You've probably heard of cloud computing or grid computing, but you may not realize it might well be your key to big savings as you figure out how to evolve from perpetual licensing to software as a service SaaS.
Most Progress Application Partners have a perpetual licensing model. In the simplest terms that means your salespeople sell new customers a license to use one copy of your software and that copy runs on servers the customers owns and runs from their facilities. In general. This is a fine model, but it is being replaced by two new models, both of which have good benefits for you AND the customer, but require some new thinking about
where the computer is located and
who pays for the computer. That's where cloud computing or grid computing can make a huge difference.
When you add a hosted application (ASP) model or software as a service (SaaS) model to your offerings, you, the vendor, take on the responsibility of owning, running and maintaining the computers on which your application runs. The customer just "rents" the use of your application and, therefore, the computer the application and database are running on. This shift of I.T. responsibility from the customer to the vendor can be very beneficial for both parties, but you, the vendor, now have more to manage. The revenue model for you is far better, but you have to buy, install, maintain and upgrade a bunch of servers now. Unless you outsource that portion to someone who can do it better and cheaper.
So, how do you get the customer to pay you to run their application, own and maintain the computers, and guarantee the bandwidth is sufficient and the backups are rock-solid without buying your own data center and dedicated I.T. staff? In the old days, you 'd buy your own computers and build your own computer room or you'd rent space in a data center and "collocate" servers you bought to that data center. Nowadays, you get all that by reaching into the clouds for a tiny fraction of the cost.
Companies like Amazon and Sun have very large farms of servers and storage which they rarely use or have been purpose-bought to offer up to the needs of businesses and companies like us Application Partners.
You can literally rent a server from
Amazon's EC2 service or
Sun's Grid Computer Utility, have a new copy of Linux up and running, and be loading your Progress application within a few minutes. Both Amazon and Sun have created online storefronts where you "purchase" the rights to run a new virtual server, choose a pre-configured Linux image, tell it to "boot up" and log in with the root password. After installing your application, you can open the firewall so your customer can get in and, as far as they know, you've stood up a brand new server in your "virtual data center" just for them.
How does this compare to the cost of a collocated server? Great!
Type |
Monthly cost |
Server cost |
Monthly backup |
|---|
Collocation |
$1,000 |
$3,000 |
$750 |
Amazon 1-CPU moderate I/O
|
$80 |
$0 |
$120 |
Amazon 4-CPU heavy I/O
|
$320 |
$0 |
$120 |
Allegro Consultants uses a traditional data center for much of our in-house Progress work, but we are moving to cloud computing where it makes sense. These figures come from our own data center experiences.
Amazon and Sun are able to reduce the cost to us of these services due to very high volume and a great degree of virtualization. So, the big point here is if you leverage these cloud computing resources, you can cut out a great deal of cost for the customer, cost that would normally be paid to someone else.
Cloud computing won't solve all the world's troubles and is not perfect for every end user company, but APs need to understand what it does mean for them so they can make a strategic choice to include it in their plans or not.