1. technology and computing
2. software

Software as a Service
"A to Z" for ISVs
A White Paper of the SIIA eBusiness Division Software as a Service Initiative
Software & Information Industry Association
1730 M Street NW Suite 700, Washington DC 20036
+1.202.452.1600 | www.siia.net
Software & Information Industry Association: Software as a Service
Acknowledgements
The Software & Information Industry Association's (SIIA) eBusiness Division Software as a Service
Initiative produced this white paper as a means for the software industry to explore the issues in the
ongoing evolution of software. This document presents issues to consider and critical success factors for
ISVs seeking to introduce software services.
The paper is a product of the members of SIIA. The working group collaborated on this document
providing expertise and resources to help determine the issues to consider in moving to this new model.
We gratefully acknowledge and thank the following contributors who made possible this white paper.
Project Work Team:
Betsey Bolton, Softricity
David Bowman, Buyonet
Steven Bradford, Xevo
Matt Engen, Rainbow Technologies
Robin Ford, GraphOn
Chet Geschickter, Breakaway Solutions
David Greschler, Softricity
Peter Grimes, New Moon Systems
Brent Gushowaty, SoftSearch
Vicky Harris, Citrix Systems
Russell Johnson, GraphOn
George McNulty, Wizmo
Jonathon Pantanowitz, Exent Technologies
Mark Reichert, Wizmo
John Tomeny, Sassafras Software
Rick Weir, VerticalApps.net
Susu Wong, Navipath
Project Manager:
Fred Hoch, SIIA
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Software & Information Industry Association: Software as a Service
Table of Contents
I.
Introduction: To Service or not to Service?.................................................................................... 4
II. Application Development Practices................................................................................................ 5
Delineating the Value Chain ............................................................................................................. 5
Which Way Do I Go? ....................................................................................................................... 6
Do it yourself or go with a third party xSP? ................................................................................... 7
What types of delivery environments are there? ............................................................................ 7
What are the key issues when selecting a delivery environment?.................................................... 8
Offering a hybrid?........................................................................................................................ 9
Aligning Your Internal Resources for a New Model ............................................................................ 9
Support Requirements................................................................................................................... 10
Software Service Readiness Assessment ......................................................................................... 11
III.
A.
Aligning with Application Infrastructure Vendors, Partners ........................................................ 11
Alignment between Business Objectives and Resources ............................................................ 12
Vendor/Partner Fit with the ISVs Business Objectives and Model .................................................. 12
Potential Conflict with Existing Partnerships/Relationships ............................................................ 12
Integrating with Technical and Support Staffs: Process, Procedure, Measurables ........................... 13
Cultural Considerations .............................................................................................................. 13
Evaluating the Business Strength and Longevity of the xSP .......................................................... 13
B. Technical Considerations in Picking Vendors, Partners .............................................................. 13
The New/Old Supply Chain Management..................................................................................... 13
The Need for an Integrated Platform .......................................................................................... 17
IV.
V.
Application Integration ........................................................................................................... 17
Pricing / Licensing Models .......................................................................................................... 18
The Price is Right .......................................................................................................................... 18
Usage Model ............................................................................................................................. 19
Named User Model .................................................................................................................... 19
Machine ID Model...................................................................................................................... 19
Concurrent User Model............................................................................................................... 20
(End-user) Site License .............................................................................................................. 20
Combinations ............................................................................................................................ 20
Does one pricing model fit all?.................................................................................................... 21
Determining the "True Value" Price ................................................................................................ 21
Impact on Revenue, Income Statements and Balance Sheet............................................................ 22
Market Specific Considerations....................................................................................................... 22
VI.
Managing the New Channel Paradigm...................................................................................... 24
Choosing a Partner who Supports the ISV Channel Strategy ............................................................ 25
Market Specific Considerations ................................................................................................... 26
How is marketing different for a service?........................................................................................ 28
Evaluating Global Issues: Legal, Technical, & Business .................................................................... 29
VIII. Conclusion ............................................................................................................................. 29
Appendix A -- Service Enabling Products and Companies .................................................................... 31
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I.
Introduction: To Service or not to Service?
A profound shift in the development and distribution of software has transformed the industry. With the
widespread adoption of networking as a tool for conducting business, the software industry has evolved
the ways in which it produces and distributes its product. The newest evolutionary model is that of
Software as a Service (SaaS).
In the software as a service model, the application, or service, is deployed from a centralized data center
across a network - Internet or private network - providing access and use on a recurring fee basis. Users
"rent," "subscribe to," “are assigned”, or "are granted access to" the application from a central provider.
Business models vary according to the level to which the software is streamlined, to lower price and
increase efficiency, or value-added through customization to further improve digitized business processes.
The potential benefits of the model are significant for both the vendor and the customer.
In the past few years, many new companies have been established that took this new paradigm into
consideration from the onset. However, what about the traditional independent software vendor (ISV)
whose products were not designed or optimized to be utilized in a service model? Should they be worried
that their products will become relics in today's distributed computing environment? Or is a service model
even appropriate for these products? Many ISVs are therefore asking themselves whether to
service or not to service?
ISVs contemplating such a move want to consider the following:
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What is the strategic motivation for considering offering Software as a Service?
Has a competitor created one yet?
Is there pressure from the customer community to offer one?
Is the company highly profitable and in no hurry to threaten the current business model?
Is the company losing money and feels a need to offer a new product?
Does the application lend itself EASILY to an application-hosted product or is there a significant
development investment needed to get it ready?
Is the service offering targeted at existing prospects (and can therefore threaten current revenue
from license sales) or is targeted at new markets?
The decision to develop a service offering necessitates significant changes in the software development
cycle and can have a profound effect on the operations and bottom line of a company. It requires a new
skill set that many traditional ISVs may not currently possess. Once this strategic decision to proceed has
been made, a whole new set of questions comes to the fore.
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Does the ISV host and manage its own service? Do they go with a third-party xSP to manage it for
them? How do they get to either?
Does the ISV hire an application infrastructure provider to provide the technology for the service and
the integration with legacy systems?
And what about the changes in the ISV business model. How does it impact internal operations? How
does it impact revenue streams?
What about the channel?
Where to begin?
The answers to these and other questions lie in this white paper. Through real world explanations and
examples, it outlines such topics as the technical considerations of selecting a SaaS partner, how
applications will integrate into your current business model, the long-range impact on revenue, and how
to manage this new channel. It's a tool to assist the ISV as they begin to address this burgeoning model
of software as a service.
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II.
Application Development Practices
Delineating the Value Chain
Before getting into application development, it's critical to understand a variety of aspects of software as
a service by looking at the technical and value chains in a more detail. In today's marketplace, companies
in the software as a service value chain have come to call themselves by a variety of names each with
their own acronym. Moreover, no two definitions are equal. The reality is that each company in the SaaS
value chain provides a variety of services depending on their skill set and there is a great deal of overlap
among companies of different acronyms. It makes it impossible to categorize them definitively. In this
document, they are referred to commonly as "xSPs", meant to represent any kind of service provider,
from the network providers to AIPs to the pure-play Application Service Provider (ASPs), all of who are
trying to offer SaaS. The list of categories and subcategorizes in the software as a service value chain
includes:
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Software Application
- A software product built for the Web
- An existing software product service-enabled
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Service Enabling Software
- A software product that service-enables a software application
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Application Hosting (commonly referred to as an ASP)
- Application deployment and management
- Application maintenance
- Application updates
- Infrastructure management
- Data management
- Security
- Provisioning
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Application Management
- End-user administration
- Customer billing
- Service level management
- Customization
- Training
- Customer support
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System Integration
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Network
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System Implementation
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Marketing/Resellers/Distribution
In a traditional software license sale model, end-users take responsibility for the provisioning and set-up
of the runtime environment (network, servers, storage and the like), installation, configuration, and
sometimes customization and integration of the application, as well as ongoing management and
support. Traditionally, ISVs limit their responsibility and support to the application code, and to the
interaction of their application code with underlying system components (such as the database and
operating system). In the software as a service model, the system and application-related responsibilities
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Software & Information Industry Association: Software as a Service
traditionally borne by the end-user shift to the service provider. The new service provider model implies
a fundamental shift in the criteria for success, and necessitates an examination of the new responsibilities
incumbent on the service provider or service provider network. Major management responsibilities and
economic and operational considerations for a software vendor include:
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Help desk: Front-line support for end-users, including problem verification, initial troubleshooting
and triage.
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Application Support: Problem diagnosis and application code analysis to identify and develop
resolution plans for code-based defects. May also include application performance tuning and
database code analysis, tuning and troubleshooting
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Database Administration: Monitoring and management of the runtime database environment
including maintaining, troubleshooting and tuning the database server.
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System Management: Monitoring and management of the operating system and storage
environment including backup and recovery, performance monitoring, system recovery and
proactive maintenance.
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Network Administration: Monitoring and management of the health of the network connection, as
well as connectivity and communication inside the data center.
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Security Administration: Monitoring and management of the system security including intrusion
and attack detection.
Traditionally, ISVs are limited to the first two items on the list as customer-facing activities, help desk and
application support, while end-users carry the burden of the ongoing management activities. Developing
capabilities to meet service-level agreements for the latter responsibilities is a significant investment in
expertise, system software products and process.
xSPs provide varying levels of support, under varying price schemes to manage these items. A well
thought out service plan will consider the need to deliver comprehensive end-to-end service management
capability. The plan should consider the costs and risks associated for the customer with insourcing
versus outsourcing in order to achieve service levels on a 7x24 basis. Complex multi-party arrangements
may introduce unnecessary risks. Simple arrangements for contracting Service Level Agreements (SLAs),
such as the xSP taking responsibility for all application infrastructure and the ISV taking responsibility for
application-level SLAs, should be favored in lieu of more complex multi-party arrangements.
Straightforward, comprehensive, and well-delineated service agreements and SLA contracts will
significantly reduce the risks of providing an end-user service.
Which Way Do I Go?
Choosing how to develop, deploy, and manage applications is a daunting task. How one chooses to
execute the strategy will dramatically shape one’s ability to deliver innovative services, expand into new
markets, and respond to competitive pressures. And so, what are the software as a service technologies
to consider … and what are the related responsibilities?
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Does the ISV want to re-write applications in HTML for Web deployment?
Does the ISV want to deploy the applications in a hosted client-computing environment? (100%
computing on client)
Does the ISV want to use a third party thin client solution to deploy and/or Web-enable your
applications? (100% computing on server).
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•
Does the ISV want the application certified under a Microsoft Terminal Services environment?
(100% computing on server).
Most traditional applications used today were written for a client/server environment rather than for the
Web, making it necessary for ISVs to find the best adaptation method. As ISVs investigate service-based
delivery, a number of challenges arise.
Do it yourself or go with a third party xSP?
Third party xSPs provide customers with a contractual service to deploy, host and manage applications.
This model combines a data center, the bandwidth of a network service provider, the application-specific
expertise of consultants, VARs, system integrators and software providers with enabling infrastructure
technologies in order to extend a transparent, best-of-breed application service to the end-user.
One of the most critical decisions an ISV needs to make is whether to own and operate the data center
and infrastructure, or find partners that can provide these back-end capabilities. In general, data center
operations fall beyond the scope of all but the largest ISVs, due to the high level of capital outlay,
breadth and depth of expertise required, and the constant need for technological improvements to
safeguard competitiveness. Even large ISVs have found it economically impractical to enter the hosting
business. For instance, J.D. Edwards recently announced it is exiting the hosting business in favor of
partnering with specialized hosting vendors that are investing in the support staff and operational
processes to support multiple vendors and clients. Moreover, it involves a skill set that many software
companies do not currently possess.
Smaller ISVs can do well by outsourcing data center functions to an experienced application-hosting
partner through a “private-label” arrangement. Under this scenario, the ISV offers SaaS to customers that
they bill directly, while partnering with a large hosting xSP to provide the back-end infrastructure. This
enables the ISV to provide a branded SaaS offering to customers without a large capital investment. By
leveraging the economies of scale of an established xSP, the ISV can provide a more reliable service at a
lower cost.
For those large ISVs that are contemplating deploying, hosting and managing applications themselves,
there are pros and cons. On the plus side, providing a complete "SaaS offering" allows ISVs to retain
control of their customer base and, of course, to receive the entire revenue stream instead of sharing it.
On the downside, the ISV will face a number of challenges in addition to the demanding task of
establishing and operating a data center while maintaining 24x7 application availability. First, regulations
governing data security - especially in the medical and government markets - are becoming more
stringent. Service providers must provide the backup systems, mirroring, security and redundancy to
ensure compliance with regulations and reassure customers.
A similar challenge is the need to ensure quality of service across the SaaS offering, which entails
working with many different variables that may or may not be under the xSP’s direct control. These
include server uptime, application availability, bandwidth capacity, latency, etc. Without extensive
expertise in these areas, an ISV may fail to provide sufficient service.
The ISV that offers it's own service solution may also find it difficult to remain competitive as market
expectations and technology innovations change. Especially in this emerging marketplace, new offerings
and standards are constantly appearing, making it essential for the ISV service offering to stay abreast, if
not ahead, of the competition. For ISVs new to the data center environment, this fast pace of change
may be too much to handle.
What types of delivery environments are there?
SaaS requires a variety of enablers, supporting technologies, and network and hardware providers.
Vendors offering application delivery products enable ISVs to readily transform products to services.
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Software & Information Industry Association: Software as a Service
Whether the ISV chooses to provide a service itself, using a service-enabling product, or goes with an
xSP and its technologies, there are four main ways that the vendors approach the delivery of applications
as a service. These include:
1. Server-Based Computing (thin-client)
In the server-based computing model, an application is run on a server, but the user interface is
presented through a thin client to the end user. Users can access the output of the user interface via
a special client program or within a browser. Application processing shifts from the individual device
to the server, resulting in centralized application management.
2. Hosted Client Computing (HCC)
HCC allows an application to run on the user's desktop, but it is served, or “streamed,” from a server.
When the user is finished using the application, it is removed without ever having been physically
committed to the user’s machine. The most efficient HCC technologies segment the application so
that only those portions of the application and the data needed to run the application are sent over
the network to the user’s machine.
3. Web-Based Applications
These include the deployment of applications via html. By simplifying user interface logic and
separating application data and user data, a Web application is developed to be maintained on a
server and viewed through a browser.
4. Java Applications
Java allows applications to include a rich mix of interactive features and functions that simple Web, or
html, based applications do not offer.
When making a decision about a method of deployment, the ISV should consider whether the enabling
method is proprietary to an xSP or other service or software provider, if it chooses to partner. They must
also consider whether it would be more profitable and appropriate for to pre-enable applications to
ensure retention of branding and compatibility among numerous channels and xSPs.
What are the key issues when selecting a delivery environment?
In order to choose a delivery method, the ISV must also assess the following in order to provide optimum
service:
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Typical environment (number of end users and scalability)
Frequency of application updates
Size of the intended application
Complexity (application richness)
Nature of end user machines or terminals and their connection bandwidth
Connectivity features of the network
Cost of service-enabling
Retention of look, features and integrity of original
Retention of branding
Cost of 3rd party software and hardware
Need for third-party systems integrator involvement
Operating system of application
Desktop resources
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Offering a hybrid?
There is a third alternative that may be appropriate for some types of applications. This is a hybrid model
with online modules, services or components complementing the base client application. This is a model
based on availability. Consider the following:
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What
What
What
What
if
if
if
if
network is down internally or externally?
power is out? (See California)
the user spends 40 hours traveling each month?
xSP goes out of business and there is a gap in service while choosing another xSP?
In this model the basic product on the client is supplemented or augmented by additional components
and services that are available through online interaction.
Aligning Your Internal Resources for a New Model
The movement to a service model and how it’s integrated into the business will also have a deep impact
on development practices. Therefore many business issues need to be seriously considered, including:
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Existing staff (current in-house expertise) can influence the technology choice
Budget
Ease of application migration and integration (need for third-party support)
Pricing under SaaS model
The new distribution system of SaaS requires a new set of components that ISVs may not already have
completely in place. Nonetheless, the software publisher must be able through internal resources, or by
working with a partner to provide the following:
BACK OFFICE SYSTEMS
Network
Content
Service
Management
PORTAL
CUSTOMERS
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Authentication
Billing
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User Interface
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Help Desk
Platform
Content is the SaaS-enabled software. This is the fundamental component of SaaS, and the
component that all publishers already have.
Platform is the system that enables applications to be service enabled. The internal resources
necessary for this depend on the in-house versus outsourced model chosen by the ISV.
Network delivers the application to the end user. This network can consist of servers housed in
hosting facilities, which have backbone connectivity to the Internet. It can also be a content delivery
network that utilizes third party systems and services for content distribution. The network needs to
be constructed such that the software-enabled content can reach the end user with optimal
performance levels.
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Software & Information Industry Association: Software as a Service
•
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Portal is the virtual storefront where end-users self-provision and access the software service and
supporting content. Supporting content includes information about the content and FAQs on how to
use the service, among other items.
Back Office Systems include the authentication systems that allow a user to access the SaaS and the
billing systems that charge them for the service.
Help Desk is the customer support mechanism. This could entail both online self-help as well as
offline hot line services that customers can call when they are having problems accessing and using
the SaaS.
Service Management brings all of these components together to ensure that the SaaS is operational
and is delivering a good value proposition to the customer. In other words, it is the managerial
oversight to the SaaS as a whole, which is not too different from the product management
capabilities software publishers already have in-house.
Publishers may have varying degrees of capabilities to deliver these SaaS components. However, most
will recognize that they can leverage some existing in-house resources to deliver a SaaS product. For
components where in-house capabilities fall short, there are many expert partners who are willing to fill
in the gaps.
Support Requirements
ISVs moving to the service model may not be prepared for the resources required to support applications
around the clock. Ongoing support is far more demanding than providing technical assistance during the
deployment phase of an application. Customers prize availability highly - it is a key component of a solid
service level agreement - and expect 24-hour service without downtime for upgrades and configuration
changes.
The ASP Industry Consortium lists the following components of an optimal customer support model:
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Aggressive service level agreements
Integrated and proactive system, application, network and SLA monitoring, management and
reporting. ASPs need to monitor, manage and report on applications based on SLAs. Unavoidable
service degradation needs to be predicted and communicated to customers in advance.
24/7 call center support. Even though self-service is expected to become prevalent in the ASP
industry, customers still expect to be able to contact live support staff. If the call center service is
outsourced, this should be transparent to the user.
Full data backup
Offsite storage of backup media and disaster recovery
Professional maintenance and upgrades of all applications and server hardware
Single-source bills for bundled services
While numerous hosting vendors are available to compete for Internet data center collocation services,
the number of players that provide application infrastructure support services is fewer. ISVs looking to
outsource the entire 7x24 support structure must keep in mind that typically, they alone hold the indepth knowledge of their application, and that access to source code and control over revisions cut to the
heart of the intellectual property value, and even viability, of their technology asset. Therefore, it is
realistic to expect that all but the largest vendors will need to provide some form of 7x24 support for
their applications. With the move to online business activity, xSPs should also link customer support with
online resources, so that support staff can view the customer’s history of interactions, a knowledge base
of customer questions and issues, and information about the infrastructure and applications.
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Software Service Readiness Assessment
ISVs need to determine how well their applications will conform to the hosting model, and what
adjustments may be needed to ensure optimal performance, scalability and other key service
characteristics. Typically, the application must be evaluated in light of the specific environment in which it
will be hosted and deployed. Some testing facilities, such as IBM’s ASP Prime Centers, provide
suggestions on how to prepare the application for the service model, and certify applications meeting
those criteria. The following are key test criteria on which a typical application is evaluated:
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Support for multiple users on a single server
Authentication and privacy for users
Automated application installation
Design considerations for distributed computing
24/7 availability
Number of supported users for a given system configuration (load testing)
Concurrency requirements
Optimal database access design for best performance in a Web environment
Type of end-user interface (browser or thin client)
High availability
Scalability
Resource usage (CPU, database)
Once the application has been tested in the laboratory, it should to be evaluated in the service
environment to determine availability, performance and multi-user capabilities. ISVs may need to request
assistance in adding functionality or resolving issues, especially to enable the application for a
subscription model. This can include establishing SLA guidelines and incorporating resource usage
accounting, license management and metering. These issues are good examples of why an ISV may want
to partner to bring the best possible service to their customers.
III.
Aligning with Application Infrastructure Vendors, Partners
For a successful deployment of a software service, the ISV may need to partner with the right technology
providers. Picking the right set of partners is critical, as your service business is only as strong as the
weakest link in a chain that will include applications, enabling tools, data centers, servers, billing,
metering, scalability, customer relationships and marketing. In choosing potential partners, the ISV must
consider the compatibility of business objectives and models among the various players, whether there
are potential conflicts with existing partners, and how the partners integrate with the ISV’s technical and
support staffs. It must decide who “owns” the customer and how the offering will be branded.
A lot of the early xSPs models were based on a client/server infrastructure via a proprietary or corporate
network. As the xSP market matures, it is important for xSPs to offer the ISVs a high degree of security
on the Web; since corporations also want secure remote access capability via the Internet. Furthermore,
xSPs should develop and offer service-enabled applications. A successful xSP also needs to have
strategic partnerships with service providers that offer a robust infrastructure; thus creating additional
values to the ISV market. Security measures are an important factor to consider when partnering with
technical providers and support staffs. Security plays an especially important role when companies
outsource their mission critical systems such as their e-commerce system, Web service hosting and
network data center.
Collocation, recoveries, real-time backup and redundancies of architecture are also factors when
outsourcing a network infrastructure service. These measurements prevent business from embarrassing
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network or server downtime. SLAs have to be clearly defined and adhered to between the providers and
companies.
A. Alignment between Business Objectives and Resources
Many ISVs are faced with the reality that more and more software will be sold as a service offering. This
is a very different distribution approach to software sold in either individual shrink-wrap, electronic
software delivery or in the OEM model. As a service, software is viewed as a commodity versus a
permanent asset. This creates a major opportunity for the ISVs opening up new markets. At the same
time an ISV is faced with the challenge of capitalizing on this opportunity while maintaining the current
installed base of the traditional channel of software distribution. Perhaps the ideal solution for ISVs and
users alike is to deliver applications the users are familiar with and which are virtually identical in
appearance and functionality eliminating the frustration and cost of retraining. xSPs help to offload some
of the resources that an ISV would spend and share some of their responsibilities. Instead of spending
resources on customer services and channel management, this will free up resources for the ISV to
devote their time on their core competencies such as R&D and product development.
Vendor/Partner Fit with the ISVs Business Objectives and Model
An ISV looking for a vendor partner should seek out a service provider willing to commit to development
or with already developed deep expertise in their particular market. For example if the ISV’s software is in
the financial market, then they should look for an xSP that specializes in this area. xSPs that hone
expertise in a certain domain will likely be able to leverage the large and the medium size business
market. Furthermore, their expertise will create substantial consulting services and customer services
because of the knowledge that they bring which are highly valued by the marketplace. This creates huge
opportunities for the ISV to improve their brand recognition and revenue generation.
ISV should also look for xSPs that can offer one single solution, with the necessary partnerships already
established. The customers will be well served if the xSP can align all the integrated services (network,
applications, and services) under one service agreement and sell it as a single offering.
Potential Conflict with Existing Partnerships/Relationships
It is no secret that the software as a service model can dramatically change how an ISV sells their
software. When their software is offered in a service model, potential conflicts arise between the ISVs
traditional partners and the new relationships necessary to fulfill a SaaS model. Partners in development,
distribution and sales need to be evaluated in light of past and future customer considerations. Some
difficult choices may have to be made. Similar to what was witnessed in the transition to Electronic
Software Distribution (ESD), the ISV needs to take a proactive approach to navigate the disparate groups
and avoid conflict that could potentially hamper both traditional sales as well as sales through the new
service model. It's key to make sure that all partners are in the loop.
Economic necessity and supply-chain complexity are driving members of the SaaS supply chain to
establish various types of partnerships with AIPs, distributors, ISPs, telcos, and others in order to
compete effectively in the delivery of software as a service. Rather than conflicts, these partnerships
may bring several benefits to their members:
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Core competencies. Partnerships allow companies to maintain focus on their core competencies while
delivering the higher value of a full solution to application users.
Cost sharing. Partners share the increasingly high capital costs of delivering SaaS.
Time to market. In light of the SaaS supply-chain complexity, partnerships speed the time to market
in comparison with a company that seeks to provide a full solution by itself.
Brand leveraging. Partnerships between companies with established brand names (for example,
AT&T) and companies with less visible brands enable efficient leveraging of the established brand to
gain immediate market acceptance.
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Integrating with Technical and Support Staffs: Process, Procedure, Measurables
There needs to be a clear delineation and escalation process between the technical and support staffs of
the two parties. Expectations of Quality of Service (QoS) and SLAs have to be clearly defined and each
party held accountable to ensure customer satisfaction. For example, it has to be clear which party is
responsible for providing the application support, and which party is responsible for client hardware
support. Measurable processes and procedures should be implemented behind the scenes to assure
success.
Cultural Considerations
When a company outsources their mission critical applications and systems to a third-party vendor,
conflict may arise with their in-house IT department. While it may decrease the cost of investment and
resources for a company, the removal of a core business system may be perceived as a threat to the
internal IT department. Instead of designing, developing and implementing leading applications, the inhouse IT staff may feel they have been regulated to a supporting role for external vendors. This may not
create a good learning and competitive environment for the department and may cause the companies to
lose valuable IT talent. For the initial engagement at least in the short to medium term, it is critical to
have senior executives of the line of business to be champions of the SaaS implementation and own the
SaaS relationships.
Evaluating the Business Strength and Longevity of the xSP
The business strength of the xSP to an ISV is their capability to deploy mission-critical applications in a
short amount of time. ISVs should choose xSP partners that have clearly defined exit strategies and
migration paths should the ISV want to migrate to another provider. This gives the ISV flexibility to
switch from one provider to another, should an xSP fail to live up to expectations. While this may be
viewed as a shortcoming, it is also viewed as business strength as an ISV is free to forge relationships
with multiple providers.
There may be additional advantages for ISVs to “pre-enable” their applications for delivery on the Web
and over other networks without rewriting them. This allows them greater flexibility in their choice of
xSPs or the option of enabling the SaaS model within their own businesses and/or those of their VARs or
end-user enterprises. It also helps them maintain control of their branding, which could be diluted by
some third-party solutions or reliance on proprietary systems. By handling the service enabling before
distribution, the selection of the xSP model becomes part of the distribution channel choices of the typical
ISV and not a technology choice or an end in and of itself.
B. Technical Considerations in Picking Vendors, Partners
To make software as a service an attractive, profitable option, it is axiomatic that ISVs must select a
service provider partner who can offer an integrated operations, delivery, and reporting platform.
Surprisingly, this new platform is analogous to a familiar concept: supply chain management.
The New/Old Supply Chain Management
The true test of a successful business is the ability to fulfill customer requirements profitably by delivering
the product in the shortest time and at the lowest cost. This is basic supply chain management … from
demand, to delivery, to service and support.
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Software & Information Industry Association: Software as a Service
Today’s service provider can actually drive Software as a Service through this traditional business model.
Figure 1. xSP Supply Chain Capabilities
xSP
ISV
(1)
Supplier
Mgmt
(2)
Offer
Mgmt
(3)
Customer
Care
(4)
Service
Assembly
(5)
Delivery
(6)
Fulfillment
Customer
(7)
Business Intelligence
Consider that core to the value-add of an xSP is the promise of compelling application offers from ISV
intellectual property, and the timely and accurate fulfillment of customer service requests. The business
processes of both supply chain management and software as a service management are the same, only
the enabling technologies are different.
The following section reviews the operational systems of the xSP. These systems are often referred as
the Operational Support Systems and Business Support Systems (OSS/BSS) infrastructure of the xSP,
which is used to maintain and enhance their operational capabilities. There are seven main areas (Figure
1) to consider.
Supplier Management
This area examines the xSPs capabilities to manage compliance to the contract requirements between the
xSP and the ISV, and insures all requirements are met. The supplier management function at the xSP is
responsible for offering ISV applications properly, ensuring license compliance, remitting payment, and
resolving issues. Key issues include:
•
•
•
•
Policy Compliance: Implementing key business policies throughout their operations, such as:
implementing license management processes, managing customer accounts properly (i.e. special
application pricing for educational or government markets), application service operations (help desk,
application service Levels), finance processes including customer accounts receivable and ISV
accounts payable, and business intelligence systems and reports.
Effective processes for key product management scenarios such as new application take-on and
effectively managing product launch dates and price change effective dates.
Providing a revenue audit trail from customer service delivery, through customer billing, to ISV
procurement.
Reporting and procurement systems that provide the ISV with required usage information that serves
as a basis for payment (i.e. application name, customer type, service volume, license type).
Offer Management
The second area of technical considerations for ISVs is a review of the xSPs systems and processes for
meeting market requirements with compelling service offers.
Packaging capability:
• The ISVs application provides “raw materials” used in the assembly of the final application service.
The product definitions (contracts, price lists, and product information) provided by the ISV inform
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Software & Information Industry Association: Software as a Service
•
the xSP of proper use and policy requirements for the application as an element of the final service
offering.
The final application service offered to the customer is comprised of many service elements,
assembled from ISV applications and from the xSPs host resources. Consider the operational
capability of the xSP to flexibly mix and match these components into compelling offers. Examples
of such capabilities are offering a word processor with or without the spell checker, or mailbox with
additional storage options.
Pricing capability:
• Understand how end user pricing is managed. How does the xSP support multiple pricing models,
including usage pricing, named user pricing, concurrent usage, site pricing, or other pricing models?
Customer Care
The third area of technical considerations relates to the customer care processes implemented by the xSP
to support application service users. For example, the xSP may offer a single point of contact through a
customer self-serve Web based mechanism, or offer telephone care service through a call center. The
xSP should have:
•
•
•
•
A quick and easy way to view existing services for a customer, view service options available, change
services, view service status, and review pricing structures.
Customer care representatives with the ability to capture and track customer requests, make
commitments on behalf of the xSP, and fulfill expectations.
An ability to manage multiple views of a corporate customer, both at the corporate level and at the
user level. For example, implementing customer service policies set by a corporate representative, so
that employees of that company select options within predefined corporate standards.
The technical skills to offer multiple billing options - at a corporate level, cost center level, user level
and to provide usage activity reporting at multiple levels.
Provisioning (Service Assembly)
The forth area of consideration refers to the provisioning of ISV application and xSP host resources, and
secure access, to enable the application service to the user. Provisioning refers to the assembly of these
resources in the proper sequence and granting access to the user.
•
•
•
•
Review provisioning documentation and change control. There should be clear instructions for the
assembly of host resources, network resources, storage, database access, directory access and
rights, application elements (application service raw materials), and security.
Automation support for provisioning, from fully manual to fully automated. Customer provisioning
requests should be implemented quickly, leveraging systems and processes that improve provisioning
speed and quality.
Review “customer to customer” cycle times to implement the specific provisioning requests, and
check the control mechanisms for tracking successful completion of these requests.
Review the xSPs ability to control provisioning actions so that they conform to the ISVs licensing
terms.
Delivery/Fulfillment
The fifth area of consideration refers to the delivery of the application service to the user desktop. Since
applications are derived from a variety of technologies, the ideal platform clearly must be designed to
accommodate a variety of environments. Leading environments include:
•
Server-based computing: In the server-based computing model, an application is run on a server, but
the user interface is presented through a thin client application or Web browser to the end user. This
model reduces the need for complex deployment strategies, retains the look, feel and functionality of
the original application and works over low or high bandwidths. Some solutions can offer cross-
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Software & Information Industry Association: Software as a Service
platform compatibility on both server and client sides and allow ISVs to retain all branding. Some
pure software solutions can “pre-enable” out-of-the-box applications. Some solutions, however,
require intermediate server software and/or hardware. This model provides significant benefits to IT
groups and xSPs for rapid one-to-many deployment and management of applications.
•
Hosted client computing: Hosted client computing allows an application to be served via a server,
delivered over a network, and executed on the user's desktop, but the application is not deployed or
installed on the desktop. When the user is finished using the application, it is removed without ever
having been physically committed to the user’s machine. Since its code is served via the server while
the processing power resides with the client, hosted client computing has the central management
benefits of server-side computing with the performance and scalability of client-side computing. This
method works best where high bandwidth is available. A robust HCC scheme also includes caching
technology in which an application’s segments are cached on the client’s PC - allowing an application
to start as quickly as if it were installed locally. To the user, applications appear identical to installed
applications without requiring significant server resources.
•
Web-based computing: Deployment of applications via the Web has increased over the last five
years. By simplifying user interface logic and separating application data and user data, a Web
application can be developed quickly, updated anytime, and be maintained without user interruption
or knowledge. The only piece of software an end user needs is a Web browser that is compatible
with any additional technologies the developers have used. Web applications can also be tailored for
the network on which they are used. It offers the ability to render the user interface dynamically as
appropriate for the device and network speed used by the client. Rewriting existing applications for
Web deployment can be costly and time-consuming, however, and will very likely not maintain the
look, functionality and speed of the original.
Also review the xSP's visibility to application service delivery, typically enabled through application service
metering tools. The metering systems used by the xSP should enable robust reporting for customer, ISV,
and xSP use. These reports are also the basis for customer billing, ISV payment, and XSP service level
management.
Business Intelligence
The sixth area of technical considerations refers to the xSPs capability to share application usage patterns
and other business intelligence with the ISV. What business information should an ISV expect from the
xSP so that together they can build a better xSP business plan?
•
•
•
•
The need to monitor usage prior to implementing new pricing or packaging models.
Visibility to activities of other channel partners (VARs, System Integrators) that leverage the xSP’s
services.
Ability to monitor application service levels.
Visibility to customer application activity and trouble tickets for improved application quality.
Application Enablement
The final area of technical consideration refers to the xSP’s readiness review of your application, and how
well the application will perform in the application services environment. Most applications used today
are not designed for the hosted environment and the automated processes of an xSP. The ISV needs to
understand the requirements and benefits of enhancing the application to take advantage of the xSP’s
service delivery capabilities.
•
Enabling fully automated provisioning by exposing API’s for customer and user maintenance
• The processes for setting up a new customer
• The processes for adding, changing, deleting users
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Software & Information Industry Association: Software as a Service
•
•
•
Instrumenting meters within the application, or employing a third-party metering system, to enable
new measures (new pricing)
Enabling product delivery over the network, or employing a third-party delivery system
Working with multiple xSP’s. Standard approaches for product definitions, provisioning, metering
that can be leveraged across multiple xSP’s.
The Need for an Integrated Platform
Figure 2. Software as a Service Platform
xSP
ISV
(1)
Supplier
Mgmt
(2)
Offer
Mgmt
(3)
Customer
Care
SaaS
Platform
Billing
(4)
Service
Assembly
(5)
Delivery
(6)
Fulfillment
Customer
(7)
Business Intelligence
Support
Licensing
By leveraging the supply chain management concept for Software as a Service, ISVs can focus on
fulfilling their customers’ applications demand profitably in the shortest time and at the lowest cost. But
to truly succeed, ISVs should also expect that their Software as a Service platform (Figure 2) integrates
with industry-standard management applications such as licensing, billing, provisioning, network
management, and customer support. With the ability to integrate industry-standard management
applications, ISVs can respond shrewdly to their dynamic business needs.
IV.
Application Integration
In the context of this discussion, application integration is actually a misnomer in the xSP community.
What xSPs are looking for in reality is interoperability between applications in a hosted environment.
Does your application rely on third party applications or data?
One of the first questions the ISV needs to ask is whether their applications rely on third party
applications or data. In a typical hosted environment the application and the data layers may be
physically located in completely separate environments. For xSPs to reach an economy of scale these
layers may need to be hosted in a shared environment. For example, a company’s time management
application may need to tie data to the billing application. Building small applications that do nothing
more than move data from one hosted environment to another could easily solve this issue.
Alternatively, each application that shares data could run in a single hosted environment.
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Software & Information Industry Association: Software as a Service
Does your application require third party maintenance and support?
One of the concerns that xSPs have in this hosted type environment is guaranteeing uptime for clients.
Commonly referred to as Service Level Agreements, SLAs often require the xSP to “lock down” the hosted
environment to third parties. This is particularly challenging for applications that require on going
maintenance, integration, and customization. For these applications to run in they must be hosted in a
dedicated environment or redesigned to allow for multiple third party maintenance, integration, and third
party support. For example, Great Plains requires third party integration and customization, which
requires a dedicated environment. To solve this, Microsoft is currently rewriting Great Plains module by
module for the Web.
Data in a Shared Environment
It cannot be assumed that all data stores will be hosted in a dedicated environment, thus the
corresponding databases must be designed to operate in a shared environment. Here the issue is
allowing one data server, or “cluster”, to host databases for multiple applications and customers in a
shared, yet private, environment. Most applications are designed with data models that prevent xSPs
from sharing the same data server for multiple databases and/or customers. It is crucial for the ISV
community to recognize this dilemma before moving forward with application redesign or the hosted
environment.
Interoperability
Some applications need a variety of interoperability features. There are a number of current xSP models
that will assist ISVs with this solution. The most obvious is hosting the application with an xSP that
utilizes a model of sending APIs for delivery of applications. Another solution that is obvious, but not
economical for the ISV in the short term, is the rewriting of the application utilizing Java. Ideally, it may
be more economical for the ISV, hosting partner, and end user to solve the problem by rewriting the
application in a Java type format. ISVs may apply a short and long term objective when dealing with this
issue.
Where are your ISV partners in their xSP strategy?
In today’s working environment many applications currently require integration with third party
applications. For all of the reasons stated above, it is crucial that ISVs understand where their software
partners are in moving to the hosted solution and make sure that everyone is heading down the same
path. ISVs need to make sure they are bringing similarly designed applications to market to ensure a
pleasant end-user experience.
V.
Pricing / Licensing Models
In considering a SaaS strategy, ISVs should carefully consider their value proposition as an application
service. It makes good business sense to revisit the core functionality of application software to identify
new ways to add value in a hosted application environment, including connecting users together to share
information, linking to public information sources, and enabling supplier-buyer communication and
possibly trading. Well-designed and well-executed market research can help identify new opportunities,
while significantly reducing the risk of your hosted service initiative. Working with focus groups and
current customers can provide a trove of data in determining a solid pricing scheme.
The Price is Right
There are currently a number of pricing/licensing models that are being used/tested in the application
hosting market today. There will also be many more that emerge as the market grows and matures. In
general, the industry proposes 3-year service contracts with end-users, although many offer 2 and 1-year
contracts at a higher rate. This section identifies the major models that are in use today, describes them,
and lists the major positives and negatives aspects of them from the ISV perspective.
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Software & Information Industry Association: Software as a Service
Usage Model
The foundation of the usage model is that an end-user will pay only for resources that are used. There
are many resources that are utilized while using an application-hosted product. Some of the major
resources that can be measured (and charged for) include:
•
•
•
•
•
End-user logged time on the application
CPU cycle time
Application server storage
Data base server storage
Bandwidth used
Positive aspects of the Usage Model:
• End-user is charged only for what is used
• Positive selling point
• Measured data allows for early warning for scalability
Negative aspects of the Usage Model:
• Need to measure usage carefully
• (May) discourage additional use (reduces revenue opportunity)
• Introduces possibility of conflict over billing
• Doesn’t allow for “value” pricing
• Makes comparison pricing easier (than other models)
Named User Model
The named user model is based on charging any authorized user a regular fee to access the applicationwhether they use the application in a given time period or not. The current industry trend is to charge
per month, although there are xSPs that charge on a daily or weekly basis for short-term projects.
Positive aspects of the Named User Model:
• Consistent with current practice of many ISV license pricing
• Easy to understand and is accepted as a “billing philosophy”
• Easy to present (sell)
• Encourages wider use of application within an end-user company
• Allows easy management of adding/de-activating user
• Allows for easy billing
Negative aspects of the Named User Model:
• Model is in conflict with the xSP licensing models of companies which charge on the basis of
concurrent usage (see below)
• Easy for end-user to reduce services
• Not based on usage; can be abused by power users
Machine ID Model
The machine ID Model is similar to the named user model except that instead of the software being
available to a single user on many machines, it is available to many users on a single machine.
Positive aspects of the Machine ID Model:
• Consistent with current practice of many ISV’s licensing pricing
• Allows multiple users to have software access
• Permits multiple users to "sample" software with lower usage costs
• The inconvenience of going to a particular computer encourages additional sales for other users
• Encourages wider use of application within an end-user company
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Software & Information Industry Association: Software as a Service
•
•
•
•
•
Supports lab usage
Easy to understand and is accepted as a "billing philosophy"
Easy to present (sell)
Allows easy management of adding/de-activating user
Allows for easy billing
Negative aspects of the Machine ID Model:
• Easy for end-user to reduce or eliminate services
• Can be viewed as inconvenient by end-users who must go to different computer
• Not based on usage
Concurrent User Model
The Concurrent User Model is based on allowing a certain number of users to have simultaneous access
to the application. There can be a much larger number of “authorized” users than can access the
application at the same time. If more authorized users wish the access the application simultaneously
than there are concurrent connections, they are denied access.
Positive aspects of the Concurrent User Model:
• Consistent with current practice of many ISVs licensing prices
• Easy to present (sell)
• Can appear (and be) good value to customer
• Reflects (better) actual usage of system resources
• Easy to bill
Negative aspects of the Concurrent User Model:
• Has possibility of reducing revenue opportunity
• May discourage growth
• Requires administration of all authorized users (additional administrative cost)
• Is in conflict with Microsoft ASP licensing program
(End-user) Site License
This model simply charges a regular fee for unlimited access for any employee of the company that is the
customer. The prevailing industry standard is to charge a monthly fee to the company over a one, two,
or three-year contract.
Positive aspects of the Site License Model:
• Consistent with most common ISV current license pricing model
• Very easy to administrate
• Easy to present (sell)
Negative aspects of the Site License Model:
• Difficult to price for maximum revenue
• Have all administrative costs with variable revenue opportunity without revenue upside
• Potentially difficult to prevent abuse of authorized users
• Many costs are based on named or concurrent users- a significant financial risk.
Combinations
Many xSPs have developed flexible pricing that is a combination of the models described above. For
example, a pricing structure could include a fixed monthly fee (site license), small named user monthly
fee, and (larger) concurrent user monthly fee. A combination such as this could be effective when the
xSP vendor costs could be based both on concurrent and named user resource usage. It would eliminate
financial uncertainty as usage volume varies (or is unknown) going into the future.
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Software & Information Industry Association: Software as a Service
Positive aspects of a Combination Model:
• Reduces financial uncertainty for both ISV and end-user
• Additional revenue opportunity as usage grows
• Allows end-user to project costs
• Allows greater pricing flexibility
Negative aspects of the Combination Model:
• Can be administratively complicated
• Might discourage additional usage due to cost awareness
ISVs need to work with their hosting partners to determine a pricing scheme that meets their needs as
well as those of the xSP partner. This is especially true if the ISV chooses to partner with the xSP through
a revenue sharing model based on customer deployment and not a simple licensing model.
Does one pricing model fit all?
As mentioned above, there are situations where it is best to combine pricing models. For example, an
emerging model is a combination of a monthly named user fee and concurrent user fee. This reduces
financial unknowns and properly reflects costs for certain xSP costs. It is also our view that pricing will,
over time, change as SaaS gains market acceptance and competition increases. A common plan today is
to be flexible and tailor pricing to fit the industry, the ISV needs, and the end-user requirements.
Determining the "True Value" Price
Determining the “true value” of application hosting is complex. There are many considerations in
analyzing the value of application hosting products. Among the major considerations are the strategic
objectives of the ISV, the total cost of ownership (TCO) of a license installation, the competitive climate,
and the demand from the customer community.
Strategic Objectives of the ISV
• What is the strategic motivation for considering offering Software as a Service?
• Has a competitor created one yet?
• Is there pressure from the customer community to offer one?
• Is the ISV highly profitable and in no hurry to threaten the current business model?
• Is the ISV losing money and feels a need to offer a new product?
• Does the application lend itself EASILY to an application-hosted product or is there a significant
development investment needed to get it ready?
• Is the service offering targeted at existing prospects (and can therefore threaten current revenue
from license sales) or is targeted at new markets?
Demand from the Customer Community
The next step to understanding the value of software as a service is to develop a list of the features and
benefits to an end-user. There are many obvious benefits such as:
•
•
•
•
•
•
•
Available anywhere, anytime
Access to current version of product at all times
Reduces support costs
Reduces dependence on internal IT staff
No capital investments
Expensable (vs. depreciable)
Cost can be budgeted
Each market attaches certain values to the benefits listed above (and more) and an ISV needs to review
them for their respective customers.
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TCO of a License Installation
It is assumed that an ISV will, at least for the short term, continue to sell and support license sales.
Therefore, it is important to establish the total cost of ownership for an end-user to install and support an
application internally for a 3 or 5-year period. An ISV can do this by creating a spreadsheet that
identifies all costs (hardware, software, installation, support, training, and others) both currently internal
and external to the company that are needed to keep the application up and available to end-users. It is
also important to analyze the sources and amount of gross profit that is created for the ISV. It is critical
to understand an end-user’s total costs as a benchmark or framework for understanding the value of an
application-hosted product to customers.
The Value of Software as a Service vs. a License Sale
For many applications, the ISV must consider that the VALUE to the end-user of renting an application is
higher than buying a license and installing it internally. Given the benefits of SaaS listed above, there are
many end-users that will get more value from it. Therefore, it is important, when pricing the product, to
consider the value to end-users - not only costs. Even if it is less costly to “sell and support” software as
a service, if the value is greater, then the price should be higher.
Impact on Revenue, Income Statements and Balance Sheet
For many ISVs, software as a service can create more revenue and gross profit than selling traditional
licenses. However, it is highly likely that the first year revenue and profit will be lower when selling SaaS
compared to a license. This is because the initial license sale, which often represents up to 80% of the
total revenue over a 3-year period, doesn’t occur under SaaS. In many pricing modeling, revenue and
gross profit under application hosting “catches up” to an equivalent license sale only after the end of the
second year. However, it generally is significantly more profitable over a period of longer than 3 years.
Key factors in determining the time to payback for a service provider model include sales commissions,
hardware asset purchase and potential economic penalties related to failure to achieve service levels. If
sales commissions are paid in lump sum upon revenue recognition, and they are based on lifetime
contract value, a negative cash flow of several months may be implied solely to pay the commission.
Likewise, the provisioning of hardware and the effects on the balance sheet and cash flows will depend
on whether the customer, the hosting provider or the vendor takes title to the equipment. The cash
outlay, asset value and amortization stream then reside with the party taking title. Finally, economic
penalties that typically surround non-achievement of SLAs can easily exceed service fees. All of these
factors need to be considered when developing the service business model and plan. Therefore, investors
and shareholders need to understand that the P & L statement will reflect lower revenue and profits in
the first year or two of an application hosting initiative.
Market Specific Considerations
Due to the fact that SaaS is a new concept to many consumers there is very little research information
regarding customer behavior and the price/value considerations of SaaS. Some research done in the past
shows basic principles can be effective in pricing a SaaS service for the business end-user market.
Customer research, relation to current license pricing, impact on bottom line and competitive factors all
play a role in determining the service price of any particular application. Sales channels also substantially
effect pricing: business productivity software generally sells through a wide variety of resellers, vertical
market software is often only sold through a direct sales force or just a few partners, and enterprise
software is usually sold through large consulting organizations as well as a direct sales force.
Business Productivity
As horizontal applications purposed for a wide audience, service applications of this nature tend to
warrant a lower price point. Typically, they are rented on a monthly, per user basis. As mission-critical
applications, the value of renting it as opposed to installing it on the desktop is a more difficult sell. An
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Software & Information Industry Association: Software as a Service
early opportunity is to bundle a number of software products into a complete solution. The small &
medium size business community is a prime market for these types of solutions.
Business productivity applications generally compete with a large number of similar products. Assuming
that their license sales channel is currently competitive (i.e. more than one organization sells it), SaaS is
an opportunity to expand their sales channels. As mentioned above, the price is a function of many
factors. Once the pricing is established, the ISV will presumably be able to maintain its' margin, since it
will be selling wholesale to xSP's that will include the software in their unique solution of products. The
wholesale price should be able to be maintained.
There are also opportunities to create a new customer set who will be receptive to add-on products. For
example, Intuit, recently introduced QuickBooks for the Web at $14.95 per month, per company for up to
20 users. The benefits to utilizing it in a service are the ease of setup, customizable features not offered
in the shrink-wrap product, as well as collaboration tools that bring distant users together, and save time
and money for the organization. Modules can be sold once the customer relationship is established.
Additionally, these service offerings provide the opportunity to add on services as time progress. For an
ISV with a Web-based sales force automation product that sells for $40 a user a month, it's not difficult
to make the sale of a corresponding customer relationship product at an additional $10 a month. The
service-based nature of the product allows for easy integration of the data and eliminates the need for
costly consulting to integrate the products. The continual interaction with the customer through a service
offering opens many new sales opportunities. In developing the price point for business productivity
applications, the ISV should consider the current value price structure but also take into consideration the
additional services you may be able to add-on later.
Vertical
The software as a service model is especially attractive for vertical software applications. The expertise of
the ISV and the focused nature of the application afford the opportunity for the service model to provide,
in many cases, a more effective (valuable) product to their market. Given the unique product offering,
the price point tends to be higher than that of a business productivity application. The opportunity is to
reach mid-market customers within the vertical industry that did not previously have the resources to
purchase the product. Many vertical market applications are not considered mission critical to warrant the
time and cost of a full implementation. Vertical ISVs need to consider a variety of pricing models to
satisfy the needs of each particular customer.
For example, take a Computer Aided Design (CAD) Program that costs $20,000 per license. For an
architecture firm of 50 employees that is a significant capital outlay annually and a cost that discourages
the purchase of the product in significant numbers. They may buy one or two licenses. However, if they
are given the opportunity to purchase it through a service offering on a monthly basis, they are likely to
rent more seats as they can both spread the costs out as well as pass them on to the client. Moreover, a
service offering will be able to attract customers that simply don't have the capital to purchase licenses.
Additionally, many vertical applications take in consideration a lot of knowledge based information - latest
construction regulations, emissions standards, etc. - and with a service based offering these
considerations can be integrated into the software immediately. An additional selling point is that a
service platform allows end-users to access such things as a manuals and FAQs, online training facilities,
and moderated discussion forums which facilitate communication and more effective application usage.
As mentioned above, vertical ISV’s products lend themselves to SaaS: they are costly, they service a
small, but committed market, and are of significant value. Since the VALUE of SaaS is higher than a
licensed installation, it should cost more. Therefore, it is important to carefully define the true total cost
of ownership of a license installation. Once the actual cost per month per user is calculated, the SaaS
pricing can be developed. Given the fact that vertical software often has little direct competition, initial
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Software & Information Industry Association: Software as a Service
pricing can hopefully be sold at a monthly price that is higher than the imputed monthly cost for the
license installation.
Enterprise
Companies providing enterprise applications were the first proponents of the SaaS model. These ISVs
saw the opportunity to reach out to new markets and expand their customer base in the face of shrinking
IT investments among large Fortune 1000 customers. Given the complexity of ERP applications, they
remain a higher price point.
Some ERP companies are charging the same licensing fee of the installed application but remitting it over
a few years. The cost savings for the customer are coming through the time-to-market advantage,
savings in consultants to install an implement the application across the organization, and the capital
investment in hardware and software for the internal installation. PeopleSoft contends that customers
using eCenter, their SaaS offering, are witnessing savings of one third over a three-year period.
Typically, Enterprise ISVs charge on a named user basis on a monthly fee. Enterprise ISVs generally sell
through consultants, accounting firms, as well as direct. While only the direct sales can control end-user
pricing, the wholesale price to third party resellers will be a function of volume, leverage, and competitive
pressure. Each third party reseller will include their own fees in their solution, but the Enterprise ISV is
protected because their revenue is already defined.
VI.
Managing the New Channel Paradigm
When ISVs look at their service business model it is essential that before they go to market they take into
account the entire global value chain, from application creation to the final customer sale. What have
been largely overlooked in the contemplation of software as a service are the marketing, sales, and
distribution pieces of the value chain.
Providing a service creates new channel considerations for an ISV. In the past, the primary channel has
been resellers and integrators serving end-users. In the service provider paradigm, there is a need to
build a new service provider channel. Critical success factors for service providers include efficient
operations and processes, expert management staff, and scaling of common solutions to amortize skill
and hardware investments across multiple clients.
An additional need to consider is application customization and integration, which historically has been
provided by vendor professional services groups or by systems integrators. In the new, hosted service
paradigm, the hosting provider needs assurances that any application modifications and customizations
can be supported going forward. This makes third-party outsourcing of application integration and
customization services more challenging. Over time, end-user and hosting provider preferences should
evolve towards modifications that come from the vendor’s professional services group, or from the
hosting providers own integration and customization teams. Intimate knowledge of application
enhancements is necessary in order to provide effective support.
Moving forward, hosting certification programs, such as the SunTone program from Sun Microsystems,
can be expected to play an important role in validating the “hostability” of application enhancements.
Companies setting up channels should consider applying such certification programs in order to establish
oversight and review over the quality of solutions that are delivered to end-users.
xSPs can be looked at in two lights. First, they can be viewed solely as a fulfillment channel providing the
hosting and infrastructure necessary for the ISV to sell their product directly or in association with their
current channel partners including system integrators and VARs. In this scenario, the xSP is not
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Software & Information Industry Association: Software as a Service
responsible for demand generation or sales and marketing. They are simply offering their expertise as an
outsourced service provider.
However in a different view, the xSP can both provide the service solution as well as be a synergistic
partner in the lead generation development as a sales and marketing engine. Many of the leading xSPs
work with the ISV to nurture existing channels as well as to develop additional channels for the service
offering. Many xSPs realize the necessity of prophesizing the SaaS model and have developed
relationships that the ISV does not currently possess. For example, system integrators and VARs have
slowly started to embrace the SaaS model and are working with xSPs to provide a service or a suite of
services to their clientele. These integrators and VARs remain the touchpoint with the client. The benefits
of this are significant in that the xSP may help to develop a new channel of distribution for the ISVs
software, one that augments the traditional channel relationship.
Choosing a Partner who Supports the ISV Channel Strategy
It is in the best interest of any software vendor to consider how to grow sales while maintaining company
goals, such as market share, name recognition, market adaptation, and of course profit. Any new avenue
for distributing product must go through this decision making process, whether it's CD-ROM, DVD, ESD,
xSP or even a new geographical market like Europe or Asia. So, when choosing an xSP partner, the first
question the CEO of a software company should ask is "How are you going to help support my business
strategy?"
Picking Proper xSP Partners
Naturally, the ISV will be utilizing its existing channels. But one of the questions an ISV must ask if they
plan to partner with an xSP is what part of the overall marketing and sales effort should be derived from
the xSP.
If an xSP is to be used mainly an enabler, then that should be determined from the onset of the
relationship. However, because there could be a range of value chain scenarios, in evaluating an xSP an
ISV should ask questions such as:
•
•
•
•
•
•
•
Is the xSP planning to be as sales engine? How specifically will the xSP help market and sell my
application as a service?
How will the xSP brand, market the service? Will it compete or diminish ISV efforts?
How willing is the xSP to work with my existing channel partners, VARs, sales force etc.? If willing,
how will it work? - Who gets paid what? Who hands off to whom? Who owns the customer? Etc.
Is the xSP willing to work with new channel partners such as VARs, aggregators, portals etc.? If yes,
how will it work? - Who gets paid what? Who hands off to whom? Who owns the customer? Etc.
Does the xSP bring new channel partners to the relationship?
How does the nature of the channel relationship play into how I service-enable my application?
What about the use of multiple xSPs? Will this provide a wider channel? How will the xSPs conflict
with one another? How will they conflict with existing channels?
xSPs and the development of this new channel don't replace the marketing activities of an ISV or its
existing channel relationships. It's critical in going forward that the ISV works with the xSP and existing
channel partners to reduce conflict and the possibility of eroding overall sales. In order to avoid conflict
some ISVs have chosen to differentiate their service offerings allowing xSP channel partners to develop
the product and pricing schemes for certain markets. One typical example is a large ERP company that
provides a direct-hosted model, but only if the end customer wants a complete solution from the vendor.
If the end customer only wants to use a particular module or portion of the ERP package, the vendor
directs those sales to xSP partners for fulfillment. Other ISVs have differentiated along vertical lines and
ask their xSPs to focus their business around a discreet market space and focus on the solution set
needed for that particular industry. Still others work with regional xSPs to drive sales geographically.
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Software & Information Industry Association: Software as a Service
Additionally, when ISVs create and manage a channel program they need to take into consideration that
the needs of xSP partners will be different then those of traditional channel partners. Furthermore, at this
stage in the life cycle of software as a service, end-user adoption is a key consideration. ISVs need to find
xSP partners that are working to help the customer understand the value proposition as part of the sales
process. It is critical to find partners who can be messengers of the service model.
Reselling One’s Own SaaS
If an ISV chooses to become a service provider for its own software, it needs to consider how this will
affect their existing channel. Some questions that and ISV should ask itself include:
•
•
•
•
•
•
•
How will the service model affect existing channel relationships?
Will I allow the existing channel to resell the service offering? How will they be compensated?
Am I going after a new market with my service offering? Do I need to create a new channel?
How am I going to manage the competing forces of my existing product and my new service
offering? How do I manage the compensation of the direct sales team?
What percentage of my customers would I like to migrate to a service model?
What incentives can I provide to move channel partners to evangelize the new service offering?
How am I going to train and certify channel partners to sell a SaaS offering?
It is important to consider channel development moving forward in the creation of a service offering.
Specific tactics and ISV should consider include:
•
•
•
•
•
•
New channel partner programs
Private label stores offering your services
Affiliate links
Discount pricing to encourage use of xSP services
Rebates for VARs and System Integrators to get involved in your xSP programs
Lead generation programs: reward resellers by passing leads to them
Aggregators
Handling the distribution of software services is another issue that is currently being addressing in the
marketplace. Whether the product comes down a wire or out of a box, there is a place in the value chain
for someone to help ISVs deal with all their resellers and customers. A new breed of provider has arisen,
that of the "Service Aggregator."
The aggregator combines service offerings from a number of different ISVs and then integrates them into
a comprehensive offering for the VAR or end-user. The aggregator can expand appreciably the market
reach of products by managing the channel for the ISV. Both traditional wholesale distribution
companies, e.g. Ingram Micro, as well as new software service aggregator companies, e.g. Jamcracker,
are providing their front- and back-end expertise to ISVs and xSPs. Successful aggregators are able to
assemble a collection of products the market is seeking and deliver them through a network of resellers
either online or off-line as well as possibly adding other service offerings.
Market Specific Considerations
An ISV has to find the right provider that is focused on their market. They have to look at the types of
customers the xSP is targeting and their strategic partners. There needs to be a synergy between the
partnership and the size of the market in which they are targeting. A major difference in the SaaS
opportunity for the three application sectors below is whether the ISV can or should develop a
relationship with more than one xSP. The decision should be driven by the nature of the application and
the existing sales channel for each ISV.
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Software & Information Industry Association: Software as a Service
Business Productivity
Redundancies, recoveries and collocation services play an important role in business productivity
application hosting. Business productivity applications are usually mission critical with time restraints; and
companies cannot afford to have any disruptions. Business productivity ISVs, since their products are
horizontal, may have an opportunity to partner with multiple xSPs. Many xSPs have a business model
based on creating demand through their own sales channel. If the ISV has sales channel that would not
be threatened by competition (or do not have the leverage to prevent it), horizontal ISVs can potentially
drastically increase their sales force through multiple xSP relationships. Of course, this creates issues of
both branding (will the xSP require unique branding where the ISV brand gets lost?) and whether
multiple xSPs will create price competition where margin opportunities will suffer.
Vertical
Vertical market ISVs generally require a very knowledgeable sales staff that serves a demanding,
specialized market. Given the complexity of the product, the xSP may not be expected to create
demand. The ISVs direct sales force and VARs will most likely continue to play an active role in the
deployment of the new offering. The exception to this is if the xSP is integrating a number of applications
in a vertical market and intends, through its own sales channel, to offer a suite of products to this vertical
industry. If this path is taken, care must be given to ensuring that the xSP sales effort complements
rather than competes with the existing ISV sales channel. To date, xSPs hoping to outsource a full
vertical application suite of have struggled to gain acceptance within the industry.
There are xSPs whose business plans are based on partnering with vertical ISVs by providing the
technology and application delivery. Sales creation continues to be the responsibility of the ISV and it's
VAR partners. This partnership allows ISVs to brand their software service, control the pricing, and sales
channel. The xSP isn’t competitive with the ISV and generally will generate revenue only as the ISV
successfully sells software as a service. This model may be the most appropriate for the majority of
vertical or specialty ISVs.
Enterprise
Similarly the enterprise market has different needs and issues than the vertical and business productivity
application software service market. Here the market may be focused on supporting a large pool of
employees, vendors, stakeholders and customers. The application hosting has to satisfy several
audiences with different productivity needs. The xSP needs to have a robust infrastructure to support
security, remote access across multiple devices, policy management and authentication. An ISV has to
examine all these criteria and ensure that the model fits with all their constituencies.
Enterprise application ISVs also have an opportunity to work with a number of xSPs. Generally, these
software products are sold and supported currently by a number of VARs, large consulting organizations,
as well as an internal sales organization. Therefore, the current competitive sales landscape assumes
multiple channels for end-users to acquire the product. These competing sales efforts will support
multiple xSPs, which will undoubtedly increase sales for the enterprise ISV. However, the complexity of
installing and supporting enterprise software does require an xSP that is sizeable with the technical and
human resources to properly support large customers with complex needs.
In the end, nothing is quite as effective as a local product representative - certainly more so for B2B, but
also for B2C. If a product or service is available on a worldwide basis an appropriate partner may even be
able to connect with global VARs, system integrators and resellers to really boost the SaaS initiative and
broaden sales opportunities as a whole. Making the channel a top priority will ensure a prosperous SaaS
strategy. Ignoring or bypassing the channel will most certainly hurt overall sales in the long term.
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Software & Information Industry Association: Software as a Service
Customers
As an ISV working with SaaS partners to provide the service offering, certainly the customer must be
considered. Some to the issues to consider include:
•
Keeping control of brand identity. Make sure this issue is resolved from the onset. Be very
specific about this issue and maintain co-branding at a minimum.
•
Who owns the customer? This largely depends on the nature of the partnership and who in the
value chain (could be more than one) is taking responsibility for sales, marketing and customer
relationship management. The ISV may want to focus solely on developing software or feel they want
to have the relationship with the customer or a myriad of iterations in between. The issue of
customer ownership is closely related to the business model the ISV chooses to employ. If the ISV
elects to sell perpetual use software licenses to end-users that make their own hosting relationships,
then the hosting provider will “own the customer,” since there will be no direct contact or tie between
the vendor and the customer. If, on the other hand, the ISV delivers a complete service offering to
the customer, then the ISV has the option of “owning the customer” by co-branding the offering with
the service provider, or by private labeling the hosting service.
•
Convert existing customers or not? This relates to the pricing model. However, an ISV should
offer the best solution for a particular customer's needs as long as the ISV can still make an adequate
profit. It's not likely to result in a lifetime customer if the ISV conceals a lower cost purchase option
from their customer. A simple conversion strategy for current customers is to offer hosting services to
existing customers where the charge for the software license fee is eliminated from the service price.
There may also be upgrade fees and the like for such an offering.
•
Licensing Considerations. Part of the difficulty in finding the right pricing for software in flexible
service model is that a customer can pay only for what they need in terms of users, usage, time etc.,
thus possibly reducing the ISVs per customer revenue. On the other hand this may be offset by the
prospect of greatly reduced software piracy. ISVs embarking on a service provider path need to
decide whether they are amortizing the purchase of a perpetual use software license that will be
hosted, or providing the lease of software as part of the service. User and prospect feedback should
be carefully considered when determining an approach.
How is marketing different for a service?
In some cases delivering the product over the net as a service will, in the short term, change or limit the
target customer group. A SaaS offering changes the value proposition to the buyer and so will lend itself
more readily to certain types of software products. ISVs have to very carefully consider both target
marketing and product positioning when looking at software service models. Different methodologies
must be implemented. In general, the marketing issues revolve around the advantages that need to be
promoted and the concerns that need to be overcome.
The advantages that need emphasis include:
•
•
•
•
•
•
Lower Cost
Distributed Access
Platform Independence
Value Added Drivers (faster time to market, no technology obsolescence, and the ability to utilize
best of breed applications)
Outsourcing Drivers (IT staffing shortages, predictable cash flows and internal efficiencies)
Macroeconomic Drivers (increased global competition, rapidly changing technology and access to
better software helps to level the playing field)
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Software & Information Industry Association: Software as a Service
Concerns for potential buyers of software on a service model that need to be overcome include:
•
•
•
•
•
•
•
•
•
•
Total Cost of Ownership, (IT costs, pricing matched to actual usage, increased bandwidth demand,
integration, implementation)
Security (Both storage and network security)
Bandwidth (Increased demands because of the necessity of being constantly connected)
Performance
Service Levels Implementation
Integration
General lack of customization
Availability
Vendor viability
Lock-In (Ability to get out of the hosted model and take control and ownership at any time)
Evaluating Global Issues: Legal, Technical, & Business
More so than ever, the Internet offers the ability to reach markets previously unattainable. There are
copious considerations when choosing a business partner who can serve a ISVs global needs. Even if a
global strategy is not a current consideration, careful analysis of a business partner's strength in this area
will ensure that such a strategy can be rolled out at any time. Some common issues to consider include:
•
•
•
•
•
Business Support: localized customer service (telephone, e-mail, Web, products); product
management (pricing, updates, etc.); territorial revenue recognition; channel integration via channel
partner programs
Legal: territory management for restricted territories; global legal infrastructure; worldwide privacy
compliance; worldwide encryption compliance; local tax registration and compliance; data residency
requirements
Marketing: channel integration and assistance; e-mail management; electronic coupons/rebates
(direct to customer and channel programs); special sale pages; reward program.
Accounting: standardized reporting; payment distribution via check or bank wire or other methods;
payment distribution directly to channel if required; independent audits
Transactions: multiple currencies; multiple payment methods; fraud protection, including
proprietary international digital product fraud detection and prevention; online real-time sales
reporting; localized navigation and checkout in supported languages
VIII. Conclusion
Software provided as a service thoroughly changes the way a software company does business. From the
development cycle to the myriad of relationships that drive the production and sales of a product to the
operations and revenues of the company, transitioning to a service model will force ISVs to rethink
everything that they do.
However, it also provides the opportunity to develop better software that can meet the needs of an ever
demanding and sophisticated customer base. It allows for stronger and more connected relationships
with customers. It also opens up whole new segments of the marketplace for their software applications.
The parameters of software as a service are just beginning to be defined. ISVs will witness and learn as
the market evolves. This white paper provides a starting point to consider the issues facing ISVs to
transition their business to a service.
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Software & Information Industry Association: Software as a Service
ABOUT SIIA
The Software & Information Industry Association (SIIA) is the principal trade association of the software
code and information content industries. SIIA represents more than 1,000 leading high-tech companies
that develop and market software and electronic content for business, education, consumers and the
Internet. For further information, visit www.siia.net.
Software as a Service Initiative
The "Software as a Service" (SaaS) model holds great promise for technology providers and consumers
alike. A robust future for the software service model, however, is not assured as the industry faces a
litany of challenges that must be addressed head on. SIIA, as a neutral third-party working to validate
the business model, is uniquely positioned to address these challenges, illuminate benefits and drive
acceptance among industry analysts and potential customers. SIIA's Software as a Service Initiative seeks
to achieve two major goals for member companies in the space:
•
•
Development of the space through identification of business model trends, best practices and
model contracts dealing with channel, legal and security issues.
Promotion of the model to encourage and facilitate new ISV/xSP/IBS partnerships, and to shape
ongoing coverage of SaaS in media to broaden customer recognition and acceptance.
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Software & Information Industry Association: Software as a Service
Appendix A -- Service Enabling Products and Companies
The following list, in alphabetical order, represents some SIIA member companies that provide
products/companies that assist in developing a service model for ISVs. SIIA does not endorse and
specific company listed in this Appendix.
Breakaway Solutions
Telephone:
+1.978.461.7800
Web site:
www.breakaway.com.
Breakaway Solutions, Inc. is a Global Full Service Provider (FSP) specializing in defining, creating, and
operating sustainable digital businesses for Global 3000 collaborative e-business enterprises through
strategy, implementation, and application hosting services. Headquartered in Boston, Mass., Breakaway
Solutions has a network of regional offices and Internet Solutions Centers in major cities across the U.S.
and in Europe, as well as 11 Application Hosting facilities in North America, Europe, Asia and Australia.
Buyonet International
Telephone:
+1.206.728.4409
Web site:
www.buyonet.com
Buyonet is the global leader in electronic commerce for digital products and services. Buyonet’s e-Alliance
Division offers a variety of programs and services for companies interested in online commerce.
Buyonet’s system allows partners such as software publishers, channel partners, and portals to have
detailed online storefronts with full-scale customer support, merchandising programs, payment
processing and sophisticated localization features. Contact: [email protected]
Citrix Systems
Telephone:
+1.954.267.3000
Web site:
www.citrix.com
Citrix Systems, Inc. is a global leader in application server software and services that offer “Digital
Independence” - the ability to run any application on any device over any connection, wireless to Web.
Citrix solutions enable organizations of all types, from major enterprises to emerging application service
providers (ASPs), to reach more users, with more applications, in more locations - with greater speed,
predictability, and lower costs. 90 percent of Fortune 500 and 100 percent of Fortune 100 companies use
Citrix solutions.
Exent Technologies
Telephone:
+1.301.581.5900
Web site:
www.exent.com
Exent Technologies develops Applications-on-Demand (AoD) technology to deliver computer software
programs over IP networks in real time. With Exent's EXEtender™ software, any executable (.EXE)
application can be delivered securely over the Web or an Intranet network for access on-demand by
licensed users. The Web browser serves as an application interface without having to install or download
the actual application to the PC. The system currently runs on any Windows PC platform, and future
versions will support game consoles, set-top boxes, Windows CE, Linux, and Mac OS.
GraphOn Corporation
Telephone:
+1.408.201.7100
Web site:
www.graphon.com
GraphOn Corporation is a leading innovator of Internet infrastructure software, providing the ability to
run any application on any device over any connection. GraphOn's ISV customers benefit from a very
quick time to market, their own revenue generation, and are able to retain their own branding. Without
costly software modifications or dedicated servers, GraphOn's software instantly Web-enables Windows,
UNIX or Linux applications for browser access from anywhere on a LAN, WAN or dial-up without
compromising the applications look and feel.
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Software & Information Industry Association: Software as a Service
iCan SP
Telephone:
+1.631.904.3000
Web site:
www.icansp.com
iCan SP specializes in business-enabling software for eBusiness and hosted services providers. The iCan
Provider Suite is a highly sophisticated operational support platform designed to help xSPs reduce costs,
rapidly roll out new services and ensure reliability. Functions include service metering, service-level
management, billing and branding.
Into Networks
Telephone:
+1.617.575.1000
Web site:
www.intonet.com
Into Network’s market-proven technology powers software to stream over the Internet. The InfoMedia
platform enables the leading software publishers, etailers and content creators to gain a competitive
edge, develop new revenue opportunities and bring the best streaming software experience to millions of
customers on a trial, rental or subscription basis. It’s secure. It’s cost effective. And it’s available today.
Contact: [email protected].
NaviPath
Telephone:
1.866.NAVIPATH
Web site:
www.navipath.com
NaviPath, Inc. delivers “Branded Outsourced Services” which monetize online customer relationships for
B2C organizations such as, retailers, affinity groups, travel & leisure businesses, media companies,
financial service providers and ISPs. The NaviPath suite of integrated services includes subscriber
management services, ebilling/revenue management, customer care, a Network Operations Center,
reporting and professional services; as well as client software, dialup Internet access, email and
messaging services. NaviPath aggregates these core services with value-added offerings such as portal
development, eCRM, privacy and profiling, personal Webspace and wireless capabilities.
New Moon Systems
Telephone:
1.888.672.4866
Web site:
www.newmoon.com
New Moon Systems Inc. uses proprietary software platforms and technology to empower service
providers and enterprise customers to provide “software as a service”. Founded in 1995 and building on
proprietary technology developed and refined since its inception, New Moon is strategically positioned to
capitalize on the huge opportunities presented by the emerging ASP market.
Personable.com
Telephone:
+1.714.430.6944
Web site:
www.personable.com
Personable.com, the Windows desktop Application Service Provider, opens a whole new opportunity to
software vendors developing Windows-based desktop applications. Personable.com combines powerful
new technologies with its own proprietary delivery and management software to provide the latest
innovation in software delivery and use. We want to help you gain instant entry into the ASP market!
Rainbow Technologies
Telephone:
1.800.852.8569
Web site:
www.rainbow.com
Founded in 1984, Rainbow Technologies is a leading provider of software security, anti-piracy solutions
for software developers. Rainbow applies its cryptographic technology to a variety of security modelsfrom securing software via hardware keys to securing against piracy with a software-only solution that
includes Internet-based software distribution and licensing. Rainbow markets the Sentinel and SentinelLM
products from offices in the United States, United Kingdom, France, Germany, Australia, China, The
Netherlands, Russia, India, and Taiwan.
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Software & Information Industry Association: Software as a Service
Sassafras Software Inc.
Telephone:
+1.603.643.3351
Web site:
www.sassafras.com
Sassafras Software develops software license management solutions. Its flagship product, KeyServer, is
a software asset management system that maintains legal compliance, prevents piracy, and provides
detailed end-user activity reports. It supports end-user authenticated application installs, which can then
be securely managed across the globe by ASP vendors. KeyServer's scalable architecture is unique in its
ability to manage tens of thousands of computers while remaining absolutely transparent to users.
Softricity
Telephone:
+1.617.695.0336
Web site:
www.softricity.com
Softricity develops carrier-class products that let enterprises, ISVs, and service providers deliver and
manage scalable, secure software application services...the complete Software as a Service solution.
Softricity's core technology is its Open Application Services (OAS) architecture. The OAS architecture will
reshape the economics, scalability, and manageability of leading enterprise software for IT managers and
service providers through its dynamic on-demand delivery technology and comprehensive centralized IT
administrative functions. OAS is the first such architecture to overcome delivery and management
challenges, creating new market opportunities for Software as a Service.
SoftSearch
Telephone:
+1.604.681.0516
Web site:
www.softsearch.com
SoftSearch is an online distributor/reseller of business and specialty software and owns the largest
database of software, containing information on over 367,000 products. Operating as a consulting service
connecting buyers and sellers of business software since 1991, SoftSearch now sells software directly
and/or refers sales leads to software publishers. In addition to it's own site, SoftSearch builds and
manages online software stores for a variety of affiliate partners.
Sun Microsystems
Telephone:
+1.650.786.3192
Web site:
http://www.sun.com/software/
Sun is a leading supplier of industrial-strength hardware, software, and services fueling the booming ASP
market. With its Service-Driven Network vision, integrated hardware and software solutions, leading-edge
development tools for Web-enabled applications, alliances with best-of-breed solution providers, and
award-winning service and support capabilities. Sun can serve multiple roles for independent software
vendors (ISVs), systems integrators, telecoms, and network service providers entering the ASP arena
from strategic technology advisor to platform technology supplier and support provider. Sun combines
the financial power of more than $15 billion in annual revenue, a strong presence in more than 170
countries worldwide, and the agility of a start-up to deliver leading edge, comprehensive solutions for
ASP requirements.
USInternetworking
Telephone:
1.800.839.4USI
Web site:
www.usi.net
USInternetworking Inc. a leading Application Service Provider, delivers e-commerce and enterprise
software as a service. The company's iMAP portfolio of service offerings delivers the functionality of
leading software from Ariba, BroadVision, Lawson, Microsoft, Oracle, PeopleSoft and Siebel as a
continuously supported, flat-rate monthly service via an advanced, secure global data center network.
Additionally, USi's AppHost managed application hosting services provide the most advanced solutions for
enterprises, software companies, marketplaces, and system integrators that are seeking a better way to
deliver solutions over the Internet to their customers and end users.
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Software & Information Industry Association: Software as a Service
VerticalApps.net
Telephone:
1.800.732.1044 x239
Web site:
www.verticalapps.net
VerticalApps.net is the leading Application Service Provider (ASP) of strategic planning, business
development and application hosting services to vertical Independent Software Vendors (ISVs). The
company has created a set of exclusive business systems that permit ISVs to design and deploy branded
ASP initiatives.
Wizmo
Telephone:
1.866.96.WIZMO
Web site:
www.wizmo.com
Based in Minneapolis, Minnesota, Wizmo is a leading Application Service Provider (ASP) that helps small
and medium-sized businesses manage growth. Wizmo hosts and serves clients' business software
applications via the Web and provides expert live help, state-of-the-art firewall security, non-stop virus
protection, daily data backup, and a range of other world-class data management services.
Xevo
Telephone:
+1.508.481.2200
Web site:
www.xevo.com
Xevo Corporation develops software that enables ASPs and AIPs to accelerate revenue streams, lower
costs and reduce staffing requirements. Its comprehensive ASP Workbench software offers flexible
service packaging and pricing, tracks application and resource usage, and automates application
configuration and user management. Through its alliances with market-leading companies, Xevo provides
an end-to-end infrastructure platform that is essential for ASPs and AIPs to reliably scale their businesses.
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