The Service Provider of Tomorrow, Part 5: Infrastructure Software

Each segment of the IaaS industry depends on infrastructure software for successful performance against SLAs. As we move up the stack from Co-Location to Enterprise Hosting, this dependency increases.

Many IaaS providers strive to move further up the IT infrastructure stack as they continue to launch new products and grow their businesses. There are often many good reasons, including giving customers what they want, but also moving up the stack yields better ROI on fixed assets … i.e., higher revenue per square foot, per KW, per server, per OS instance, etc.

In moving up the stack, IaaS providers make important decisions about infrastructure software. Build vs. buy decisions, and (if the answer is buy) which vendors to use. In making these decisions, two key questions need to be considered:

SaaS architecture or traditional architecture?
Customer-facing or internally-facing?

Infrastructure software covers a wide range of categories: monitoring tools, systems management, backup job scheduling, clustering software, and many different types of security software, just to name a few categories. For over a decade, IaaS providers have been frustrated by the fact that infrastructure software vendors have not developed their products with multi-tenancy in mind. At VeriCenter, we aggressively pushed our software vendors to support multi-tenancy for many years … and we usually got blown off.

SaaS deployments are natively multi-tenant. Even infrastructure software, when delivered as a SaaS offering, is multi-tenant. When people think about SaaS, they usually think of application SaaS providers such as Salesforce.com or NetSuite. And with good reason: application SaaS providers were first to the party. But infrastructure SaaS providers have now emerged and are gathering steam. Examples include Service-Now, Qualys, Zscaler, and Alert Logic.

As an IaaS provider, why would you choose a non-SaaS offering when a SaaS offering is available? Non-SaaS increases your capex (both for the software license as well as the required infrastructure to run it), forces you through a complex integration project, and you still have to pay maintenance fees to the vendor and hire additional system admins. Even worse, non-SaaS products are generally built with a monolithic architecture that will either make your integration project hopelessly complex, or present scaling issues down the road (or both).

SaaS offerings will scale with you as you grow, and can be implemented quickly. No capex, no complexity, just a predictable monthly fee. Assuming apples-to-apples functionality, the SaaS solution is the obvious choice, especially for IaaS providers in today’s environment.

Even after you’ve decided to go the SaaS route, you need to consider customer-facing product management issues. Don’t make the mistake of thinking infrastructure software is only about improving quality, reducing costs or creating scalable process. In the IaaS world, infrastructure software is often revenue-producing, either directly or indirectly. Infrastructure software is the key to moving “up the stack.” The question is whether your new software will be customer-facing or internally-facing.

For example, Service-Now is an infrastructure SaaS solution that will be used primarily by your system administrators, rather than your customers. Implementing this solution might help a Dedicated Hoster move up the stack to provide Managed Hosting services, but it is not a direct revenue-producer in that the customer will not pay the IaaS provider a fee for this service. Service-Now meets an internal need of the IaaS provider in fulfillment of its promise to the customer.

Other infrastructure SaaS offerings are designed to be direct revenue-producers for IaaS providers. Alert Logic’s Threat Manager and Log Manager products are great examples. IaaS providers offering Alert Logic’s products explicitly quote monthly prices for Threat Manager and Log Manager to their customers. Just like managed storage or backup services, these products appear as discrete line items on the monthly customer invoice. More importantly, these products are instrumental in moving up the stack. Security solutions are the key, and often the toughest aspect, of delivering your customer a fully-managed IT infrastructure service.

If you are in the IaaS business, Security SaaS offerings give you a scalable multi-tenant security solution for your customers, with fast time to market, and fast provisioning of new customers; they are immediately accretive to revenue and profit.

In my next few posts I will explain why Security SaaS is crucial to the ongoing success of traditional IaaS solutions, and even more crucial to the future of cloud computing and the notion of a secure cloud.

This is part 5 in a running series of posts by Gray Hall, CEO of Alert Logic on the future of the Service Provider industry. Gray’s experience and background give him a unique vantage point to comment and help lead what the Service Provider of Tomorrow has to do in order to be successful. Parts 1, 2, 3 and 4 are also available here on Secure Cloud Review.