Software as a Service presents a tempting value proposition to businesses all over the world. The benefits are obvious – lower TCO and cost savings, flexibility, ease of access as well as relief from maintenance and upgrade hassles. According to recent data from multiple outlets, SaaS adoption rates continue to outperform those of on-premise enterprise applications.
SaaS provides a significant business opportunity to ERP, CRM and business intelligence vendors as well as for companies in the enterprise content management, supply chain management and project management solutions space. These vendors are putting a web front-end to their application portfolio so that their customers’ user base can easily access them from any browser or multiple devices. These offerings are now mainstream, and independent SaaS vendors and CDNs continue to roll out solutions to capture market share. With such fierce competition and an unusually high churn rate, customers of these solutions tell me that SaaS vendors continually struggle to enhance the end-user experience and increase user stickiness.
Similarly, today’s CIOs, CTOs and IT managers also struggle with a plethora of challenges when migrating from an on-premise application to a SaaS based deployment. While cost is a key driver for SaaS deployment, the implementation may also be accompanied by a dip in productivity due to access to the SaaS application being slow if the distance between the provider and the user is more than a few hundred miles or even 10s of milliseconds in network speed. A case in point being the enterprise deployment of cloud based Office 365 subscribers and the post deployment performance issues created by distance, network latency and poor performance.
It is essential for SaaS vendors to live up to the performance benchmarks set by on-premise applications and the technological advancements to optimize them for a global user base. Enterprises with application servers on-premise had multiple optimization strategies in place when it came to accelerating such applications– including MPLS for stable latency connectivity, wAN optimization for bandwidth reduction and application acceleration systems for improved performance.
However, a SaaS application is a web-based application hosted in a data center owned and operated by the SaaS vendor and provides services to multiple enterprises from a centralized location. This application is typically accessed over an Internet connection, and while bandwidth costs have been continually falling, the public Internet is anything but reliable. As businesses grow global, concerns with latency and packet loss only grow bigger, and MPLS and WAN optimization strategies cannot stem the tide to the cloud. And there you have it – a slow running SaaS application and dipping productivity levels. If unchecked, this could cause enterprises to re-evaluate their SaaS deployment decision and perhaps switch back to their on-premise application provider.
In parallel, it’s important to look at the typical life cycle of SaaS vendors as they grow. Most vendors start off small and pick up local or regional customers. Since one of the key drivers for SaaS adoption is global scalability, it is likely for them to see an uptick in the number of international users because:
- Their existing customers are undergoing global expansion, or
- Their marketing efforts have resulted in increased global brand equity, leading to
international customer acquisitions, or
- They just acquired a huge customer, headquartered in the same region, but with a large
number of offices overseas.
As the international user base expands, many times, so do customer complaints. And a major chunk of these complaints is due to performance issues such as “asking too long to upload content” or a “slow reporting service”. More often than not, SaaS vendors are not prepared for this eventuality, which in turn leads to churn and a slower growth rate. In order to retain customers, SaaS vendors need to have an application acceleration strategy in place so as to meet performance expectations of customers and deliver the best end-user experience. One of the options that they have is to deploy multiple data centers, duplicate their software stack and mirror data near customer locations. However, this is not a long-term strategy for growth.
SaaS vendors therefore resort to CDN, or more precisely web application acceleration or dynamic content acceleration services. Capabilities of web application acceleration solutions include:
- Intelligent routing over the Internet middle mile to choose the minimum latency path
- TCP Optimization – to quickly recover from network congestion and packet loss
- Persistent connections – to minimize the number of round trips
- Connection pooling – for better origin offload, and
- On-the-fly compression
These acceleration services are built as an overlay on the public Internet, which is still a major bottleneck. The ‘middle mile’ between the content and the edge location of the CDN provider may be intelligent with the capabilities above but is certainly not dedicated, guaranteed or private. SaaS vendors do experience better response times with these solutions but consistency in application performance continues to elude them, something I hear from many customers.
While the market for these solutions is still small overall, when compared to other segments of the content delivery industry, web app acceleration is one of the most important requirements for SaaS providers that want to compete in the CDN space. The margins on these services are high, customers understand the impact that fractions of a second have on their business and most importantly, they are willing to buy these solutions based on real performance benchmarking and metrics. This is the opposite of how customers buy large file downloads or streaming video delivery. If a video takes half of a second longer to start up, due to a performance problem, in most cases, it won’t impact the content owner in a negative way and they won’t pay more for such a small uptick in performance. But half a second slower of faster when it comes to commerce, CRM and other applications, can mean the difference between making money and losing money.
There is a lot of competition in the SaaS web application acceleration space right now from Akamai, Amazon, Aryaka, CDNetworks, EdgeCast by Verizon, Fastly, Instart Logic, Limelight Networks, Riverbed, Yottaa and others, all vying for a piece of the business. To me, the most interesting up and comers right now are Aryaka [WAN Optimization & CDN Provider Aryaka Carves Out A Niche To Address Enterprises’ Content Delivery Problems], Instart Logic [How Instart Logic Wants to Solve Web Application Delivery], and Yottaa [Retailers: Your End-User Experience Is Lacking, Here’s How to Fix It.] Web application acceleration isn’t simply a hot buzz word, it’s the future of the CDN market and a key service requirement for any SaaS provider that want’s to be successful in the CDN space.
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