Software as a Service, and related modes of deploying and providing enterprise business services, has revolutionized the software industry in the last few years. Currently there are SaaS applications for many functions such as HR, Finance, CRM, IT asset management, and more. Serus Corporation is a leading provider of enterprise software that addresses needs in the operational management of outsourced manufacturing activities. Our solutions can be deployed in either the traditional installed software model, or hosted and provided in a SaaS model.

Operations management includes a large number of complex business processes, and interactions between different business organizations, within and across your supply chain. We believe that the requirements to meet these operational challenges go beyond the typical SaaS solution and include a set of Managed Services, in which solutions providers are also helping organizations run their enterprise, adding “people-smarts” into the set of “software-smarts”. For instance, we currently provide software and managed services to semiconductor manufacturers, with software providing data management, reporting, and analysis, and managed services to handle operational exceptions, server management, and cross-organization support.

In this document, we provide a summary of SaaS, current trends in SaaS, our definition of the Managed Services space, and our view of the future.

What is SaaS?

Software as a Service (SaaS), also known as software on demand, is a newly developed model for delivering software. The traditional model has been to have customers acquire a license and have software installed within the customer organization. Examples of this model are software installed on your desktop, software in your data center, and software in other parts of your organization. In most cases, the customer is responsible for the ongoing management of the software. Payment is typically up-front, followed by support license payments.

In the SaaS model, a software vendor develops a software application and the customers use it over the Internet. The software is hosted by the vendor or at a third-party site. Customers pay not for owning the software itself but for using it. SaaS presents significant advantages to both customers and vendors, particularly in the area of reducing software support complexity and costs, as well as providing more flexible payment and support options.

According to IDC (2005 Software as a Service Taxonomy and Research Guide, Erin Traudt, Amy Konary), the key characteristics of SaaS software include:

• Network-based access to, and management of, commercially available (i.e., not custom) software
• Activities that are managed from central locations rather than at each customer’s site, enabling customers to access applications remotely via the Web
• Application delivery that typically is closer to a one-to-many model (single instance, multi-tenant architecture) than to a one-to-one model, including architecture, pricing, partnering, and management characteristics
• Centralized feature updating, which obviates the need for downloadable patches and upgrades.

Many industry analysts argue that SaaS is actually a return to earlier models of software distribution, in which software was hosted at Service Bureaus or at Application Service Providers (ASP’s). This analogy is valid, but what has changed in the meantime is the increased connectivity of SaaS solutions to other information resources using Internet technology, the ubiquity of web browsers and even devices such as cell phones for accessing SaaS-deployed software, and the improved security models which allow organizations to be willing to migrate business-critical information out of their premises.

Stages of SaaS Application Development

There are several well-known stages to carry out for development SaaS applications. Most of these were identified during 2004 to 2006, and many companies are well into this process, plus a large number of service and support companies will provide assistance.

Start with typical Client-Server application – most of the SaaS efforts today have begun with a prior version of the software, in which the client-side function has clearly been separated from the server-side. This will allow partitioning into the hosted side and the front end side.

Movement from Single to Multiple Instances – most SaaS companies have initially set up separate servers for individual customers, with one copy on each server. The next step beyond this is to install multiple copies of your software on a single server. This is called multi-instance. Multi-instance enables you to share the cost of a server across multiple customers.

Move to Multi-Tenant Instances – one of the most challenging steps for many older applications, this requires that one instance of the application hold data for multiple users (tenants). This requires that the data content be segmented by tenant so that one tenant’s data is not used by or visible to another. The resulting gain in deployment flexibility is quite large, as now the hosting environment can be expanded more easily than adding more hardware.

Challenges of Testing – multiple-tenant instances require additional testing for their tenant-partitioning features.

Integration of Web Services for Data Transfer – SaaS applications are typically “open” for loading and exporting of content using data transfer standards such as web services. A related stage is to define standard formats of data for transfer.

What are the Current Trends Surrounding SaaS?

Rich User Interface

The earlier web-based user interfaces have been updated to provide an experience more like a desktop application. This can mean menus, multiple windows, and graphical drag-and-drop interaction that was not previously present in web applications. Many of the technologies used for this are part of AJAX, and a variety of open-source and commercial organizations are providing toolkits for such.

Increased Connectivity and Data Management

The next major trend is increased connectivity to the user’s business operations systems, and to other business systems. This takes the web services mentioned above one step further. The most recent SaaS solutions contain entire data management back ends. Serus Corporation’s solutions include data fetching, data cleansing, and data storage facilities that use a variety of formats, and handle very high data traffic rates.

Cross-Service Business Processes

Currently, most SaaS solutions provide one and only one business service. For instance, you send your leads to your CRM provider, you send your user questions to a support knowledge base provider, you send your forecast data to a forecast trend analysis provider, you send your shipment information to your shipment tracking provider, and then (perhaps manually) transfer the combined results to your SaaS financial provider. Such an approach is actually a throw-back to the “separate silos” of systems that typified the pre-Internet and pre-Enterprise Application Integration world. It often leads to errors due to “re-keying”.

This flow of information can be shown across the product lifecycle as:

The latest trends in SaaS are that one SaaS solution is the “orchestrator” of the other solutions, including handling all of the data transfers. The characterization is based on business process definitions, which span multiple systems. In this model, the users get to focus on the part of the business operations that they need to, while the system handles all of the coordination.

Cross-Organization Business Processes

If the above case is handling the issue of business processes that span the lifecycle of a business activity, such as tracking an order from a customer lead to finished delivery, the orthogonal issue is transfer of information updates across the different parts of the organization. This can be shown in the following diagram:

As shown here, while orders are coming in for products, there also product changes coming in from Product Development. Likewise the marketing promotions can change rapidly. Manufacturing specs must get to production in a timely basis, or the wrong products will be built. Finally, the world of billing and finance is often changed by new regulatory requirements.

Single Sign-On

Another trend is managing access to multiple SaaS solutions. For instance, an organization might have 10 or more different SaaS solutions that are used during a regular day. Each has a login facility. Simply remembering the passwords and account information can be difficult!

A related problem is that when an employee leaves the organization, the access must be retracted to all of those systems, since they contain critical business information.

The approaches being tried include hardware and software-based approaches. One approach is called HASP (Hardware Against Software Piracy) ID, which is a firmware token on a USB key fob or smart card with software built around it on the back-end. This feature uses the same system as LDAP or Microsoft Active Directory.

Another development is a set of standards for security, called “SAML”, for Security Assertion Markup Language. This allows for security definitions to be exchanged and updated.

Single Billing and Usage Tracking

Related to the issue of tracking security of users with multiple systems is the issue of tracking the billing from the multiple systems. Everyone has seen their cell phone billing statement expand as more of your family’s teenagers are added to the system, and it is difficult to determine who is using what service of the cell phones. The same applies on the enterprise level.

Organizations are now appearing that are “billing integrators”. Essentially the inverse of the process that orchestrates the sending of requests out to the back-end providers, these are collecting the resulting billing and account statements and consolidating them.

Service-Level Compliance

The shift to SaaS means that service providers are now responsible for the day-to-day operations of their solutions. Typically, the terms under which such services are offered include Service Level Agreements, which must be monitored and checked. Traditional management systems do not scale to meet this need.

Hence, the latest set of hosting tools and server farms provide advanced features for monitoring and management. They also provide reports against SLA’s which customer CIO’s require.

“Managed Services” are a Step Beyond “Software As A Service”

Managed services is the practice of transferring day-to-day related management responsibility to another organization. It can be a strategic method for improved effective and efficient operations. The person or organization who owns or has direct oversight of the organization or system being managed is referred to as the offerer, client, or customer. The person or organization that accepts and provides the managed service is termed the service provider.

Typically, the offerer remains accountable for the functionality and performance of managed service and does not relinquish the overall management responsibility of the organization or system.

Examples of managed services used on a day-to-day basis in today’s world include:

• Payroll (as done by ADP)
• Shipping (as done by FedEx)
• Financial management (as done by Schwab).

In the IT space, the most common managed services include:

• Strategic application management: ongoing management of core enterprise applications, such as SAP or Oracle, as well as legacy and custom-developed applications.
• Data center management: hosting and running operations.
• Asset management: tracking version numbers and licenses.

Managed services are carried out by a mixture of software systems and people. For instance, in Payroll, there are auditors available to check for process gaps or exceptions. In Shipping, the goods would not move without the people in the trucks and in the dispatch centers. In Financial management, the account managers are people who are aided by software systems to provide account management and advice.

In Serus’s world of outsourced manufacturing, managed services include the following:

Business Services:

• Master Data Modeling
• Financial Valuation / Costing
• Product engineering / Manufacturing coordination
• Operations Process Coordination
• Supply Chain Planning
• Application Change Requests
• Exception Management and Root Cause Analysis
• SOX Compliance and Audit Support

Support Services

• 24×7 Helpdesk Services
• Application Training

Application Services

• 24×7 System Application Monitoring / Trouble-shooting
• 24×7 Supplier B2B Monitoring / Trouble-shooting
• 24×7 Supplier Transaction Monitoring
• High Performance IT System Consulting Services
• Upgrade and Patch Management Services
• RDBMS Performance Monitoring and Tuning

These capabilities are far beyond the typical SaaS solutions which are handling leads in CRM, or tracking resumes and open positions in HR. Such typical solutions are basically performing record-keeping. Instead, Serus is addressing business-critical operational issues associated with complex manufacturing processes including exceptions and multiple sources of information. We cover a scope from the product design stage to the financial reconciliation stage.

Our View of the Future

The SaaS revolution is well-established, and needs no further justification.

However, the transition from single-point SaaS solutions that are in distinct silos, to the offering of complex SaaS solutions that span multiple parts of the organization, contain business processes, and proactively enable you to operate your business is the next important challenge for the enterprise software industry. This will be a shift to “Software plus Services”.

Serus Corporation is well-positioned to be a leader in this transition, as we have already defined and implemented solutions that provide integrated SaaS and Managed Services capabilities.