PLM Strategies-Great Expectations for Software as a Service1 Aug, 2006 By: Kenneth Wong
Arena Solutions introduces transparency in its product
December 20, 2005, was a dark day for Salesforce.com, the poster child of the SaaS (Software-as-a-Service) movement. At 6:30 A.M. Pacific time, the company's servers went down. Service wasn't fully restored until late afternoon, leaving thousands of subscribers without access to their business data and operational functions for the better part of a day. It prompted one analyst to remark, "[On]-demand software is still not altogether trusted in the world of major enterprises, and this outage will provide significant ammunition for the company's competitors" ("Salesforce.com Outage Forces Reality Check," December 21, 2005, www.thestreet.com).
One month later, another outage followed. Although Salesforce.com officials dismissed the incident as a less severe one and "a minor issue," it clearly was severe enough to rattle many customers ("Salesforce.com Users Lament Ongoing Outages," January 31, 2006, CNet News, http://news.com.com).
Four months later, on April 7, 2006, a day after Salesforce.com bragged about 99.99% availability during the previous month, another crash hit the company like a belated April Fool's joke. All these episodes shook some early adopters' faith in on-demand software delivery. Salesforce.com wasn't the only one that received a black eye—the whole SaaS model came under fire.
Whereas Salesforce.com offers CRM (customer relationship management) software on demand, Arena Solutions (www.arenasolutions.com) delivers PLM (product lifecycle management) modules in a similar fashion. On April 12, while Salesforce.com's public-relations team was probably still dodging bullets, Arena sent out a press release announcing that its customers "can expect to receive a minimum planned uptime and availability of 99.5% on its service." The company assures its customers that, "since inception of the service in 2001, Arena PLM has had more than 99.96% uptime—through 45 major releases of the product and hundreds of minor upgrades." Is it something Arena's customers can bank on, literally and figuratively? Or is it just vendor swagger? To understand better, I asked Arena's chief technology officer Eric Larkin if he'd be willing to talk about the 0.04% downtime.
"In any case where you distribute the cost across a large base, you can do a better job," Larkin said. "One of the advantages of a shared infrastructure is that we [the infrastructure provider] invest heavily in it. It gives us economic incentive to keep it operating for all customers. Either we're servicing them all, or we aren't."
"The longest-ever continuous downtime in the operating history of Arena," Larkin verified, "was about three-quarters of an hour." As he recalled, a few months after the service went live in 2001, Arena's network service provider accidentally omitted a critical router in its configuration, creating an outage for Arena and a few others relying on the same provider. "The provider basically cut off our services from outside the network. It took us about an hour to learn about it, because our monitoring infrastructure was inside the network. So we now use external monitoring in addition to internal monitoring," he said.
To bolster customer confidence, Arena now displays its system performance on a public Web page dedicated to system status (www.arenasolutions.com/uptime). As shown in figure 1, the chart as recorded on June 14 revealed that, during the past 12 months, total unscheduled system downtimes (that is, system downtimes outside planned downtime for maintenance and upgrades) had been as high as 51 minutes (in May 2006) and as low as 1 minute (in June 2005). Note that these figures represent the sum total of all system failures for each respective month—not necessarily an indicator of the length of a single failure.
Figure 1. Arena Solutions, which operates based on the notion that software can be delivered on demand just like a service, is taking measures to bolster faith in this business model by putting its system performance on display.
Reliability and Liability
Ken Amann, director of research at CIMdata (www.cimdata.com), remarked, "Given the state of technology today, particularly in network infrastructure, it's reasonable to be able to deliver 99.5% system uptime. If they've got the right network connections, built-in server redundancies and failover, and power backups, they should be able to achieve that." Eric Karofsky, an analyst from AMR Research (www.amrresearch.com), reserved judgment: "Salesforce.com is one of the most mature and well-funded SaaS companies. They have outages—well-known outages in the past six months or so. Can another company do better than Salesforce.com? I don't know."
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Suppose Arena fails to live up to its own promises. What then? According to the terms of their global service-level agreement, Arena customers "will receive a credit against their subscription." In other words, customers will be entitled to free system usage that equals the length of the outages. Obviously, subscription credit won't help a customer recover opportunities and businesses lost during a system outage, so this self-imposed penalty clause may not mean much to some clients. On the other hand, I don't know of any reliable statistics or reports that suggest maintaining a PLM system in-house with your own IT staff can get you better system performance than what Arena promises. In fact, for some small- and medium-size businesses, limited IT resources might make 99.5% uptime a questionable goal.
Another feature Arena is adding is an account activity report, which is a breakdown of system usage provided to customers. CIMdata's Amann observed, "It gives customers a way to track what they've done, who's using Arena to do what and how much usage they've had. For Arena, it gives them a way to determine where a client is not using all of their capabilities, so it gives them an opportunity to educate the customer on additional Arena capabilities and to expand their penetration within the account. Actually, it would be nice to see all the vendors provide this usage tracking model."
AMR's Karofsky observed, "Arena has some strong offerings for supplier management. They have a model that allows suppliers to get on it for free. In other words, if you're an OEM (original equipment manufacturer), you can instantly expand your ecosystem with little or no additional costs. The distinguishing line is whether the tool is a relational database and a product management system or a true collaborative product development system. Arena can certainly state that it's the former. But how well does it facilitate collaborative product development? That's a goal it's still striving for."
Arena's Larkin responded, "I think the Holy Grail for any PLM provider is to enable an environment where OEMs and suppliers can easily discover each other and collaborate together for more effective product development. And while it's true we have much more work in front of us to deliver on this vision, I think it's worth noting that this problem can only be solved through an on-demand service, which scales for many-to-many collaboration, whereas the client–server model is more geared towards one-to-many, or worse yet, one-to-one collaboration."
The SaaS Model
Here's an argument against the SaaS model that I've heard from some traditional software vendors: Because SaaS providers have to cater to multiple users using the same infrastructure, they won't be able to provide personalized services such as helping clients reengineer processes or write customized applications specific to a client's company, industry or niche market. CIMdata's Amann responded, "If [Arena] is providing solutions that meet its customers' needs, that it can deliver without—or with very limited—additional services, and its customers can operate on a common but secure environment, it's a cost-effective solution for its clients. It's a simpler and easier business model, and it keeps the costs down. For companies that may need tailored services or want to keep their data in-house, it's not a good model. There's a huge market out there with many companies having different needs, so Arena can grow without having to worry about [tailored services]."
Larkin pointed out, "With both our Professional and Enterprise Edition, Arena can be configured—either by the user directly or through our professional services team—to support custom business processes and requirements, including customized category-based configuration of business objects and custom workflows. The only thing we don't provide is customer-specific software development."
So are you ready to embrace the SaaS model? The answer, according to AMR's Karofsky, depends largely on the personal attitude of the CIO (chief information officer) or the corporate decision maker: "People either buy into it, or they don't. Can your CIO stomach the idea that somebody else is managing your information? . . . It's particularly relevant for PLM, where your intellectual property is being leveraged. For the most part, these [SaaS] vendors have proven that their environments are secure overall. There are some open-minded CIOs who will be swayed [by the vendors' assurance], but there are also some that want the data under their control, no matter what."
The definition of on-demand software, much like that of PLM, has been stretched—at times beyond recognition—by the vendors' tug of war: once it became clear that the concept had consumer appeal, many vendors began defining it to fit their own product offerings. AMR's Karofsky reflected, "We get a lot of questions on what on-demand means. When I hear on-demand, I usually go into what we—AMR—see as software as a service. For the most part, what that means is single instance, multiple tenants—which is where Arena fits in."
CIMdata's Amann clarified, "We need to be careful. On-demand means different things to different people. Arena provides a subscription-based, hosted solution: you license a subscription and you can use the licensed applications as much as you need for the duration of the subscription. That's just a variation of on-demand. Another variation is where the amount of workload goes up and down, the number and distribution of users varies and the vendor automatically adjusts the licensing agreement to accommodate those changes."
Still a Force to Reckon With
When asked about Salesforce.com's management, Arena Solutions' CEO Michael Topolovac humorously said, "Well, we sort of grew up together, drank out of the same punch bowl, so to speak." Not that Salesforce.com's founder Marc Benioff and he attended the same high school or went to the same college parties—he meant, as vendors championing the SaaS model, they shared some common customers and business principles.
The SaaS model may have been bruised by Sales-force.com's well-publicized outages, but it's certainly not squashed. In the same article where one analyst predicted the December 20 outage would "provide significant ammunition for the company's competitors," another also acknowledged that, "while potentially serious, it was far from a fatal blow" ("Salesforce.com Outage Forces Reality Check," December 21, 2005, www.thestreet.com). In June 2006, Intelligent Enterprise named Salesforce.com one of the "Companies to Watch" as part of the magazine's annual Editor's Choice Awards.
If, over time, Arena proves it can maintain its promised 99.5% uptime with no hiccups—and its history to date shows no indication that it can't—it'll give a serious boost to the SaaS model in the PLM industry and beyond. And the SaaS model certainly has one clear advantage: if the system goes down, you can blame someone else.
Kenneth Wong is a former editor of Cadence magazine. As a freelance writer, he explores innovative usage of technology and its implications. E-mail him at Kennethwongsf@earthlink.net.
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