SaaS-ifying your CRM Application

Dears,

SaaS-ifying your CRM Application

SaaS CRM Maker Salesforce.com is clearly the poster-child for the software as a service (SaaS) industry (at least in the CRM space) and has boasted its multi-tenant architecture as the undeniable standard for hosted software delivery. However, SAP has entered the SaaS industry with its Business By Design solution and trumpeted its isolated tenancy hosted delivery model as one of the most overarching advantages when compared to Salesforce.com.


The debates between multi-tenant and isolated tenant hosted delivery platforms are nothing new, however, the topic has transcended from a quiet conversation among industry pundits to a full scale debate among SaaS buyers and influencers.

The multi-tenant hosting model claims to deliver the following advantages over isolated tenancy:

1. First and foremost - dependability and reliability. By mandating every customer operate on the same database, operating environment and software version, the hosting manufacturer is able to deliver greater standardization, operate with fewer variables and ensure a more reliable information system.

2. Material cost savings. When all customers reside within a single database, there are material economies of scale related to both software procurement costs and IT (Information Technology) administration (including provisioning, maintenance, tuning, trouble-shooting, evolution and systems management).

3. Faster life cycle evolutions. By not supporting individual client applications and multiple software versions, resources can be more tightly focused.

Not to be over-shadowed, isolated-tenancy advocates point to their hosted software architectural advantages:

1. Software versioning. Whereas multi-tenant CRM software solutions require all customers to share the same application version and all customers are upgraded in mass (whether they desire the upgrade or not), isolated tenancy CRM systems generally support multiple versions of their software (usually the current version and the last one or two versions) and permit clients to accept or defer new version releases. Isolated tenant and multiple version support often appeal to those clients who have incurred system integration or software customization and want the opportunity to evaluate the ramifications of a new version release before being forced to the new version. Isolated tenancy applications also appeal to those clients who would like to defer a new version release for a period of time (often until the first point release is issued).

2. Increased flexibility for access to information and system integration. Because isolated-tenancy CRM applications devote a dedicated and unique database to each customer installation, greater access to data with third party query tools, report writers and integration tools is permitted.

3. No limits customization. Unlike multi-tenant applications which include constraints which cannot be violated due to the shared database approach, isolated tenancy applications offer a 'no limits' software customization which generally implies both more flexible and lower cost customization.



Current Trends

• Hosed CRM and ERP (Enterprise Resource Planning) buyers show increased awareness in the multi-tenant versus isolated tenancy trade off. Majority of the Customers indicated that the tenancy model is or was included in their software selection evaluation.

• The smaller the customer, the more likely they gave less importance to this issue.

• The larger the client, the more likely they preferred or even demanded isolated tenancy. As one Fortune 500 respondent commented, "I find it audacious and presumptuous that a CRM company is going to tell me that I'm sharing a database with thousands of other companies as well as tell me that they are upgrading my system without my advance notice, input or approval. Do they not recognize that a system upgrade may wreck havoc with other related systems?"

• Security conscience organizations such as health care, financial services and federal government seemed to show strong preference for isolated tenancy, however each of the SaaS CRM Tenant model has its own advantage Single Tenancy could be model to look for to scale to new heights in the next few years.

Challenges in moving Desktop Warmers to the Cloud Comrades

While the idea of a cloud is appealing, there are challenges in moving an existing product to the cloud. Here are the challenges in moving to a cloud based business model:

• Customers are not going to switch unless the cost saving is exceptional. Minor savings are not good enough.

• Deployment has to be exceptionally fast

• High performance is an expectation. Customers somehow expect that the cloud has unlimited resources. So, if they’re paying for a cloud app, they expect that they can get whatever performance they demand. Hence, auto-scaling is a minimum requirement.

• Linear scaling is an expectation. But this is much easier said than done. Parallelization of tasks is a big pain. Must do lots of in-memory execution. Lots of caching. All of this is difficult.

• Latency must be low. Google, Facebook respond in a fraction of a second. So, users expect you will to.

• If you’re using Linux (i.e. the LAMP stack), then, for achieving some of thees things, you’ll need to use Memcache, Hadoop.

• You must code for failure. Failures are common in the cloud (at those scales). And you’re system needs to be designed to seamlessly recover from this.

• Is customer lock-in good or bad? General consensus in cloud computing market is that data lock-in is bad. Hence you need to design for data portability.

• Pricing: Deciding the price of your cloud based offering is really difficult.

o Cost of the service per customer is difficult to judge (shared memory used, support cost, CPU consumed, bandwidth consumed)

o Customers expect pay-as-you-go. This needs a full-fledged effort to build an appropriate accounting and billing system, and it needs to be grafted into your application

o To support pay-as-you-go effectively, you need to design different flavors of the service (platinum, gold, silver). It is possible that this might not be easy to do with your product.

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