Many of the software companies aiming for a share of the fast-growing, multi-billion-dollar Software-as-a-Service (SaaS) market are themselves beginning to realize the immense benefits of using hosted, on-demand software enablement and delivery solutions.

As the software industry shifts from traditional “boxed” solutions to applications hosted on the Web, a growing number of software companies are taking advantage of the unique set of on-demand, pay-as-you-grow services offered by Santa Clara, California–based OpSource.

Many businesses already understand the benefits of the SaaS model—lower costs, less risk, and greater scalability of infrastructure hardware and software. For software companies, large and small, the benefits of using SaaS are even greater.

“Our customers are primarily software developers who recognize that their number-one value-add is developing great software,” says Treb Ryan, CEO of OpSource. “What we do is enable them to spend more time developing great applications and services and less time delivering them.”

OpSource’s flagship Optimal On-Demand infrastructure enables software companies to quickly deploy SaaS solutions without the worries and much of the cost associated with traditional infrastructure management. Optimal On-Demand includes all of the infrastructure components and ongoing services necessary to support SaaS, including 24/7 systems management and call-center support provided under the client’s brand.

OpSource’s unique Success-Based Pricing model—based on the “pay-as-you-grow” concept—allows software companies to begin the service with a minimum commitment and ensures that their costs do not increase ahead of their user base.

OpSource's approach proved a good fit for KANA Software, a leading provider of multi-channel customer service solutions for clients including Xerox, Verizon, and JetBlue. KANA faced a major challenge: how to meet growing customer demand for an affordable and reliable SaaS-based e-mail response management solution without having to invest in costly infrastructure and add the kind of expertise that might threaten KANA’s core focus on software development.

KANA met this challenge using OpSource's Optimal On-Demand program—what Brian Kelly, KANA’s executive vice president of corporate strategy, calls “the most comprehensive SaaS-enablement solution on the market.” Working with OpSource, KANA reduced its initial costs by more than 70 percent and its ongoing costs by 30 percent.

Dovarri, a leading developer and marketer of sales software for customer relationship management and sales force automation, chose the Optimal On-Demand solution to deliver its PRO-One suite of applications as a SaaS offering. With Optimal On-Demand, Dovarri can provide salespeople with a wide range of opportunity management, customer and sales force service, and mobile access capabilities that maximize sales effectiveness.

Microsoft Technology Enables a Unique Success-Based Pricing Model

A key to the success of the OpSource model is the Success-Based Pricing model, which is made possible by the Microsoft Services Provider License Agreement (SPLA). With SPLA, independent software vendors (ISVs) and hosting service providers can license Microsoft® products on a monthly basis and pay on a per-user or per-processor basis for only the capacity used. This license does not require an up-front usage commitment and allows licensees to report based on their previous month’s usage.

“Most managed hosting companies base the price on the number of servers or other deployment, bandwidth, or storage metrics. What we do is align our price to our customer’s price,” says CEO Ryan. “This helps our customers understand the cost of our service in terms of their business and their revenue. It’s predictable. And it helps us stay in sync with the customer’s needs since we only grow if our customers grow.”

To help ISVs make their applications available for on-demand delivery, OpSource adopted components of the Microsoft Solution for Windows®-based Hosting for Applications version 1.0. This has been another key factor in OpSource’s growth, helping the company increase its operational efficiency and quickly deliver valuable new services to customers. Windows-based Hosting for Applications offers systems, tools, best practices, and step-by-step guidance on enabling applications for SaaS offerings.

OpSource offers ISVs a premium multi-tenant hosting environment based on the Microsoft Windows Server® 2003 operating system. Most customers with Windows-based applications also deploy Microsoft SQL Server™ 2000 or SQL Server 2005 database software and Internet Information Services (IIS).

Microsoft Active Directory Offers Unified Management in a Hybrid Environment

The OpSource hosting infrastructure includes both Windows-based and Linux-based servers. OpSource needed an efficient way to manage this hybrid environment.

“Active Directory® was clearly the best choice for the unified management interface we needed,” says John Rowell, OpSource’s chief technology officer. “We have datacenters spread all over the country, and Active Directory gives us a comprehensive, holistic view of all users and access.”

For example, Active Directory gives OpSource the ability to establish varying levels of access rights so customers can administer their own systems without touching the OpSource core operational infrastructure.

To centrally manage and share critical business information both internally and externally, OpSource has also deployed Microsoft SharePoint® Portal Server 2003 and Windows SharePoint Services, replacing a previous home-grown portal solution running on a Linux-based server.

“When we implemented SharePoint Portal Server, we replaced three years’ worth of work in a week—and exceeded what the old portal could do by an order of magnitude,” says Rowell.

Windows SharePoint Services has also accelerated the speed with which OpSource can deliver new services to customers. “The ability within SharePoint to integrate third-party tools through Web services makes adding new features extremely simple,” says Rowell. “Now, adding a new piece of functionality will take anywhere from five minutes to a few hours, whereas before it would have taken months.”

OpSource has further increased operational efficiencies by implementing Microsoft Operations Manager 2005 to monitor the state of its infrastructure, uptime, and service-level agreements so the company can understand its application usage patterns.

“Efficiency is absolutely essential to our success as a business,” says Rowell. “The Microsoft solutions enable us to deliver our service in less time with fewer people because the architecture is solid and many great tools and support are available.”

A Platform for Future Success

Building on the foundation of the Microsoft platform, OpSource is extending its new services to help fuel its customers’ business success.

• Critical business intelligence: OpSource uses Windows SharePoint Services to aggregate a wide spectrum of real-time data on each customer’s infrastructure status, application usage, and revenue performance to present a full analysis of the company’s business health.
• Delegated administration: By implementing Active Directory, OpSource can empower its customers with self-service administrative control so they can make changes to user accounts themselves—and extend that capability to their subscribers as well.
• Development support: The flexible, usage-based pricing of the Microsoft SPLA has helped OpSource establish its SaaS Incubator program, which allows startup software companies to develop their SaaS applications in the OpSource hosting environment free of charge for six months.

“Microsoft has been an important strategic partner in pioneering the SaaS business model,” says OpSource CEO Ryan. “The Microsoft solution set and licensing structure give OpSource the flexibility and solutions needed to enable the SaaS ecosystem. And that, in turn, has enabled our software customers to do what they do best—create great software.”

© 2006 Microsoft Corporation. All rights reserved. This case study is for informational purposes only. MICROSOFT MAKES NO WARRANTIES, EXPRESS OR IMPLIED, IN THIS SUMMARY. Microsoft, Active Directory, SharePoint, SQL Server, Windows, and Windows Server are either registered trademarks or trademarks of Microsoft Corporation in the United States and/or other countries. The names of actual companies and products mentioned herein may be the trademarks of their respective owners.

Document published September 2006.