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.