When – and why – hybrid SaaS might be a better option

Cloud services, particularly SaaS products like Office 365, G Suite, Slack and Zoom have been invaluable to enterprises trying to maintain functioning, productive operations amidst this year’s sudden shift to remote work and distributed teams.

SaaS has long been popular as a replacement for internally operating broadly-used, commodified IT software like productivity suites and communications platforms.

However, the pandemic, which forced IT operations and support staff to work from home, led more organizations to investigate and adopt SaaS for backend business services like CRM, ERP and content management.

Indeed, Flexera’s annual cloud survey found that one of the fastest-growing enterprise initiatives is migrating on-premises software to SaaS.

The deeper SaaS creeps into an organization’s back end services, the more it renders the availability and performance of critical business processes dependant upon a SaaS product and vendor that the business doesn’t control. When revenue, customer satisfaction and business operations rely upon an external service provider, it forces business executives to fully understand the tradeoffs of SaaS and options for mitigating the risks without sacrificing the benefits. A hybrid SaaS implementation that combines shared and single-tenant infrastructure is often the right option. 

Shared- versus single-tenant SaaS

The SaaS deployment model is typically conflated with implementations using shared infrastructure. The concepts are understandably merged since the vast majority of SaaS products, and all consumer titles, are delivered from infrastructure shared across hundreds or thousands of customers. Nonetheless, the sensitive nature of customer, financial, procurement and HR data held in CRM, ERP, CMS and EHR systems led many software vendors to enter the SaaS market with single-tenant infrastructure to assuage the fears of skeptical business leaders. SAP S/4 HANA Cloud, STE is a prime example of the type that Brian Sommer warned about almost two years ago when he wrote:

Great SaaS apps run in the cloud in multi-tenancy (Old ERP vendors still peddle single-tenant on-premises, hosted and private cloud solutions).

Although Sommer lumps single-tenant SaaS together with on-premises software (“and their countless variants”), the single-tenant deployment model doesn’t necessitate uncontrolled heterogeneity. Indeed, it is often built from a standardized software distribution, run on the same cloud environment as a vendor’s multi-tenant customers, but using cloud resources, i.e. compute instances, storage columns and buckets and virtual networks, that are dedicated to one customer. Such implementations sacrifice some of the operational efficiencies of shared infrastructure for greater control over performance levels, maintenance windows and data placement.

A better SaaS alternative is a hybrid model in which parts of an application, such as the Web UI, mobile interface and administrative console are delivered from shared infrastructure while the backend databases and business logic run on dedicated infrastructure. For example, Generis CARA, a content management SaaS that targets highly regulated industries like life sciences and financial services provides two classes of service that vary the mix between shared and single-tenant resources: 

  • Standard with shared infrastructure for the application logic and UI servers, with a dedicated database for each customer. Updates are automatically applied each quarter.
  • VIP with dedicated services for the application middleware, UI and database. Updates are available each quarter, with customer control over the schedule (including the option of skipping updates)

The advantages of a hybrid approach include:

  • Predictable application performance by eliminating resource contention.
  • Customer control over software updates and maintenance downtime.
  • Customer control over application version and configuration, backup policies and the physical location of data repositories. 
  • Lower lock-in risk by using dedicated databases that are more easily replicated or migrated to other cloud infrastructures. 
  • Faster data restoration in the event of accidental or malicious deletion, again due to not comingling customers on a shared database or storage repository.

Noisy neighbors and other cloud performance concerns

Data security and cost control usually top the list of business concerns when asking executives about cloud usage, however, dig deeper and you’ll find that many IT leaders also worry about performance when using SaaS applications. An ESG survey focusing on applications for distributed workers, i.e. every employee in the COVID era, found that dismal SaaS performance for remote workers is common. – Read more

5 emerging SaaS trends for your business

In the past few months, businesses around the world have embraced cloud technology to pivot and survive. Cloud-based apps allow businesses to continue their operations remotely. However, if you have chosen cloud software for your business recently, you know that the SaaS industry is a crowded marketplace. For every single business requirement, there are hundreds, if not thousands, of vendors to choose from.

The pandemic has thrown the SaaS industry into sharp relief, highlighting both its shortcomings and its many advantages. It should come as no surprise that the industry is expected to grow this year to US$116-billion this year (up from just under $100-billion in 2019). But is that growth sustainable?

Even as the market adoption for SaaS grows, here are some other driving trends:

  1. Lack of profitability
    SaaS is notoriously a low-margin business. The percentage of profitable companies in the SaaS market is, surprisingly, in the low single digits, despite the market growth figures. At a time when VC funding is drying up, only those vendors that can prove they are on track to be profitable will make themselves more visible and relevant in the future. Those that cannot make that leap will most likely be a part of someone else’s consolidation story.
  2. Rise of the Suites
    In a bubble, features tend to masquerade as products and products tend to masquerade as companies. During a recession/depression, this reverses. Products become features and categories consolidate. This gives rise to product suites which are either built from the ground up or assembled through acquisition. Already, bigger SaaS players are strengthening their offering by either building new products, or more often acquiring companies.
  3. Consolidation
    A SaaS industry with tens of thousands of companies is unsustainable. How many CRM companies do we need? 10? 20? 50? We have more than 5 000 currently. This suggests that many of them are likely to be consolidated and in multiple areas. Oversupply combined with the rise of the suites suggests that consolidation is inevitable. – Read more