SaaS HR And Payroll Powered By i Proves Popular

September 9, 2013 Dan Burger

Making the choice to deliver its human resources and payroll application in the software as a service (SaaS) package was a gamble for NorthgateArinso (NGA), but the idea has fit the bill for thousands of companies that are attracted by the software features and the SaaS subscription-based replacement for software licensing. Most of these companies have no idea the software runs on the IBM Power7 hardware and the IBM i platform, but it has worked out well for NGA.

Renting rather than buying mission-critical applications is still pretty rare in the IBM midrange community, but it is not the IBM i shops that make up the biggest percentage of NGA customers. NGA is in the business of selling software and decided years ago that it did not want to be limited by selling to a platform-specific market. Of course, it didn’t start out that way. NGA’s customers were 100 percent IBM midrange shops at one time–a time when the software vendor had a lot fewer customers.

“The IBM i has been the foundation of what this company does for a long time,” says Sam Xydias, VP of product engineering for NGA. In the late 1990s, NGA was selling software licenses to approximately 200 companies that ran the human resources and payroll application on IBM AS/400 servers in their own facilities. That’s when NGA began its SaaS strategy.

Putting SaaS into the product roadmap in the late 1990s was betting on potential. Executive decision makers were skeptical of business critical applications running over the Internet and it was yet to be determined whether SaaS was an idea that companies would embrace. Many software companies saw the opportunity SaaS presented, but not many took that route and even fewer made it successful.

“We saw an opportunity to make some changes to our application and enable it to be delivered through a browser. It was a bold and visionary strategy to take. It also took some significant investment and business risk,” says Xydias. “We did this with the IBM i and we have grown the application’s capabilities and customer numbers using this method.”

The first version of NGA’s HR and payroll software, called Preceda, that was prepared and marketed as a rental was introduced in 2001.

Xydias explained how the spark of this idea was ignited. It began with two NGA customers exploring the possibility of migrating off the IBM iSeries platform. Both companies preferred to stay with NGA software, if possible. NGA was able to convince the companies that moving from their on-premise servers into the NGA data center was a good fit with their plans. The case was made and both companies agreed.

“Those early examples provided us with credibility and experience,” Xydias says.

Early on the conversion was slow, but the sales team was also carrying the message beyond the IBM midrange. Twelve years later NGA has gone from 200 customers to 2,000 customers. Xydias estimated that 20 to 30 customers are IBM i shops. In the overall customer mix, there are companies as small as 15 employees on one end of the scale and companies with tens of thousands of employees on the other end.

When NGA first modernized its application to be browser compatible, it retained much of the RPG backend because of its ability as a fast and efficient processing engine for payroll calculations. And it chose LANSA as the middleware that enabled the application to serve data to the browser.

“We continue to leverage what we did 12 years ago, while extending it and fine-tuning it,” Xydias says. “The fundamental architecture remains the same, but we’ve added JavaScript, cascading style sheets, and AJAX technology in the presentation layer to handle the rendering of the user interface.”

NGA runs its SaaS software (now called Preceda On Demand) in data centers in Australia and the United Kingdom. In the beginning, the business began in Australia and originally catered to only Australian businesses. The data center there now serves companies in that country as well as from New Zealand and the Philippines. It uses a Power7-based Power 750 box, sliced for multi-tenant use. (One application is shared by all the SaaS customers, just like Salesforce.com.) There is also a redundant system that has real-time replication for high availability. In the UK data center, the application runs on an IBM BladeCenter with Power-based blades. Xydias says that’s not because of anything related to the SaaS delivery model but because of existing IT infrastructure that fits overall business requirements for NGA.

Regardless of the machine and the configuration, Xydias says the IBM i on the backend provides great scalability, security, and reliability and it handles mixed workloads without separate LPARs or separate machines.

“Our customers are logging into a Web app,” he says. “They don’t ask, and don’t care, what server it runs on in our data center. They are concerned with it meeting their business requirements, that it’s secure, that it’s readily available 24×7, and that this can be done at a reasonable cost.”

Although NGA has made good use of its IBM i foundation for the software as a service business model that encompasses much more than the IBM i market, Xydias also points out the software runs on-premise at approximately 5 to 10 percent of the customer base. The majority of this business is classified as managed services with NGA managing the on-premise servers. However, this is not actively marketed and the company is committed to the SaaS model for continued investment and future growth.

The IBM i ISV community overall has been receptive to the software as a service delivery model with subscription-based pricing. In the past several years, more than 100 software vendors have introduced SaaS and the IBM i on Power Systems has a reputation as an archetype system for hosting software as a service workloads. An IBM white paper on this topic is available as a PDF download here.