Jan12

SaaS Go-Time: Has your software development shop reached a critical tipping point?

An interesting conversation recently took place between the owner of a small, but rapidly growing Independent Software Vendor (ISV) and his lead software developer in charge of new development.

If you currently deliver Software-as-a-Service (SaaS) to clients using an on-premise IT model, the conversation may challenge the way you see things.


Owner: We did well last month, but we need several new clients to match revenues from last year, and our costs are also going up. Our latest e-commerce module does look popular but we seem to be at full capacity. You agree?

Lead developer: Yes, those several dedicated servers we purchased last year pushed us over our budget. I over-provisioned to allow us to scale, which means we do have some juice left but it also means two of our developers spend much of their time simply maintaining them and trouble-shooting technical issues. We either need more server administrators or a different operating model.

Owner: This is the problem I have with the above: the spare capacity is great for the Christmas period, when traffic spikes, but then we have ‘dead air’ for the rest of the year once it subsides.

Lead Developer: You’re right. At the moment I have to over-provision to ensure we accommodate a surge, which may take all our servers down. It’s a balancing act, but we don’t always get it right.

Owner: My other concern is I would like to start hitting smaller customers who can afford a software subscription model and don’t have a real IT department. At the moment, we seem to be stuck with hardware issues, that’s sucking up large chunks of your time and we can’t meet this objective.

Lead Developer: I know, but it would also be great if we could monitor how they use our apps and develop further usage patterns. This may help us see what future apps we should consider building.

Owner: Exactly! But, I would also like to see shorter development cycles. We have a lot of competition out there and it’s not getting any easier.

Lead Developer: Well, we face endless software fixes not to mention frequent incoming software upgrades. This stretches out software testing and deployment for my team. I don’t like it any more than you do.

Owner: So is the on-premise model working for us? It seems we are spending a lot of money upgrading servers, maintaining them and entering long product development cycles that could put us out of business if we are not careful?

Lead Developer: Not to mention the day-to-day operations including server maintenance, capacity planning, software debugging and infrastructure upgrade paths; all of these slow us down. Testing on multiple platforms is also a growing challenge…

Owner:DON’T forget the opportunity cost of not introducing new apps to the marketplace before our competitors!!!

Lead Developer: Yes. So maybe it is time we shrink our IT footprint and consider a cloud-based delivery model? We are starting to experience severe server sprawl. If it goes on like this we will need to relocate simply to accommodate our growing network of servers.

Owner: Well, we discussed this before but you had some security concerns.

Lead Developer: I still do, but the more complex our operations become in-house the more I am starting to think that it’s a security risk NOT to move to the cloud. The reality is our team cannot cope with the infrastructure challenges. And, we need to constantly update our architecture, which means we are becoming vulnerable to both intrusions and maintaining uptime. We are not winning and it’s going to get worse.

Owner: What is it going to take? You obviously need a bulletproof Infrastructure-as-a-Service (IaaS) provider that offers customized SLAs to match your requirements. Does such a provider exist?

Lead Developer: Yes, I have identified a web host that offers both Xen OnApp servers and heavy-duty VMware enterprise servers for testing and deployment. Either of those platforms could serve our needs nicely. Both options provide root access to the underlying server. This means we have granular control over all our applications.

Owner: Can you scale quickly enough on their platform?

Lead Developer: Yes. Their cloud bursting capacity allows us to accommodate seasonal spikes in traffic and quickly scale back down immediately after. This will save us cash since we no longer need to over-provision by purchasing more servers. A lot simpler!

Owner: But, this sounds like a massive migration path? Is it doable?

Lead Developer: I think we could start by migrating our marginal apps and software to their servers to initially test the cloud model. Over time we could progressively move our entire core development environment offshore to their platform. Then, we could start delivering software via a subscription model to our customers as we do now on-premise.

Owner: I like where this is going. You are sure you will have the firepower you need going forward?

Lead Developer: I think so. What I find really attractive about this remote Software-as-a-Service (SaaS) model is the reduction in complexity. The control panel will allow us to slice and dice RAM, disk space and processor capacity, independently. Within minutes I can deploy a server template, which speeds up SaaS delivery to new customers. And, we can track all their usage patterns!

Owner:  I would assume the pricing model is straightforward? I have heard that some companies have reduced costs by up to 50-60% by moving to a cloud model?

Lead Developer:  Correct. Plus, they also appear to offer consultancy and technical resources to our development team, which could further insulate us from risk as we continue growing. We could also consider private and hybrid cloud models for some of our banking customers who need more stringent security compliance controls for their back-end data.

Owner: It sounds like you could almost label these cloud platforms as “Virtual Dedicated Servers (VDS)”.

Lead Developer: Exactly! I prefer “hardware-as-a-service”. We can free up developer time and start focusing on quicker product development cycles and generating more revenue. I would say at least 70% of our developer time is currently focused on server management, integration and trouble-shooting.

Owner: Okay, you have convinced me. Let’s light this candle!

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