Mark Bunn, Senior Vice President, SaaS Business Operations, Cloud and Network Services, Nokia
Launching a new business model isn’t for the faint of heart, particularly when the change disrupts the status quo. Software-as-a-Service for communication service providers promises to change the very foundation of how our industry does business today. Moving from a legacy of customized, on-premise technology to a cloud native environment where everything is managed by the software vendor, is not only a change in mindset, it also changes the way CSPs have managed their businesses since the industry began in the 1800s.
The tipping point where only the strong survive
What’s to gain? Faster time to market, faster deployment of systems and new capabilities. Done right, SaaS eliminates risky, cumbersome upgrades, delivers significant savings on total cost of ownership (TCO) and reduces worry. Adopting SaaS will vastly improve the time-to-value that CSPs can realize by having on-demand access to services.
Software-as-a-Service for CSPs can usher in a new era, reducing business friction to a level that makes mass adoption and value creation possible. Of course, any major shift brings cultural, operational and technology changes and it’s important to pay attention to lessons we can learn along the way.
Five critical assertions
1. Security and compliance are non-negotiable.
As security breaches can be devastating. it is critical to take every reasonable action while providing a fully functional and highly available service. Security compliance is table stakes and takes significant time, effort and cost to achieve.
2. Architecture drives profitability.
In a cloud native environment, consider scalability at both ends of the spectrum where cost control becomes most challenging. Keep a rein on technical debt incurred as a byproduct of time-to-market priority decisions. Automate, automate and automate again, relying on infrastructure-as-code instead of manually applying production changes. It keeps the costs of SaaS operations flat while growing the SaaS subscriber base. Finally, and most important, diligently manage the reliability associated related to the deployment architecture with software.
A key difference between SaaS and other forms of hosted services is that the software, not human beings, is responsible for managing the SaaS services. For example, if we had production SaaS customers on our SaaS Delivery Framework today, we would have expected little measurable service impact for the AWS outage that occurred the week of December 6. The combination of our SaaS Delivery Framework architecture and Site Reliability Engineering early detection system provides a shield against this type of service disruption. In our future end-state, the SaaS Delivery Framework will enable us to move workloads between hyperscaler platforms to mitigate cloud outages like this one.
3. Embrace the fact that we are the IT department.
The buck stops with the SaaS delivery team, as the responsibility for operations, administration and management moves to the SaaS service provider. The SaaS delivery team provides the equivalent of a public utility service with responsibility for infrastructure, security, patching, updates, and data management including backup, archival and recovery.
4. The commercial risk is distributed.
For a mature SaaS service, there is no upfront cost for the buyer and no upfront revenue for the seller. On and off-boarding is expected to be easy. An exceptional offering and ongoing engagement with the customer are critical for retention.
The SaaS business model is cost-effective. The customer can reduce IT expenses related to the management of personnel, hardware, and software. With a pay-as-you-go, pay-as-you grow subscription, costs for the buyer and recurring revenue for the seller are better managed by providing commercial scaling based on actual need.
Updates to customers are provided automatically and new features can be accessed immediately. In short, buyer and seller alike reap efficiency and financial benefits from SaaS.
5. The customer can no longer “always be right”.
With SaaS offerings, we manage customers as a group, not as individuals. SaaS at commercial scale requires the SaaS service provider to maintain full control of the lifecycle of the service. As a result, customers don’t dictate release and upgrade schedules.
Are we there yet?
Now that we’ve laid the foundation with lessons learned, let’s look at clues for SaaS buyers that the service offering has yet to reach a mature state.
Hosted private cloud versus SaaS
A SaaS buyer would expect that the installation process is fully automated. If professional services with fees are essential to get started or the time between confirming an order and deployment is measured in weeks, it’s likely a hosted private cloud and not SaaS. A SaaS offering includes standard support with the subscription price. Support (or “CARE”) isn’t sold as a separate add-on to the SaaS service.
Extensibility is measured by the ability to tailor a system and the level of effort needed to implement and maintain the extension. High extensibility leading to extreme customization and, subsequently, increased security vulnerability risk, is inconsistent with a SaaS model. These characteristics are commonplace in hosted private cloud offerings.
Signs it might not be cloud native
Forced downtime and long, scheduled maintenance windows indicate software that isn’t cloud native. Applications that don’t auto-recover are not mature cloud native applications even though they may have incorporated cloud native elements.
It’s closer to an on-premises model
More than a handful of product codes per service and/or overly complex pricing, indicates an on-premise commercial model. The absence of proactive security penetration testing is also a tell-tale sign. Simplified pricing models and sophisticated security validation are fundamental characteristics of SaaS.
Walk this way to full maturity
Delivering SaaS successfully depends on building a strong foundation for entering the marketplace. While a true SaaS offering needs many ingredients before it’s considered fully mature, that doesn’t mean not being in position and being ready to sell.
You can offer direction on standard industry security compliances and increasingly provide self-service capabilities to tenants, including ordering, billing care, pay-as-you-go pricing, and service health dashboards.
There’s a lot more than meets the eye to a true SaaS offering. Getting from where we are today to maturity promises to be the journey of a lifetime.
