| According to Gartner, Software as a Service (SaaS) | | | | This is why an alternative and less conservative |
| is software that is owned, delivered and managed | | | | model is proposed by Verax Systems. It is based on |
| remotely by one or more providers. This means that | | | | the assumption that it is easier for a large service |
| the application users are not licensed and charged for | | | | provider (i.e. data center) with existing billing |
| software availability in extended periods of time, but | | | | infrastructure and procedures in place to integrate |
| only billed for the amount they actually use. In most | | | | additional application usage billing processes into it |
| scenarios, the software is either available in the form | | | | than setting up two separate engines. |
| of web applications or terminal services. In the first | | | | The advantages of this model are clearly evident for |
| case, the entire application is hosted on the provider's | | | | both the data centers and the application providers. |
| hardware and no client software except for a web | | | | As the revenue is shared between the two parties, |
| browser is needed. In the latter case, the only | | | | both of them have a common business goal, so |
| difference is a requirement for the customers to | | | | there is an obvious synergy effect. Also the total |
| download a client application, but the core of the | | | | cost of this model seems to be lower, so a more |
| system is also hosted by the provider. | | | | competitive and profitable offer can be directed to |
| Benefits from SaaS | | | | the customers. |
| These facts combined mean vast savings for the | | | | Application providers without the need to handle |
| consumers. The lack of an initial license fee and | | | | billing, invoicing and collection processes can put more |
| hardware requirements can reduce the CAPEX | | | | focus on what they do best. This should result in |
| significantly. It is also easier to plan the spending and | | | | lower prices for the service, as well as in |
| adapt over time. The actual cost of ownership (TCO) | | | | development of new features or applications. Many |
| depends on how much the applications are used at a | | | | small and rather unheard of software companies can |
| particular time and not on future capacity. This | | | | vastly benefit due to the service provider's footprint |
| flexibility and affordability of the model are especially | | | | and market recognition. It also means a safer |
| vital for businesses in today's economy. | | | | business with less investments in expensive |
| As for the software vendors, the SaaS model offers | | | | infrastructure and processes. |
| equally valuable benefits. Initially lower, but recurring | | | | The data centers as service-as-a-whole providers |
| revenue streams are much more predictable and | | | | gain an opportunity to increase their market share |
| provide the ability to plan the budgets more | | | | and recognition. First of all, they can expand their |
| effectively and precisely. Due to the centralized | | | | customer base by attracting more application |
| hosting, the software is also much easier to maintain | | | | providers due to a convenient business model. In a |
| and support. All upgrades are limited to one | | | | time of increasing competition among infrastructure |
| environment and have instant effect for all users. In | | | | providers, more of them aim to find market |
| addition, direct access to the application logs | | | | differentiators. This objective can be met by offering |
| facilitates bug fixes. Finally, SaaS can help overcome | | | | added value – clearly achieved by directly |
| sales difficulties ina period when businesses reorganize | | | | providing applications in the SaaS model. Value Added |
| and freeze their IT budgets, so they cannot afford | | | | Services at a low expense combined with additional |
| the lack of flexibility and expenses of software | | | | revenue from commission should provide a quick ROI |
| based on EULA licensing models. | | | | and increase the company's footprint. |
| These advantages are clearly confirmed by good | | | | |
| results of the market leaders and optimistic | | | | Verax SaaS provisioning and billing infrastructure |
| projections of its researchers. Contrary to mostly | | | | Verax Systems positions itself as an infrastructure |
| negative growth forecasts coming from all over the | | | | enabler for the provisioning and billing of SaaS |
| economy, the global SaaS market is expected to | | | | applications supporting various business models, |
| grow in 2009 by as much as 30% (Gartner) to 40% | | | | including the revenue sharing in particular. The Verax |
| (IDC). | | | | OSS/BSS Suite covers important areas of building |
| Billing and other challenges | | | | SaaS infrastructure, including: |
| The positive aspects of SaaS for software vendors | | | | - Defining new services (Product Catalogue) |
| are unquestionable. However, a number of topics | | | | - Provisioning (Provisioning Service) |
| need to be addressed before an application can be | | | | - Customer self management (Self Care Portal) |
| offered in this model. | | | | - Billing of both infrastructure and application usage |
| The inevitable challenge faced by all Software as a | | | | (Billing) |
| Service providers is setting up the billing process. | | | | - Monitoring of the service infrastructure and |
| Whereas traditional IPR or EULA-based sales required | | | | measuring SLA compliance (NMS) |
| simple license invoicing and handling of usually | | | | What is worth mentioning is that Verax Systems' |
| long-term maintenance contracts, the "pay-per-use" | | | | applications are not limited to the SaaS platform – |
| model and proper management of frequently | | | | all our products are oriented at carrier-grade services |
| recurring transactions impose a requirement for a | | | | for IP-centered, convergent telecommunications. |
| rating and billing engine, as well as a set of | | | | Defining the services |
| procedures. This means additional analyses and | | | | In order to be able to efficiently handle the billing of |
| investments need to be made in order to kick off | | | | any kind of services, they have to be precisely |
| the provision of SaaS. | | | | defined. What could be just a one-off exercise for a |
| The necessary infrastructure is offered by many | | | | small business offering a limited number of |
| vendors (e.g. Verax Systems with its OSS/BSS Billing). | | | | rarely-changing services is usually not the case. |
| In order to achieve good results, software | | | | Strong market competition enforces introducing new |
| businesses are required to develop a profitable and | | | | ways of attracting customers and thus, new |
| competitive usage billing model. One of the first steps | | | | services. This means that the configuration of new |
| is defining the main billing units and UDRs (Usage Data | | | | applications becomes a daily routine. The challenging |
| Records) related with them or software license key | | | | economy is also a time when acquisitions or mergers |
| limitations. The most commonly used aspects are: | | | | become very common, resulting in an increase of the |
| - Number of users and sessions per user | | | | number and complexity of the product packages |
| - Number of concurrent sessions | | | | offered. In order to handle the product and service |
| - Number of enabled modules / functionalities | | | | offerings in an efficient and error-free manner, a |
| - Number of business artifacts generated by the | | | | sophisticated product catalogue, capable of handing |
| application (e.g. reports, invoices etc.) | | | | SaaS specifics is required. |
| - Number of objects created or stored in the | | | | The Verax Product Catalogue offers a flexible tool to |
| application (e.g. articles, contacts etc.) | | | | define the SaaS services and means of their billing, |
| - Number of emails sent | | | | such as: |
| Obviously, the rating and billing must cater for the | | | | - Service name |
| business value of the applications, service | | | | - Activation times |
| maintenance costs (like customer support and SLAs), | | | | - Eligibility criteria |
| as well as the hardware required to host it (e.g. CPU | | | | - Billing criteria: |
| and storage capacity). The diversity of the | | | | - Platform usage, such as storage, CPU cycles, data |
| parameters may be a difficulty alone. However, this is | | | | transfers and others |
| where another critical challenge occurs. | | | | - Additional application criteria, resembling more a |
| It is the scalability required to handle a varying | | | | classic license, such as the number of users, sessions, |
| number of customers and users. Obviously, a | | | | modules enabled, etc. |
| well-established business can make long-term | | | | The Product Catalogue offers an easy, intuitive |
| customer base growth plans and set sales targets in | | | | interface for not only defining the technical details of |
| order to adapt the infrastructure on time. However, | | | | the services, but also allowing to categorize them for |
| the recent economic reality has made it increasingly | | | | easier browsing, create service bundles (with |
| difficult for companies to reach those targets. In | | | | mandatory and optional products), provide |
| addition, some of the services offered to customers | | | | descriptions and photos for the customers and define |
| have a very seasonal nature (e.g. consumer | | | | multi-currency pricing. |
| e-commerce usually booms in the Christmas season). | | | | Provisioning the services |
| This means businesses need to make upfront | | | | Provisioning of individual applications is likely the most |
| spending on hardware capacity which is likely to be | | | | complex process of a scalable and flexible SaaS |
| redundant for extended periods of time. A related | | | | infrastructure. In order to attract customers, the |
| challenge is also the provisioning of the services, | | | | offering must be tailored to the needs to the |
| which also requires appropriate infrastructural | | | | maximum extent. The resulting wide range of pricing |
| solutions to be in place. | | | | and licensing models needs to be reflected in the |
| A conclusion from the above is that it is not easy for | | | | provisioning mechanism. An indication of the potential |
| a specialized application provider to offer their | | | | challenges is that the provisioning of various SaaS |
| software in the SaaS model on their own. | | | | applications may include the following: |
| Fortunately, the market is rich in solutions similar in | | | | - Instantiating a virtual machine from a template |
| the idea, but oriented on hardware infrastructure. It is | | | | - Setting platform parameters such as storage, |
| usually referred to as Infrastructure (or Platform) asa | | | | database and others |
| Service, and a combination of the services is | | | | - Setting DNS names |
| commonly named Cloud Computing. | | | | - Managing HTTPS certificates |
| "Hardware as a Service" | | | | - Configuring a default administrative account |
| The Infrastructure as a Service providers reduce | | | | - Configuring the application license, e.g. three modules |
| most of the CAPEX required from software vendors | | | | for five concurrent users |
| in order to start offering SaaS. Their huge data | | | | - Activating the service and billing notification |
| centers cater for the flexibility allowing for instant | | | | Verax Systems has been working on a Provisioning |
| multiplication of the hardware resources as the needs | | | | Service solution to meet all the challenges faced by |
| grow. The dynamic scalability and provisioning is | | | | our current and potential customers. |
| achieved with the latest platform virtualization | | | | Managing the services |
| monitoring infrastructure (hypervisors), out of which | | | | A wide range of applications and a large number of |
| the most commonly used are Cytrix Xen and | | | | users make for an excellent business aspect, as they |
| VMWare (Information Week Analytics, Sept. 4, | | | | directly affect the revenue gained. However, the |
| 2009). Costs are kept down to the minimum due to | | | | management of customer service becomes more |
| built-in load balancing mechanisms. | | | | difficult and expensive as the customer-base grows. |
| The dynamic growth of interest in SaaS had turned | | | | It is not just a question of instantiating the particular |
| providing scalability, redundancy and provisioning for | | | | applications, but also responding to the customers' |
| its purposes into a core business of many companies. | | | | changing needs. |
| Even though, as the concept is relatively new, the | | | | The easiest way of reducing the customer service |
| implementations and market offerings differ quite | | | | costs and making it more manageable is providing the |
| considerably. The most commonly listed three | | | | customers with a front-end, where they can manage |
| services – Amazon's EC2, Google's App Engine | | | | the parameters of their services on their own. It not |
| and Microsoft's Azure represent different | | | | only helps to improve and reduce the call center |
| philosophies, with hardly any platform restrictions and | | | | costs, but also increases customer trust and loyalty. |
| added services in the first case, very restrictive | | | | The Verax Self Care Portal allows this and much |
| policies for a low price in the second, and single | | | | more, by providing enhanced possibilities of customer |
| platform with value added services in the last | | | | communication (e.g. broadcasting news, events, new |
| example. | | | | products), improving the service with a service rating |
| With specializations ranging from virtualized and | | | | feature and accelerating the cash flow by presenting |
| scalable web hosting and disaster recovery through | | | | outstanding payment information to the customers. |
| provision of SaaS and test environments for | | | | SLA compliance |
| software vendors to leasing high-performance | | | | The provider's liability and proposed Service Level |
| computing resources for research and industrial | | | | Agreements are one of the most frequently asked |
| simulations, the leaders in the most common | | | | questions when it comes to managed services. |
| appliances include Amazon (EC2), Rackspace and | | | | Security concerns are the main argument against |
| GoGrid. | | | | using SaaS for 30% of decision makers surveyed by |
| A majority of the providers impose a minimum | | | | Forrester in 2009. This is why it is essential for any |
| service duration, although in most cases it is as low | | | | SaaS provider to deploy the right tools and |
| as monthly. The services are usually billed according | | | | procedures to maintain the required level of |
| to utility-based or availability models. The charges are | | | | availability and data security, as well as to |
| commonly applied for the following parameters: | | | | demonstrate them to their current and potential |
| - Hours of virtual machine availability (e.g. Amazon) | | | | customers. |
| - CPU cycles (e.g. Rackspace, Google) | | | | It is not just the hardware infrastructure that |
| - RAM-hours (e.g. GoGrid) | | | | matters. In order to avoid dropping below the |
| - Data transfer | | | | SLA-declared parameters by reacting to problems |
| - Storage | | | | before they become critical, the SaaS providers need |
| Additional services, such as monitoring, load balancing, | | | | to havea proper monitoring system in place. |
| software license fees etc. are also offered and billed | | | | Verax Systems' Network Management System is a |
| for as part of bundled plans or separately. Some | | | | perfect match to those needs, both for the platform |
| providers offer pre-paid plans and monthly or annual | | | | as well as the applications. The Verax NMS provides |
| subscriptions, although their practical aspect is a price | | | | proven SLA compliance and features full FCAPS |
| discount or a fee for the "reservation" ofa machine | | | | (fault, configuration, accounting, performance, |
| (either virtual or physical) with additional per-use | | | | security) functionality to help maintain the highest |
| pricing on top of it. | | | | level of availability and provide tools for fault |
| One of the most frequently raised disadvantages of | | | | prevention. Due to support of rules-based business |
| entrusting the hosting of applications to 3rd party | | | | logic and pluggable architecture, it can be integrated |
| companies is the aspect of data security and | | | | with any existing platforms and applications. |
| uptimes. This is addressed by most providers who | | | | Integration challenges |
| offer suitable service level agreements (SLA) with | | | | SaaS applications are usually built on top of existing |
| uptime levels exceeding 99%. However, it is the | | | | infrastructures and services. This means that there |
| small-print that matters. For example, Amazon's SLA | | | | may likely already be some systems in place. Be it |
| guarantee of 99.95% is calculated on an annual basis, | | | | existing client databases, some forms of billing |
| which means a critical system may be down for a | | | | systems or other environments, Verax Systems can |
| few hours within a week with no obligation from the | | | | integrate with them via: |
| provider. As another one, GoGrid's 100% SLA level | | | | - SOA-ready architecture with pluggable services |
| refers to availability as indicated by the operator's | | | | – e.g. it is possible to replace the integrated |
| proprietary monitoring tools. | | | | Verax OSS/BSS database and modules with a |
| Service separation model | | | | custom plug-in connecting to an existing database |
| In this model, the software vendor hosts its | | | | - Verax mediation, which can be used to relay the |
| applications in a selected Data Center providing | | | | UDRs to and from the existing billing system. |
| platform or infrastructure services. The software is | | | | Verax Systems has broad experience as an |
| offered and sold to end users directly by the | | | | integrator of applications for telecommunications |
| application provider and the data center is not part of | | | | (including Tier-1 operators) and financial markets. |
| the process. The application provider is billed for the | | | | Growing with the needs |
| infrastructure usage. The application sends usage | | | | It seems obvious that building a proper SaaS |
| reports to the provider's billing engine. The entire | | | | infrastructure is an investment. While some |
| billing and invoicing process is also handled by the | | | | businesses can afford to create it within a short |
| application provider. | | | | period of time, others may need to prioritize and get |
| The main advantage of this model for the application | | | | going with only the most essential parts in place in |
| provider is that the scalability and provisioning is | | | | the start-up period. |
| entirely taken care of by the data center. This | | | | Verax Systems understands this and offers delivery |
| means a significant cost reduction, as no hardware | | | | of a perfectly-suited solution over time. The |
| needs to be purchased and set up in order to | | | | suggested and most common order would be to first |
| provide the service. The sales is directly between the | | | | deploy the provisioning service, followed by |
| software vendor and the customers. Both the data | | | | automating the billing process, and finally improving |
| center and the application provider offer their core | | | | SLAs with the NMS and the customer service with |
| business services only. | | | | the Self Care Portal at a later stage. However, we |
| Despite offering undoubted advantages, this model is | | | | are open to any needs and ideas. |
| not without flaws from the software vendor's | | | | Summary |
| perspective. The requirement of running dedicated | | | | Building a SaaS platform is undoubtedly a complex |
| sales & marketing departments has been | | | | and demanding task. However, setting up the |
| enough of a struggle for many software engineering | | | | necessary infrastructure around it in order to |
| businesses. The billing and invoicing on top of that | | | | provision and bill particular applications is also a |
| may be too much for some executives to handle in a | | | | challenge. Verax Systems with its OSS/BSS Suite |
| short timeframe. | | | | offers a perfect set of applications to address these |
| Revenue sharing model | | | | challenges. |