SaaS needs virtualization

It’s no secret that virtualization has been a major trend on the IT industry. In fact, to many people, SWsoft has been mostly known as a vendor of server virtualization Virtuozzo (more information at Server Virtualization Blog) and desktop virtualization Parallels products.

Let's take another look at the 10 tenets of SaaS and see why virtualization plays an important role in the SaaS world.

Provisioning. Image-based deployment of virtual machines is much simpler and less error-prone than an installation process requiring many steps in the configuration. Virtuozzo, with extremely compact images, makes provisioning a snap.

Density. Most existing applications were not designed for SaaS and only support a single tenant (user hierarchy) per environment. Virtualization allows multiple instances of such applications to run on the same machine, greatly improving efficiency without the need to redesign the application. The unique architecture of Virtuozzo allows 25-50 instances per server, making it economically very efficient to run "legacy" applications in SaaS mode.

Isolation. True multi-tenant design has many advantages, but some significant drawbacks, too. Multi-tenant applications typically don't allow for a lot of customization. Customizing database schema or supplying custom code or scripts is either prohibited or severely restricted. The reason is that a single missing index, poorly constructed query, allocation of too much memory or an accidental infinite loop can bring down all tenants on the same server. By comparison, Virtuozzo gives each application instance a fully isolated environment. Together with resource management capabilities, it guarantees that one instance cannot affect others, however badly it misbehaves.

Service Levels. In a multi-tenant design, it's a non-trivial task to account for CPU cycles, memory or network bandwidth used for servicing a particular tenant. Consequently, it's very hard to limit resource consumption by tenants, which, in turn, makes it difficult to have different service levels for different tenants unless resource management logic is carefully designed into the application. As a result, applications become very complex and admins need to master resource management for each application.

Virtuozzo solves the problem by making it very easy to manage resources between virtualized applications instances. Flexible service level policies can be applied to any existing application, using the same mechanisms regardless of the application. Moreover, Virtuozzo provides capabilities like high availability, clustering, live migration and other high-end features - without spending time on designing them into the application.

As you can see, virtualization brings very significant benefits to the SaaS world. Virtualization gives ISVs an easy migration path to SaaS without having to give up  the flexibility of "dedicated" design. At the same time, virtualization allows service providers to make their hosting infrastructure very flexible yet very efficient.

The benefits are so significant, that, in my opinion, no SaaS provider will be able to be competitive without using virtualization.

APS - Application Packaging Standard

About 3 months ago, SWsoft announced the APS (Application Packaging Standard), but just last week we believe APS has become a big deal in the industry. More information on the standard is available at http://www.APSstandard.com. Now, let me explain.

Let’s use my blogs as an example. Both Server Virtualization Blog and SaaS and Hosting Blog were originally hosted on LiveJournal. There were two major drawbacks – first, your colleagues cannot post to your blog unless you convert it to a community; second, the amount of spam comments was becoming increasingly unbearable. It finally annoyed me so much I decided to change the host and I moved everything to Blogger. Soon, I discovered that I cannot post even a small picture to the free Blogger account. Even more annoying - you don't get a notification when someone posts a comment and you cannot reply to comments. And neither of these blog engines provides transparent integration with services like Feedburner, Google Analytics, promotion services, etc. There are paid blog engines, but AFAIK (correct me if I'm wrong), they don't offer such integration either, and without it, I don't think they are worth the expense.

It'd be nice to be able to buy such a blog engine, but nobody makes one. The reason, in my opinion, is that small ISVs are not writing commercial web apps because they don't have the power and reach required to market and sell them. Hosters could be a great channel, but they all have different infrastructures and control panels, and each application needs to be individually integrated into each infrastructure. A hoster cannot possibly afford adapting each update of each of the, say, 100 apps it offers. An ISV cannot afford adapting each update of the app to, say, 100 hosters it sells through. And even though The Planet, 1&1 and SWsoft collectively have thousands of engineers - Isabel says so, not me - we cannot do much about it. We are not in the application business.

It was obvious to us that there is some incredible opportunity for both hosters and ISVs, and we decided to try to bring them together. The solution was to create an Application Packaging Standard that would allow easy interoperability. An ISV only needs to tweak its applications once and hoster only needs to tweak the control panel once. After that, any app can be re-sold by any hoster.

Both hosters and ISVs seem to get it. Just few days after the announcement, we have already received incredible feedback with many hosters and ISVs ready to adopt this standard.

We believe that hosters need to take a more active role and become the last mile of adoption of SaaS. They know how to host apps and they have a very wide reach to users. They now need to become real retail outlets so that Internet users can buy applications from them.

By the way, if you have any feedback on APS, please join SWDN and get back to us with your comments and suggestions. You are very welcome!

Virtualization ROI = Really Operations Investment

What is more important in hosting, the price of virtualization software, or virtualization efficiency and tools that accompany the software?

Service providers use SWsoft Virtuozzo for two primary purposes (Industry analyst Dan Kusnetzky’s blog provides a much more comprehensive discussion of virtualization use cases):

1. VPS product offerings – the goal is to offer virtual private servers to customers to serve the market need for low-cost servers while increasing the amount of revenue per server.
2. Virtualized infrastructure – the goal is to consolidate servers, reduce power consumption, and optimize server management through virtualization.

Key requirements for both solutions are: extensive management tools, fully automated provisioning, and high density. This post will demonstrate how each of these factors is more important than a small change in software price.

Comparison 1 (automated provisioning and management): Compare a 10% software price discount to fully automating the service provisioning process. In the hosting world, providers typically have a 30 page manual which describes service provisioning steps. Many service providers have a manually intensive 5-6 hour process from the time an order is received until the time the customer can begin to manage his service. Assuming that virtualization software is $3,000 per server, a 10% discount would be $300 per server. Assuming that a technician makes $50/hour for installation services and 10 VPSs per server, the automation savings could be $2,500 per server – not including maintenance and improved customer satisfaction.

Comparison 2 (higher density): Compare a 10% software price discount to a 10% improvement in server density. Savings from software: 10% off price of virtualization software. Savings from higher density: 10% of server/CPU-based software licensing + 10% of the price of server hardware + 10% off power consumption costs for your datacenter + 10% off the cost of maintaining your servers.

Bottom line: Management tools are the most important factor in selecting a virtualization solution. Pricing and density are also factors, but to maximize ROI make sure your virtualization software is integrated with provisioning software, billing software, and customer control panels. Virtualization is an investment in operations efficiency - the returns will depend on integration and automation.

SaaS distillation - stage II

In her blog (BTW, one of my favorite blogs, not just on hosting), Isabel says that the “top 10” list of SaaS infrastructure should be amended. She calls them commandments, by the way! It’s very flattering (a blasphemy, though :) ) to think I have enough influence to issue commandments. Here is my reply:

• Open API – Isabel makes a good point about giving customers and 3rd party developers access to an API. Without question, an open API is a prerequisite for functional integration. Control panels and applications need an API to participate in a cross-application workflow. The API needs to be well documented with task-based guidelines and comprehensive reference material. Ideally, some developer tools should be provided, too. This is actually what has been the focus of Open Fusion initiative for the most part of 2006 and this was the reason we created SWDN.
• Migration – In terms of the discussion about portability, I would like to clarify. My point here is not to move the data between hosters, but rather to help hosters move data inside their datacenters. Currently, moving customers to a new hardware or upgrading control panel software to a newer version, is typically done in-place, causing some downtime. We want to avoid that. And, yes, off-line is a possible scenario, but internal migration is something our customers have been asking for a long time.
• Data Aggregation – Isabel wants data aggregation to be added to my list and suggests that mash-ups are a key component of SaaS infrastructure. I do agree, but would like to point out that the difference between enterprise data aggregation and SaaS data aggregation is that in the former case we know the schemas of the data sets, while in the latter we don’t. We need to be able to “mash-up” any app with any other app, yet avoid the costly “each-to-each” integration. That can only happen when/if application vendors agree to use common data formats for their domains.
  The same idea was behind creation of APS – a standard packaging and provisioning data format – that allows for integrating each application individually into each hosting infrastructure. And we are working on implementing a common “hosting automation domain model” in all our products – a huge body of work, let me tell you – and then we will propose it for the industry to accept. And the same needs to be done by ISVs in all verticals.
  Bottom line – I’ll happily add data aggregation to the “top 10” when one of the current top 10 is solved and goes away :)
• Finally, on the topic of Hosters as SaaS Market Leaders. Isabel took us to task for hosting our blog on Google. Well, yes, we host our blogs on Google Blogspot for free. However, if there was a blog engine that would automatically provide viewing stats, RSS stats (without feedburner URLs), some help with online marketing/promotion and all of this without me having to spend time tweaking layout templates – we’d gladly buy it. And maybe a little extra if it offered a nice non-browser based editor. Nobody has written such an app yet, though, and I believe that one of the main reasons is that it’s very difficult for a small ISV to sell and market their apps as SaaS. I’ll talk about that in detail in one of my next posts where I’ll talk more about APS and why we created it.

As you can see, we are very much in agreement with Isabel on most things. The differences are mainly in how and when, not what should be done. A subtle hint – this discussion would be even more fun if someone else joined us with some fresh thoughts on the subject :)

SaaS distilled

For some time, I’ve been trying to figure out the requirements for an efficient software-as-as-service infrastructure. Here is what I came up with. I don’t feel that this taxonomy is quite final yet, so I encourage everyone to share your thoughts.

1. Automation. All user-initiated or user-requested operations, such as provisioning new user accounts and new services, allocating new resources, and upgrading to the next level of service needs to be performed very quickly and in a fully automated fashion.

2. Provisioning. Fast automated provisioning is particularly important. Service providers need to be able to provision a new application into the hosting infrastructure and start offering it to customers very quickly. Provisioning of a new customer account or a new service instance for a specific customer should be done even faster.

3. Self-service. Users want to be in control. Hence, users need an interface (API and control panel) for managing service properties within their domain of expertise and system properties that are safe to change within the SLA.

4. Licensing. Since services and applications have specific terms and conditions, providers need to be able to manage application permissions for specific users. In other words, providers need to be able to license service and applications to their users.

5. Billing. Along with separation of responsibilities comes separation of costs. Providers, users and developers act as independent entities and need to know who uses which services, how many resources and for how long. Providers need to be able to charge for service and resource usage as well as for services packages, promotions, volume discounts and so on. All of this requires a comprehensive billing system.

6. Density. One of the most important efficiency factors is the ability to host as many users on a single server as possible. A true multi-tenant design is still more art than engineering, and most applications, middleware and business frameworks (with the exception of data base servers) either don’t support multiple application instances on a single server, or require complex configuration.

7. Isolation. However densely the service instances are packed on a server, they need to be very well isolated from each other on system namespaces, faults, performance, security, etc. Service providers need to be able to fulfill and change SLA for a service without affecting other services. For example, you want to make sure that a buggy application cannot consume too much system resources and starve other applications. At the same time, customers want to make sure that their application performance will not go below certain threshold even if all other applications on the same server are also under high load.

8. Service Levels. The key to efficient SaaS infrastructure is to allow a service or an application to run at any desired level of service – from the most affordable to the highest mission-critical – without tweaking either application or the infrastructure. SaaS hosting infrastructure needs to be able to provide operational capabilities – high availability, zero downtime maintenance, distributed load-balancing, precise resource accounting and management, fault tolerance – to any application.

9. Integration. Once a user has multiple services and applications, it is critical to have some consistency among them. In particular, SSO (Single Sign-On) and UI integration (language locale, color scheme) are important to create a seamless user experience.

10. Migration. Users want the flexibility to change hosting facilities, service plans, and hosting providers with little effort. Such migration requires an ability to take services of a user/tenant and move them to a different environment or infrastructure.

Let me know which requirements of SaaS look more important to you and how you are addressing them right now.

In my next post, I’ll talk about standards and virtualization and why I think they are two most important SaaS enablers.

Looking forward to your comments!

SaaS in the Dentist Office

I hate going to the dentist … but every 6 months I get a computer generated reminder that I have an appointment or need to schedule one. Recently, I didn’t receive my reminder so I ended up forgetting to schedule my normal 6-month check up.

Nine months later, when I arrived at the dentist office, I asked the office manager why I hadn’t received a note like I usually do. Although the details were sketchy and disjointed, it had something to do with a computer problem. I noticed that the computer running the patient records software ($3,500 program) was sitting under a desk – next to a space heater. When computer service work was required, the office administrator called an IT services company which would drive to the office and service the box.

Market opportunity: I thought to myself, if I was a dentist, I’d be willing to pay $100 / month to have this application hosted and available 24 x 7. I also noticed that according to the US Census Bureau, in 2000, there were 116,494 dental offices in the United States. Anybody interested in $140 million per year?

According to the Experts ...

The folks at IDC are predicting large growth in the U.S. Web hosting market. In a recent report they estimate that the current $8.2 billion market will become $16.3 billion by 2011.

For the first time, the report has a section dedicated to the issue of SaaS and how it will impact the growth of the hosting industry. About 10% of the report’s analysis is dedicated towards SaaS. There are quotes such as “the SaaS opportunity for hosting providers is real” but “it is unclear what the hosting provider’s role will be in the market”.

Since IDC says it is unclear, I would like to suggest that the hosting provider’s role should be “market leader and SaaS facilitator”. Today, all hosting providers offer SaaS – some offer applications, others offer IIS or Apache as a service instead of having the business run the web services on their premises.

Call to action: If you have success stories regarding deployment of real-world applications – post them on your website so the experts begin to acknowledge that hosting providers are the rightful owners of this trend.

SaaS is the future

SaaS is becoming an increasingly popular theme. Despite some skeptics, the industry is mostly very excited about the idea. In this blog, I’ll be following SaaS trend and provide my own thoughts and analysis. Let’s start with an introduction.

I’m Ilya Baimetov, Director of Technology at SWsoft. SWsoft provides management and automation software for hosting service providers. Control panels, service and user provisioning, billing – complete spectrum from cheap shrink-wrapped control panels to complex implementations tailored to the needs of particular customers. We also make Virtuozzo – an ultra-cool and a super-efficient server virtualization product. If you are in the hosting industry, you are our customer or at least you know about us.

SaaS (Software as a Service) is a distribution model, where software is delivered to its users as a service – ready-to-use, maintained by professionals and paid on a subscription basis. The major benefit is that SaaS allows each three parties – users, service providers and ISVs (independent software vendors) – to concentrate on their core competencies and delegate the rest to the experts. SaaS model brings the following benefits:

Users:

• Software can be acquired with no up-front fee.
• Zero or very short deployment time.
• Deployment, provisioning, operations, and maintenance are delegated to expert staff.
• Software is hosted in a data center free from Internet and power interruptions.
• Reduces support costs by eliminating the need for in-house expertise and 24x7 monitoring.
• Self-service control panels put users in direct control of their software where it deals with problem domain.

Providers:

• Opportunity to sell additional services with higher profit margins compared to selling raw infrastructure.
• No support calls for software upgrades.
• Admins can concentrate on their core competency – efficiently running the infrastructure. Problem domain related properties are delegated to the users.
• Easier accounting for billing/charge-backs.

ISVs:

• Offers channel into new markets – including small and medium sized businesses.
• Lower software distribution and deployment costs.
• More predictable recurrent revenues.
• Ability to respond to market faster because of the more centralized deployment.
• Ideally, no need to design all the infrastructural properties – high availability, scalability, storage management, etc. – into their applications. These properties are automatically provided or made very easy by the SaaS infrastructure.

However, SaaS is a paradigm shift for everyone:

• Users – need to adjust to self-service. I most cases, this is a welcome change – users like to be in control.
• Providers – need to learn how to build an infrastructure that allows quick integration of new services, supports fast and fully automatic service provisioning, and allows SLA-driven operation.
• ISVs – need to change design of their apps to implement strict division of responsibilities between users and admins (relatively easy) and multi-tenancy (very hard).

To help users, providers and ISVs move to SaaS, they need a platform they can use to jump-start their efforts. In my next post, I’ll analyze what are the aspects of a SaaS platform.