• November 25, 2009
  • By Matt Wallach, EVP & general manager, Veeva Systems

Don’t Get Conned

Criminal mastermind Frank Abagnale, Jr., successfully conned millions of dollars out of the pockets of innocent people by posing in various disguises including a Pan American pilot, a Georgia doctor, and a professor. He was so skillful that in a period of five years he stole more than $2.5 million in 26 countries — a feat made famous by the 2002 film Catch Me If You Can. Today, slick CRM vendors are trying a similar heist by disguising their products as software-as-a-service (SaaS) in hopes of profiting from this revolutionary technology's recent explosion.

It's a big problem, especially in the life sciences industry that has been dominated by just a few, large on-premises CRM providers for the last two decades. Lack of competition has, to put it mildly, stifled innovation. And, today these vendors plus some new market entrants are scrambling to compete with SaaS pioneers. They make a few tweaks to their database servers, modify their pricing structure, and go to market with pricey CRM knockoffs cleverly disguised as SaaS.

They look like SaaS, they sound like SaaS, but they are merely cloaked in SaaS clothing. These vendors charge customers to install, configure, and maintain the application on their hardware at their location. They abuse the term SaaS by defining it simply as any application that can be accessed over the Internet. However, these "hosted services" are still shackled by all the same costs and limitations as outdated single-tenant on-premises and on-demand solutions. They incur major expenses each time the software is upgraded because previous customizations are lost and the application has to be redeployed for each customer.

Multitenancy — not Web access — is what makes SaaS truly powerful.

Multitenancy is the architectural model that allows SaaS CRM vendors to serve multiple customers from a single shared instance of the application. Only one version of an application is deployed to all customers who share a single common infrastructure and code base that is centrally maintained. This is called "shared schema." Remarkably, however, no one customer has access to another's data and each can configure their own instance of the application to meet their specific needs.

Multitenancy separates the platform and the applications that run on it, making it possible to create applications with logic that is independent of the data it controls. So, instead of hard-coding data tables and page layouts, users define attributes and behaviors as metadata that function as the application's logical blueprint. Individual deployments of those applications occupy virtual partitions rather than separate physical stacks of hardware and software. These partitions store the metadata that defines each customer's business rules, fields used, custom objects, and interfaces to other systems. These virtual partitions also store custom code, ensuring that any potential problems with that code will not affect any other customer. This approach also makes it possible for administrators to customize the application as needed using simple point-and-click tools.

To illustrate the difference between SaaS's multitenant architecture and the single-tenant architecture characteristic of on-premises client/server or hosted/on-demand applications, think of a neighborhood versus an apartment complex. In the neighborhood, each homeowner has his own yard to mow, his own plumbing to maintain, his own electrical system to operate, and his own walkway to clear. In some neighborhoods, each homeowner may keep his server on his own property — i.e., on-premises client server. In other neighborhoods, each homeowner may connect to his server remotely (i.e., hosted or on-demand). This is a single-tenant infrastructure, where each customer has its own dedicated server that runs its own version of the application.

Now, think of an apartment complex. The upkeep of the lawn, plumbing, electrical system, water supply, and walkways are shared by all of the apartment's tenants. Residents don't have to do maintenance themselves because they are all handled by one central office. This is multitenancy, and is the reason that multitenant SaaS is so extremely cost-efficient to deploy and maintain. The customer has no hardware to purchase, install, or maintain. The application is built on a shared infrastructure, where all servers, networks, and functionality are managed from a central location and the application is accessible through any Web browser. And, it's this economy of scale that also enables the vendor to provide the very best hardware for the customer's application to run on, enabling best-of-breed security, speed, and performance. The host handles all system upgrades, which are transparent to the users so everyone is always working on the latest, highest-quality software release.

Multienancy enables the many powerful business advantages celebrated by SaaS users, including outstanding flexibility, best-in-class performance, and huge cost savings. With no hardware to buy or software to maintain, plus free automatic upgrades, SaaS has a total cost of ownership that's five to ten times less than installed software.

So carefully scrutinize imposters whose goal, like Frank Abagnale, Jr., is to con you. They will mask their products and use terms that sound like multitenant, such as "isolated tenancy," "megatenancy," and "hybrid tenancy," which are lower levels of service but are not multitenant SaaS. There's only one genuine article — the rest are merely masters of disguise.

About the Author

Matt Wallach (matt.wallach@veevasystems.com) is executive vice president and general manager for Veeva Systems based in Pleasanton, California. Wallach has been published in major life sciences publications and was named to the PharmaVOICE 100, which recognizes the 100 most influential people in the life sciences industry. He is one of the founding employees at Veeva Systems, a SaaS-based solution for the global life sciences industry.

Please note that the Viewpoints listed in CRM magazine and appearing on destinationCRM.com represent the perspective of the authors, and not necessarily those of the magazine or its editors. You may leave a public comment regarding this article by clicking on "Comments" at the top.
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For the rest of the November 2009 issue of CRM magazine please click here.

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