Lately, I’ve been thinking about highest and best use as it would apply to hosted services.  I don’t think it’s any surprise or news to anyone that dedicated hosting may, over time, begin to shrink as grids and VPS become more popular and robust.  With this in mind, the highest and best use for a company who has a dedicated offering would be to begin the movement of its dedicated hosts away from the physical server in the rack to a virtualized instance that runs across a grid that is shared by others.  This allows the dedicated host to maximize the square footage of their datacenter, the power, and other resources, while still presenting that semblance of “dedicated” to the end customer.  But, can we squeeze more density into that highest and best use?  For many companies, the marketing spin around grid is a SaaS platform where you don’t really have to create a multi-tenant application; you can simply create a virtualized instance per tenant.  Traditionally, you would have been buying a physical piece of equipment per customer, but now you can go with the grid and spread your customers across shared hardware.  In my opinion, this is half the equation.  The other half is to build a platform that sits atop a grid that provides on-demand SaaS capabilities, i.e. an ISV can publish their application into a shared virtualized instance.  This maximizes the savings gained from moving away from a physical server per server role, but also maximizes that instance as being shared among multiple customers.  Over time, hosts could decide to move their resources away from their traditional offerings into working on these new, next generation SaaS platforms.

 

What do you think?  

Dassault Systemes, a French firm that creates 3D and product lifecycle management software and services, has entered into the nascent SaaS 3D modeling space with their launch of 3DVIA, a platform Dassault suggests will transform the world into a place where someone can leverage the power of 3D to create, share, and experience life in 3D online.  The downside to this announcement is that there really isn’t anything there yet aside from being able to upload pre-created models, i.e. the Apple iPhone; however, the potential is there for them to transform this into something quite interesting and equitable. 

Once they launch an application that allows you to easily build 3D models, you’ll most likely start to see subscription packages for more advanced, professional features.  I imagine that as they prove out their online strategy and scale out their internal systems to deal with usage load, we’ll see them bring their industrial applications into the SaaS model. 

Add onto the above news with their announcement of a partnership with the advertising group Publicis to work jointly on 3D online marketing together.  This new venture is going by the name of 3dswym (3DSee What You Mean).  Combine that with the Microsoft partnership to bring 3D modeling capabilities to Virtual Earth and you can see the beginnings of a little ad-driven ecosystem where enough of Virtual Earth has been filled out that you can now walk through virtual landscapes of, say, Seattle where business owners can sell space on their walls or elsewhere all driven contextually off of the information Microsoft (or others) have collected about the visitor.  And finally, the announcement of 3DLive available for Vista with some of the benefits being real-time 3D collaboration and 3D search and navigation.  Will we see some of 3DS in Surface someday in the future?

Some interesting things I could see coming out of 3DVIA and the various partnerships are: 

• Social Networks using more 3D models for avatars and other things.
• Richer online 3D worlds
• Distributed product-cycle collaboration.
• Easier monetization of ad-space within virtual worlds, such as Second Life or open source ones like Croquet or Uni-Verse. 
• A partnership with Microsoft to provide in-game advertising over Xbox Live.
• XNA plug-in that allows you to pull in models built on the 3DVIA platform as MS hopefully embraces the hobbyist game-builder. 
• 3D Flickr

 At what point will we begin to see other CAD / PLM companies bring to market or make announcements about forthcoming SaaS applications?  These announcements from Dassault certainly position them as a player in the space.

Over the past week, I've been looking through the various appliance projects hosted at rPath's rBuilder project site with an eye toward what could a hosting company borrow or participate in. rPath is a company that's building software that makes it easier to manage, deploy, and create applications that can be built as either virtualized or physical appliances.

Aside from the obvious, like the LAMP project, there are numerous appliances that fit into various vertical markets that many hosting companies are starting to enter. A company could grab a project and apply its own magic to it to fit it into its existing provisioning, control panel, and other infrastructure systems.

Another option is to utilize the pre-built virtual machines for a vertical VPS platform. The virtual machines are tuned for the application. The plans can be cheaper than the more generalized Linux VPS offerings. You could build a RIA that allows for seamless, integrated management of all applications to which an SMB could subscribe.

The beauty about the virtual machines is that some projects have VMs for a variety of systems: VMWare, Virtual Server, or Amazon. The last in the list is probably the most interesting. I could see a meta-hoster that simply builds an application that, when an order is received, grabs the latest Amazon image from the project source control and then provision it as a VM within EC2. Still, it might be pricey renting out an Amazon VM as a VPS offering.

Some of the projects worth watching, in my opinion, are those around Zimbra, SugarCRM, and Asterisk. These would make great additions to an on-demand platform that could be offered on cheap VPS plans or use the appliances for your shared platform and carve out tenants. Build on top of the three applications to create a nice, integrated platform, maybe the Linux equivalent of Unified Messaging (though I'm sure I.m missing some more in the list).

With the announcement of Microsoft's SaaS Incubation program launching in North America, we'll start to see the traditional hosting companies begin to emulate what companies like OpSource have been doing for awhile. What I'm most interested in, is seeing how each of these platforms take shape and which host will be the first to begin moving down a path of on-demand SaaS application publishing into their environments. To an extent, this is a good opportunity for all of the participants in this program to come together and begin discussing how to make it easier and standard for an on-demand platform -- all the way from designers that a SaaS ISV can publish manifests through to define their "world" within the infrastructure to SDKs that allow SaaS ISVs to tie directly into a variety of services offered by the SaaS hosters.

I think it's important for these new SaaS hosting players to realize that bringing on an ISV is more than simply providing equipment and pipe. Those companies who believe that SaaS is simply a new moniker for offering dedicated servers are wrong. Just like web hosting, you need to provide a platform for these applications to sit in, on-behalf-of services to tie into, and a method of managing and publishing new applications or application updates into the environment -- these are only a few things a true on-demand SaaS platform needs.

Those companies that can work with each other to develop a standardized method of publishing applications into a hosting platform, bringing on-demand SaaS hosting into reality, will, I believe, help strengthen the overall SaaS industry as more and more ISVs look toward SaaS or S+S as the next evolution for their businesses.

In the past few months, I've been doing some due diligence on on-demand billing systems that I can tie into my evolving SaaS architecture. As I was doing this, I started to get a look into how responsive some of these companies were and how sales tactics change once you're through the door and it got me thinking about one thing: trust.

Most of us can agree that billing is probably one of the most important elements of any company offering a product -- I know it's the one that makes me the most nervous when I'm looking at providers who will handle billing for me in a SaaS model. The worst scenario any SaaS ISV can get into is to go with a billing solution that they either lose trust in or the company they've chosen begins to layer on extra costs that weren't outlined in the initial quote or promises at the initial sale are reneged upon once you're through the door.

This is probably why many companies in the past have either purchased an on-premise solution or have built their own. In the hosting world, many companies have brewed up their own solution to handle the type of billing models hosters have had to deal with, i.e. things like subscription and usage-based billing.

It would be nice to see some of the major vendors with solid, known names move into the on-demand billing space. I think this is also why I thought about the model Microsoft is using with their SaaS push, in particular MS CRM 4.0 ("Titan"). A company can start off with by going with Microsoft or with a partner who builds additional services on top of CRM, and then migrate into either a dedicated solution or an on-premise solution if they either grow large enough to warrant on-premise or lose faith/trust in the company managing their CRM platform. This creates a great continuum and I know it goes against the SaaS model of moving things to the web, but for some services, many companies will be nervous if they can't switch between SaaS and on-premises, especially when trust has been eroded.

On-demand companies that build a SaaS offering should consider how a customer would move their billing solution to on-premises or to a dedicated platform where they're not lumped in with a shared set of customers. A company that can successfully build a solution that can start hosted, then migrate to self-hosted will be further ahead, in my opinion, than those companies who strictly offer on-demand billing.

All I know is if I trust you with my revenue stream, then I need to have a method of moving the ability to bill for that revenue in-house if something happens that destroys my faith without forcing me into an expensive migration to another on-demand billing solution.

Well, it looks like Hostway acquired Affinity Internet Inc. this week. Obviously, I can't comment on this in too deep of a detail, but I can say that this positions us to be a global leader in the hosted services space with an increasing emphasis on items such as SaaS. For full details, you can read the press release here.

I'll probably post more as I learn more :)

Well, in this morning's email stack, I had a blanket email from the CEO of Speakeasy, Bruce Chatterley, informing all of its customers that Speakeasy has been acquired by BestBuy.

From the letter:

"Best Buy has agreed to acquire Speakeasy, a privately-held voice and data solutions company based in Seattle, WA. Speakeasy will be aligned under the Best Buy For Business (BBFB) unit, enhancing Best Buy's technology portfolio and ability to help small businesses improve their productivity and cut costs."

And the question I had was, why would a retailer purchase a connectivity company.

"One of Speakeasy's core product offerings is Voice over IP (VoIP), which is becoming a popular choice for small businesses who seek efficient and cost-effective telecommunications services. Best Buy For Business' mission is to deliver simple, reliable, and affordable technology solutions to small businesses. A product offering such as VoIP, which has immediate compelling appeal to most SBs based on cost savings and simplicity, is an attractive value proposition that allows Best Buy to round out its solutions menu for small businesses."

Something also makes me wonder if BestBuy will begin to partner with providers to offer hosted business-line applications like Exchange, CRM, and others. This seems like a logical next step, since you would now have BestBuy selling the equipment to the small business, Geek Squad setting up the equipment for the small business, then using GS to also set up connectivity through Speakeasy and any hosted applications that require client-side software, i.e. Outlook setup to Hosted Exchange services.

Microsoft's Hosting Summit is going on here in Bellevue, WA today and tomorrow. As you could expect, there is plenty of discussion around Exchange 2007, with data points showing that the market for Hosted Exchange is growing rapidly and that mobility is one of the key drivers behind this growth, CRM 4.0 ("Titan" is on its way and Microsoft is beginning to work with partners with to bring this up dated version with multi-tenant support to market), SaaS, and Software + Services. I'll discuss those last two in a different post later this week.

For the companies hosting IIS the best news that is coming out of this summit was shown off by Bill Staples during his demonstration of some of the new features that have been introduced in IIS 7. Hosting companies now have the ability to centralize the IIS configuration in one place and then point multiple nodes at the single configuration. This alleviates the need of the hosting company to build their own software to manage the replication of configuration information within an IIS cluster; commonly, if a hosting company wanted to offer a highly-available IIS hosting solution to their customers where there are multiple nodes in a cluster, they were left on their own with figuring out how to replicate creat, update, and delete operations to IIS, i.e. create site, delete site, etc. across the farm.

Another neat feature added to IIS 7 is the ability to publish a restricted view of the IIS 7 management console to the end-user across http(s), giving hosting companies the ability to offer a richer, Control Panel like add-on for sites hosted in IIS 7. The features available to the end-user can be customized by the hosting company.

Another exciting demo was of SoftGrid. Microsoft showed off the ability to simply enable an application for a user in a domain and then the user being able to click on the application and have it stream directly to the desktop. There's no indication on how this will fit in with the hosting community and if there will be a facility for hosters to host their own SoftGrid platform and sell on-demand applications like Office, but this platform looks promising and seems to be Microsoft's answer (though there was nothing official here, either, just a guess) to Google's push into online office applications. Ideally, Microsoft will seek to partner with hosting companies and allow us to build out this platform not only for Microsoft applications but also for ISVs who want to move into a hosted model without having to rewrite all of their code.

One concern I have, that I'm sure others will have, is what Microsoft's intention is with entering into the market with their own hosted Exchange and SharePoint offerings (as Ballmer alluded to a few weeeks ago) and how exactly partners who already offer those services will play into their hosting ecosystem. Right now, I believe it would be prudent for hosting companies to look at the products they're offering and then build a tier on top of these products that ties them together to create an added level of value greater than what the user gets out of the box. A good example of a company doing this is SMBLive who have taken SharePoint hosting to a new level for the SMB. I think we'll eventually see the decline of hosters who offer out of the box services and move towards building integrated services.

A topic that I have been thinking about lately involves how companies can "mash-up" their B2B applications in a secure manner.

It is critical to understand, I think, that some core differences between a consumer mash-up like those that apply statistical information over, say, Google Maps and a B2B scenario might be: 1) business applications will commonly employ some type of authentication system to gain access to the data within the application and 2) customers could have the ability to alter data within either application.

Within the B2B mash-up model I can see applications participating in both a unidirectional manner, where application A pulls data from application B, and a bidirectional manner, where application A pulls data from application B and application B pulls data from application A -- think of a pair of applications that need to stay in sync with some or all of their data, i.e. a hosted billing solution such as the one offered by Aria Systems and a hosted Sugar CRM solution like the one offered by RPS Technology.

Now, in both scenarios how should we manage identity? When application A pulls data from application B on the behalf of the user in application A how does application B ensure that the end-user has authorized application A to pull that data at that moment in time? I'm thinking about how we protect against fraud or misbehaving applications that might be holding onto credentials and performing actions without the explicit authorization of the end-user.

This is a situation where a SaaS Hosting provider could come to market with an identity solution that could sign the authorization credentials via some type of proxy service that sits in front of the application and issues tickets for that current session. Both applications would trust that ticket of the 3rd party (the SHP) and allow the interaction between the two applications. Once the ticket expires, then application A and application B break the trust and become silos again. The proxy service would also have the benefit of allowing the end-user to utilize a single logon for both applications; it could abstract the credentials and do handle the authentication and hand-off to the application.

I think we will begin to see more and more B2B mash-ups. It will most likely start as narrow contracts between the companies offering the services, but will hopefully expand into a more generalized manner where any ISV can build their application to pull data from another application using some type of trust system. I could see ISVs publishing their API(s) into a service catalogue in which other ISVs can find the API and begin mashing up data points within their applications, creating ad-hoc suites of applications that share segments of data between each other.

Recently, I've been thinking about how annoying it's having my files scattered across different services and how customers must feel when they have to access yet another place for data. Multiple hosting companies are beginning to offer SharePoint services, Online Storage drive services, other collaboration services, and not to mention their classic web hosting products where customers can store files.

None of these services appear to be integrated. Hosting companies need to be moving towards coupling services like SharePoint and Online Drives together so customers can have one location to push and pull files to and from, especially if they're after the SMB market, not necessarily the consumer file storage market. Sure, you can mount a local drive to the SharePoint document store, but a hosting company should write a utility that allows the customer to simply double-click and have access to the files.

The host could build a web-interface for the file library that renders an aggregated list of the customers' files across all services, then surface the ability for customers to publish these files from one location to another. An example would be a customer who wishes to publish a document they've been working on with teammates in SharePoint to their public website. Simply log into the centralized interface and tell the host to publish that file to the website.

To me, it's important that the customer has a single location they can go to retrieve all of their documents and other related files. With SharePoint, online drives, web site directories, etc. -- more and more locations are being introduced to the customer, the trick will be in how to integrate all of these locations so the customers know they have access to their files regardless of the route they take getting there.