I recently published a blog post about the benefits of using subscription-based business models called "What bike rental and the future of software have in common." Many industries are going through a shift of revenue streams from traditional one-time sales to products being provided “as a service” and paid via subscriptions. In the software industry this is referred to as Software-as-a-Service or SaaS. However, there is much more to this than just switching from a perpetual license model to a subscription model.
The “false cloud”
Back in 2010, Salesforce.com CEO Marc Benioff warned attendees at the Web 2.0 Summit in San Francisco to beware of what they called ‘false clouds.’ Benioff said “Companies hosting private cloud architectures do not benefit from economies of scale that ‘real’ cloud offers.” Back then, Salesforce.com's 77,000 customers were running on 3,000 servers spread over three global data centers. Theoretically, 77,000 companies of varying sizes would require at least 100,000 servers to independently run their CRM platforms on-premises or in a hosted solution. This translates to an equivalent output at only 3 percent of the infrastructure needed because of economies of scale and more efficient hardware utilization.
Many software companies are touting that they can deliver their software in the SaaS delivery model. However, what they are offering is often not a modern multi-tenant cloud solution where all customers are running the same software using shared resources and receiving software updates continuously without costly upgrade projects. In addition, these are not true SaaS offerings, where business users can configure functionality that would otherwise require expensive and time-consuming development using conventional single tenant software. These ‘false cloud’ solutions are often marketed as a ‘Private SaaS’ or a SIP (Secure Isolation Platform), but, in reality, are often just another way of selling an on-premise software package as a hosted solution.
SaaS is much more than cost savings
The biggest drawback with the false cloud is not that the customers are missing out on the economies of scale by not sharing resources, but that they will not have a speedy deployment, a future-proof and configurable solution, and the business agility that comes with a modern SaaS platform. 75% of enterprise software decisionmakers surveyed by Forrester rated ‘business agility’ as the top benefit of a SaaS platform, while another 72% rated ‘speed of deployment’ as a key benefit. Saving money, getting better uptime, and higher security are, of course, still relevant arguments for SaaS, but being agile and fast is of even greater importance. This is especially true for software that supports the rapidly changing processes in sales and marketing that can really reap the benefits of the SaaS model.
Software-as-a-Service is not just your software running on someone else's server. It is much bigger than that and should be an important factor when you choose your software vendors going forward.
Johan Boström, Co-founder and Evangelist, inRiver
Recently we had a great day at our HQ with Nasry Angel from Forrester discussing our Roadmap and Visions. During the discussion, we talked about different approaches to architecting software.
If you simplify it, you can categorize these approaches into two main categories.
Here it is all about The Expert, and an assumption that this solution will handle everything from here to eternity. Or perhaps with this expert aura it simply becomes too many features within one solution, and too few that dare to challenge the solution. In the 90s this was a popular way of approaching software architecture. Trying to build and capture THE Enterprise Model that would solve everything and with that false expert know-it-all notion this could be done. Meanwhile, the business had to wait while the experts sat down and did their analysis, and after that it was done. The only thing that now remained was for anybody or somebody to implement their flawless design and voilà the one model was built.
To quote Jimmy Nilsson on why this did not work on the 90s and why it will not work in the future either:
This approach often leads to a big on-premise monolithic design. Over time this will not scale with new creative ways of solving real business challenges, but more be a war for preserving a state and design that was built and invented during the analysis and the creation of THE Enterprise Model.
Here it is all about knowing that we do not know what the future holds, hence we need to approach our domain with that notion. Understanding and accepting that everything we add will create complexity, so being very aware of what type of business challenge we are solving is paramount. Because we know that the domain and business challenges will change many times during the lifetime of our design. If other or tangent business domain opportunities arise, look for other services or collaborations to solve it. This approach of moving forward in small steps and failing fast, but with tiny failures that quickly will lead to a path towards an efficient design. In hindsight, this path will look crisp and clear, but without these small failures it would have been impossible to find it.
This approach often leads to a SaaS-based design with Microservices as base architecture, which often gives more flexibility and more purpose-built features . This often fits better within an organization. Because of the natural state of a IT-landscape where a lot of different systems and services often needs to coexist. To assume that ONE system would solve this challenge in the most efficient way is not very realistic. If you on the other hand are working with modern service-based solutions, this will put you in a much greater position to be efficient in maximizing the effect of your investments.
A couple of weeks ago me and our CEO, Niclas Mollin returned from San Francisco after attending the great event SaaStr 2017. The reinforced insight we left with was that all inRiver customers deserve a modern approach to delivering software. We have, for a long time, believed in a Cloud Service Approach, but with that transition we had to go through a lot of changes. To get where we are now, we have “killed a lot of darlings” on the way. With this I mean things that were thought of as absolute musts in our solution, and could not be changed. As always with these situations, time and commitment will help you in finding an alternate route. In this change process, The Microservice architecture is something that has helped us in our ambition to ― together with our community ― create an easy-to-use and fast-to-scale SaaS approach. The feedback we have received is very positive, the agility we can provide and the speed of change our design offers is very appreciated by our customers.
Think big – Start small - Scale fast
Jimmy Ekbäck, Executive Vice President Products & Services, inRiver