makes the non-peak load time non-deterministic.
  3. Identifying delta-changes efficiently is a non-trivial and most difficult part of any Business Intelligence solution. Some times, this requires analyzing and understanding the load on the source database and taking the appropriate action. There are two common ways to identify delta changes
    1. Creating an index on the last update date of the table if there is such a column to audit the transactions. For immutable transactions, it is also possible to create an index on the unique id of the transaction, but in most such cases, there is already an index for the unique id.
    2. Creating snapshot log (materialized view log). Oracle also has a concept called Change Data Capture.

    In both the above cases, the related techniques primarily add extra over-head to the source system and exist solely for the purpose of supporting the business intelligence initiative. This is important because, this creates a lack of interest to those who are responsible for providing high-performing OLTP applications that can support thousands of transactions per hour.

  4. Most non-trivial intelligence solutions require joins to dozens of tables. Change detection when there are several joins is typically very inefficient. Inspite of the best efforts, this ends up in several full-table joins even though the final result of the identified change is only a small fraction of the total records. So, the load on the source system is very high in detecting changes for non-trivial metrics.
  5. Further, certain type of transaction changes, while result in a change to a single record on the transaction side, results in changes to hundreds and thousands of changes to the related metrics. A good example of this is, setting the currency conversion rate for a given date results in updating the related financial metrics for every monetary transaction on that date for the entire company. Once again a huge impact on the change detection and extraction side.

This list could be easily extended further with several use cases, but I just want to highlight a few key common issues of business intelligence primarily on the source side, no matter what the software model is. There were times I wondered, after going through several of these complications, if the most easiest and best thing is to just do a disk-level replication and do full-refresh of the fact tables. Such is the pain with incremental maintenance of facts and dimensions, the building blocks of business intelligence.

So, once you understand and acknowledge that the Business Intelligence solution is not just about aggregating and reporting on the data warehouse side, but also constant performance monitoring, tuning and many times fundamentally inventing and adapting techniques and changing architectures to make the extraction process as efficient as possible, then you would understand my current thinking that SAAS-BI doesn’t make sense for some scenarios.

So, when evaluating SAAS-BI, here is what you need to consider

In-house application hosting scenario So, while the SAAS-BI provider pitches you that you don’t have to maintain the extra hard-ware and IT department to deal with aggregating and reporting, who is going to take care of your source database and hardware for their performance? Even if the SAAS-BI provider is ready to send someone to your data center and trouble-shoot it, would they consider the holistic requirement of ensuring that both your OLTP transactions and the BI extractions are optimal or just care about the later?

SAAS applications Why would salesforce or netsuite or any other SAAS provider care about providing the extra indexes or materialized view logs just so that your 3rd party SAAS-BI provider can extract the data easily? That too, when the SAAS application provider is using a multi-tenant model to keep his costs lower and competitive, extracting data for one client would adversely impact the performance for the other. Why would SAAS provider risk this for a 3rd party SAAS-BI provider? That may force you as the customer to go with a single-tenant SAAS solution, just for also getting a SAAS-BI solution.

So, I think, however much the SAAS-BI providers want to convince you that they have patents and IP that involves database kernel level tweaking or hacking to make SAAS-BI possible, first and foremost, it’s a problem that is created to support their business model, not yours! Ofcourse, this is no different from creating a custom inhouse application that is very specific to your needs vs using a off-the-shelf product that is more generic. However, for applications, the performance is not as severe.

SAAS-BI Predictions So, that leaves me with predicting future outcome for SAAS-BI. First, does this mean SAAS-BI doesn’t make sense at all? No. It does make sense in two cases.

  1. SAAS-BI provided by your own SAAS provider. Yes, they already have your data, it makes it so much easier for them to provide you the related intelligence.
  2. SAAS-BI provided by anyone when your applications are hosted in-house. However, I would seriously advice you against this because the ROI calculations may not have factored in the related cost in monitoring and maintaining your source system for performance and scalability. Not to mention, all the extra network bandwidth needed to encrypt and transfer the data from your data center to the SAAS-BI data center. That also means factoring your internet pipes for much more peak-bandwidth else your potential customers visiting your corporate website might have network problems and worse, you might lose sales and loyal customers.

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OutSAASing

SAAS by definition lets a company outsource it’s IT operations and use software as a service. Now, what happens if the SAAS vendor is from one of the countries that specialize in outsourcing? Well, I call it OutSAASing just for the heck of it (I just googled and not a single result for this word, so I can probably say that I am the first to come up with this word, even if it’s stupid :)).

But most importantly, this article on Zoho indicates what it means to have the option of OutSAASing

“Marc Benioff, chief executive of Salesforce.com, has made an offer to buy Zoho for an undisclosed amount. Benioff seems appropriately nervous, since Salesforce.com’s sales and administration costs are high, eating up most of his earnings. Can he afford to compete if Zoho undercuts him at such a dramatic scale?”

A SAAS provider can typically expect to make decent margins by pooling resources and provide service to multiple customers. When I mean pooling resources, for a developer this could be using a single database, using a single middle-tier for multiple customers. For COOs and higher ups, it could also mean using a fewer DBAs, fewer Network admins and fewer people pooled to provide the service.

Recently Oracle announced a Single Tenant OnDemand CRM. For those familiar with web hosting models, this is like having your own server that you can reboot anytime you want and do whatever you want. Essentially it comes with a separate database and midleware for a single customer. Oracle’s move into virtualization in 2006 is perhaps with the intention of being able to provide single tenant model through virtualization.

But anyway, coming back to the OutSAASing, some of the recent developments in India regarding SAAS is what prompted me to write this article in the first place. First of them is NIIT’s announcement of offering ProcureEasy which can be a competitor to other SAAS providers in this space such as Coupa. The next is NIIT and Ramco Systems announcement of partnership to provide OnDemand ERP which is a competitor to NetSuite and may be Compiere when it gets to that stage.

Thing is, while Oracle’s single tenant system makes things “virtual private” infrastructure resources, the OutSAASing companies can simply choose to offer dedicated DBA, dedicated Sys Admin and if required, even a few developers into the mix in their overall offering to a few large customers and still maintain their margins. Now all of a sudden, instead of just “Software As A Service”, it becomes “IT Department As A Service”. Ofcourse, large MNCs are already having a lot of presence in India and China and wherever there is quality labor available cheaply and can follow the suite. But, with manufacturing gone outside the US in the past decades and services replacing it, SAAS being an internet oriented offering and hence can be delivered from anywhere, even SAAS is likely to slip away from the US. Ofcourse, it’s not easier done than said. When companies like Amazon itself have outages to their popular platform web services such as S3, the key for the success of OutSAASing is precise execution like what Japanese did with quality and cars. Providing better SLAs, quick response times and six-sigma precision.

On the other hand, inspite of throwing additional cheaply available personnel, powercuts and even internet outages make it difficult to centralize the infrastructure at a single place. So, the infrastructure should perhaps be distributed closer to the customer countries while the operations can be centralized.

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