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Feyzi Fatehi
Feyzi Fatehi
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Become Your Own SaaS Provider

Enterprises adopting private cloud should consider offering "private SaaS," a way to efficiently offer application services to their employees and partners.

So much has been written about the rise of the public and private cloud that sometimes it can feel more like dense fog than a cloud. But there are still new and innovative ways the cloud can be put to use. One way is to enable "private SaaS": using cloud concepts to deliver software services within the enterprise and the extended enterprise.

While robust software-as-a-service (SaaS) offerings like Salesforce.com pre-date the cloud, the technologies developed in cloud computing further allow SaaS to easily onboard and support users. This multi-tenant model, which treats members of different departments, business units, or groups as members of those distinct entities and allows unique rules, workflows, and requirements for each group, has become the heart of the SaaS business model.

Research from many industry and academic sources indicates that a great deal of the growth in cloud usage is being driven by SaaS, in which the customers can subscribe to applications “as a service” and avoid having to incur the capital expense and operational costs of running applications in-house. 

At the same time, many organizations are embracing the private cloud concept as a way to provide infrastructure that is a flexible alternative to traditional datacenter computing, or to provide an extra layer of security and governance that may not be available in the public cloud. Why shouldn't these private clouds also offer application services on a subscription basis to groups of enterprise users?

The SaaS business model needs to support operations and lifecycle activities that are part of the operations in many organizations, as well as SaaS-specific capabilities, including subscription management, monitoring, metering, reporting, tenant management, and billing. All these SaaS concepts can be applied to good effect in an enterprise environment.

Private SaaS benefits
One of the many benefits of a private SaaS implementation is the reduction in number of application instances to manage. The integration complexities and operations costs are also greatly reduced when compared to running many separate application instances for each geographic entity, dealership, or business unit -- which often happens in large enterprises. Private SaaS streamlines the operations needed to provide a software service with a high degree of autonomy for each member entity, while still leveraging a highly efficient and well managed shared infrastructure.

As large as those benefits are, they can be greatly expanded if the private SaaS model can be implemented for several applications, where the cost savings and consistency of infrastructure, operations, and management can be applied to a larger portion of the company's IT operations.

Private SaaS also allows IT to replace multiple application instances that may previously have been separated for security or privacy reasons. The multi-tenant ability of SaaS to securely manage and separate the data of different groups of users can result in a substantial reduction in infrastructure costs. In addition to the reduced direct cost of the infrastructure, an enterprise is also able to reduce costs for operations and management of many application instances.

Private SaaS enables enterprises to take advantage of the efficiencies of cloud economics and utility internally, or to their "extended enterprise" including vendors, customers, and supporting partners. Implementing private SaaS also empowers the CIO by enabling improved management oversight, governance, and insight on specific software usage and consistency in software version, operations, and integration across the organization.

Taken together, this means higher asset utilization and much lower cost of service delivery. CIOs can implement private SaaS to modernize and recast their current software application portfolios as profit centers based on business value, rather than as cost centers. And they can deliver those software services faster, with improved management, oversight, and control. 

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Lorna Garey
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Lorna Garey,
User Rank: Ninja
11/15/2013 | 12:17:45 PM
Chargebacks?
How would you recommend IT deal with charging back application usage in this model? When we have multiple instances of an application, all on their own servers or VMs, it's fairly easy to allocate costs; however, in this setup that seems more of a challenge.

Our data shows more of IT's budget being decentralized, so I believe this could be a key point.
scottchate
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scottchate,
User Rank: Apprentice
11/16/2013 | 2:48:40 PM
Re: Chargebacks?
Lorna you are absolutely correct. We too find that people are concerned about how allocation of costs can be managed. In scenarios where an enterpise uses the Virtual Tenancy model, where each tenant is provisioned with their own instance of the application, the usual methods can be applied since there are separate resources assigned to each tenant. If the Multi-Tenant model is used, the infrastructure is shared amongst all tenants and as you note, that means a different method of cost allocation may be needed.

One approach is simply to divide up the total cost and allocate it by a proportional metric such as number of users. For cases where that doesn't provide the desired level of specificity, some may wish to apply metrics such as transations, storage usage, users login times, or some other measure they can correlate with value received.

Corent's SurPaaS® platform has the built-in capability to do metering of application activity at the transaction level, and to interact with the cloud layer or OS information to gather and analyze data so that the metered activity, whatever it is, can be tracked, counted and the appropriate charges sent to the billing system. The proper allocation to the tenant is based on the user that perfomred the actions. This provides tremendous scope to allocate usage to the tenants with a high level of detail.

We have found that when the Multi-Tenant model is employed, it can lower the cost of service delivery by 5 to 15 times. These order of magnitude savings often make it easy for all participants to accept the simple allocation methods, as there are substantial savings for everyone.
PatrickH859
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PatrickH859,
User Rank: Apprentice
11/25/2013 | 4:47:15 AM
Absolutely agree
I agree to everything written in the story because my company does the same. We felt big difference when we applied to SaaS software for the first time. It was the monitoring tool Anturis to see the infrastructure of the company. We saved money on hardware and even hiring one more administrators because our current one said he would be able to cope with everything because of the new software.
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