Canadian infrastructure provider Peer 1 is using deep discounts on consulting services as part of a program to entice independent software vendors to make the move to an on-demand model for providing applications to their customers.
Vancouver-based Peer 1 on Wednesday described the program, which quietly launched about a month ago, as an “incubation and enablement” service. Using Microsoft products such as SQL Server, participants will work with Peer 1 and Microsoft experts to either create software-as-a-service (SaaS) versions of their products or new products that can be delivered on demand.
In the traditional on-premise model, companies buy software and install it locally and use it for a fee. In the SaaS model, enterprises use applications only as they need them, which can create a lot more fluctuation in terms of demand.
For companies like Peer 1 , SaaS represents a business opportunity to provide the infrastructure that allows companies to scale business depending on the ebb and flow of what enterprises want.
Robert Miggins, vice-president of business development with Peer 1, said the program will make the move to SaaS a lot more cost-effective for independent software vendors (ISVs), particularly if they are using Microsoft technologies. Miggins said some customers could expect to get $10,000 worth of business or technical consulting for $3,000, or about a third of the cost. This might include, for example, engineers from Microsoft and Peer 1 helping an ISV figure out how to ensure they can reliably support their users if they receive a lot of requests for an on-demand application at the same time.
“It’s a bit of a discretionary thing because there are some very real costs borne on our side. If we feel like we’re going to get the benefit of a great customer relationship, then we’re happy to make the investment now,” said Miggins, adding that much of the brainpower would come from Microsoft-approved consultants. “We would help create the engagements, but it’s not like we’re getting into a different business ourselves.”
Customers under Peer 1’s program, which is called SaaS3, include Horsham, Pa.-based DonorPerfect, which provides fundraising software for non-profit organizations. Jon Biedermann, the firm’s vice-president, said DonorPerfect has been offering SaaS products from as far back as 2001, but that Peer 1 and Microsoft were able to offer some best practices.
“What’s been very nice is I flew down and met with their brain trust. They have some ridiculously smart people,” he said, adding it would have cost his firm at least $2,000 or $3,000 to improve the availability of its software. “What we’ve done is taken their recommendations into effect and made SaaS that much more fine-tuned.”
‘Peer 1 said the SaaS3 program will allow ISVs free access to a development “sandbox” that includes the use of a dual-core Dell server running Microsoft’s SQL Server database. Miggins said this would probably save ISVs about $250 per processor compared to what they would pay otherwise.
“A lot of traditional ISVs are used to the way they do business,” said Lee Hadsock, Peer 1’s senior manager of business development. “SaaS means they have to change how they sell, how to compensate their sales team, how they bill for product, how they support it.”
Although Rackspace and Toronto’s Q9 offer similar programs, Biedermann said DonorPerfect estimated they could get the same services with Peer 1 without paying nearly as much.
“You’re biggest gamble is gong to be on the right infrastructure. Half of it is hardware but software is the other half,” he said. “If you don’t get it right, you’re screwed. There’s no other way to really say it. You’re in trouble.” While SaaS adoption has been difficult to track so far, a recent report from research firm Gartner Inc.said three-quarters of all SaaS products have been bought by business unit managers rather than IT managers.