January 15, 2008

Open source helps SAAS vendor's systems scale "non-linearly"

Author: Tina Gasperson

Aria Systems provides applications that let companies perform automated billing services. Aria uses open source to deliver a product that costs its customers less than products built on proprietary software while providing them with secure, efficient, easy-to-use billing. CEO and founder Ed Sullivan says one factor that contributed to his idea for a better billing system came from his experience as a paying customer playing the popular Ultima Online game.

Aria is a hosted billing and customer management application that clients access through a Web browser on any operating system. Because it is "software as a service," or SAAS, Sullivan says customers don't know or care what the service runs on as long as it is reliable and easy to access. "We don't say that we're built on Linux unless they ask. Instead, we try to figure out what are the questions they really need to focus on. An analyst said once, you're selling holes, not drills. If you're answering questions about the bit size, you're not marketing effectively."

Sullivan started his IT entrepreneurship back in 1995 when he decided to launch a career as an Internet services provider. Much of the work he did was built on open source operating systems BSD and Red Hat Linux. "We knew how to build very scalable infrastructures," he says.

Technically, he was on top of his game, but the marketing aspect threw him for a loop. "I didn't know what I was doing and basically got my clock cleaned," he says. "In desperation I started studying the market and figuring out what the heck to do."

Sullivan decided to market his ISP to big computer OEMs as a private label product they could bundle with PCs. It was a good idea. Gateway, Compaq, IBM, and even Univision began marketing Sullivan's Internet service under their own brands. "Even Amway, believe it or not," he says. "Megadeth, Journey -- we'd sell it to anybody that had some kind of affiliation with a brand."

One of the more difficult aspects of the business was unifying all the different companies' workflows onto one platform. Off-the-shelf billing and CRM products weren't working for the varied client base, Sullivan says. That was when he began to see the limitations of proprietary software. He decided to code his own system, using open source tools, to handle the disparities. That was the germ of the idea that would eventually become Aria Systems.

After Sullivan sold his successful ISP business to Covad, he retired early. "I became addicted to computer games," he says. "I ended up building up a character on Ultima, with a house and a lot of gold. I lost it all because the credit card [on file] expired. I started thinking about that. If I had done that to one of Gateway's clients, they would have yelled at me or even sued me. I started to see an opportunity to build a application that could help manage these kinds of problems."

Sullivan put that idea together with his experience in building his own system to handling billing and CRM, and came up with Aria Systems. He built the business almost entirely on open source, using Linux, Apache, PHP, and Perl. "The only non-open source aspect of this is Oracle," Sullivan says. "I love MySQL, but as it exists today for financial services, there are functions that Oracle has that MySQL doesn't support. But we're constantly watching and waiting for the day. We have a conversion plan in place for that day. We'd have to do some re-engineering of Aria, but it wouldn't be open-heart surgery. It would probably be appendicitis type stuff."

The biggest benefit of building on open source has been to the bottom line, Sullivan says. "Open source enables us to scale non-linearly with our clients as they grow. Most commercial software and services scale linearly." In other words, as clients grow and need more capabilities and larger systems, with open source the cost goes down instead of up. "It allows us to diverge toward zero. Say we start at a dollar and go down in price based on volume. Our non-open source proprietary behind-the-firewall competitors start at a dollar and go up based on volume. It's because there's a shared infrastructure, and because with open source, once you have the basic knowledge set, it's effectively free. When you combine the lowered licensing costs with the multi-tenancy of SAAS, it gives us double leverage on our cost structure."

Even with all the benefits, Sullivan says that building a business on open source is "much harder than it appears on the surface. There's a lot of steps between the idea on the map and the first revenue event. Understand what using proprietary software in the infrastructure will do to your cost structure. If you begin to realize the accounting aspect of how your business scales, dollar for dollar, and the real leverage that open source gives you, it's a beautiful thing."


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