Cartezia Perspectives - November 2008

dezineforce, the UK-based Engineering Design, Simulation and Optimisation Service based on a SaaS business model has become the first global player to offer a fully integrated engineering design optimisation service which promises to transform the way in which designers work.  The dezineforce SaaS offering dramatically cuts the costs of Engineering design compared with Conventional Design approaches. This cost advantage increases with the volume of design activity. At low volumes, the costs of the SaaS service are typically 60% of the costs of Conventional Design Approaches, with these costs dropping to 30% at higher design volumes.

SaaS has the potential to dramatically transform the software industry globally, by cutting the costs of acquiring, deploying and running software tools and applications, across a wide range of industries. However, the enthusiasm of software vendors keen to jump on the SaaS marketing bandwagon has led to the conflation of SaaS as a powerful business model with new technology architectures and deployment strategies such as Cloud Computing and Virtualisation, which owe more to the evolution of ASP models than to the revolutionary impact of SaaS. True SaaS applications are firmly based on the idea of multi-tenanted architectures which underpin the new business model.

In assessing the impact of SaaS on the software industry, we also need to distinguish between ‘vertical’ SaaS services, which depend on deep domain knowledge and high levels of functional integration versus ‘horizontal’ SaaS infrastructures. The latter are probably better characterised as Platform as a Service (PaaS). This point is best illustrated by the offerings from Salesforce.com, the SaaS pioneer. Its core Sales Management functionality is probably the most well-known demonstration of a true SaaS service, albeit for relatively simple applications, while its newer AppExchange offering provides a platform for other software vendors to deploy SaaS applications.

The power of SaaS has already been well demonstrated in relatively ‘simple’ areas such as Sales and Human Resources, with many competitors challenging Salesforce.com, such as Zoho. Several major players such as Intuit have also announced their intention to provide financial management SaaS services, and the list is growing by the day, particularly as software companies search for ways to compete more effectively on the basis of cost as the global recession starts to bite. (We discount here all those marketing-led announcements which have jumped on the SaaS bandwagon, with little of substance behind them).

But the big question until now has been how effective SaaS implementations will be in more complex areas, such as Engineering Design.  dezineforce has now provided an emphatic answer to this question by successfully launching its new SaaS Service. dezineforce’s success highlights the fact that such high-end services require the effective integration of computing infrastructures, new data management and visualization tools, coupled with sophisticated workflow technologies, to deliver highly usable services with significant cost benefits. 

The dezineforce SaaS offering

The dezineforce service gives subscribers web-based access to a unique, integrated suite of tools required to execute computer-based design. It includes:

• Industry-standard software for analysis of design behaviour (including structural and kinematic analysis and thermo-fluidic modelling)
• Proprietary optimisation tools for systematic design improvement
• Design process guidance, including templates for the design-analyse-optimise process
• Powerful compute cluster processing capability
• Remote progress monitoring and powerful results visualisation tools
• On-line community, which provides a support network of design professionals and peers
• Extensive real-time online support
• Data archiving, which enables design re-use, design and process audits, and  compliance management.

The dezineforce SaaS is designed to be driven and controlled by the design engineer. It offers far greater flexibility than the conventional model, including access from anywhere, for multiple users. The service provides access to a wide range of tools, thus facilitating design by distributed teams of engineers.

Comparing Costs of dezineforce SaaS vs Conventional Design Approach

Catalyzt has recently analysed dezineforces’s SaaS model, and compared the costs of using this Service versus Conventional Design approaches, for a wide range of Engineering Design activities. This analysis covers different levels of design complexity (from the design of components to the design of complete systems), different types of design ‘solvers’ (including the behaviour of structures, fluids and multi-physics problems), and different areas of engineering design (including architecture, aerospace, automotive, marine and power generation).  The conclusions of this analysis are very clear: well-designed and executed SaaS services, such as the dezineforce service, can dramatically cut the costs of Engineering Design.

In comparing the costs of the dezineforce SaaS offering versus Conventional Design Approaches, it is important to categorise and compare the right costs, to properly assess the impact of this approach. The Catalyzt analysis focused on all the technology-related costs of Computer-Aided Engineering. These costs included all the hardware and software costs, and the associated productivity gains but did not include the costs of hiring, training and deploying designers, because these are typically the same for Conventional and SaaS based design.

The key areas of cost examined and compared were as follows:

• IT costs, including:
  • Analysis
  • Application licensing
  • Computing hardware
  • System management and support
  • Setup (procurement and commissioning)
• Designer time, including:
  • Analysis setup and post processing
  • Modelling
  • Assessing scope for design improvement
  • Making design decisions
• Risk Management, including:
  • Late-in-cycle changes
  • Recalls / warranty claims / penalties

The analysis compared the costs per year over an assumed 3-year life cycle of procurement and use, for the Conventional Approach versus the SaaS model based on Annual Subscriptions. For the Conventional Approach, Year 1 costs are typically higher than Years 2 and 3, so Average Annual Costs were computed to provide a fairer comparison between the two approaches.

The Cost Comparison curves reproduced below dramatically illustrate the Cost Advantage of the dezineforce SaaS offering over conventional design approaches. To this cost advantage should be added the additional benefits of significantly enhanced design optimisation (giving better designs) and design flexibility enabled by the use of a subscription based service, with multiple tiers of subscription usage coupled with the ability to buy ‘top-up’ design capability.

The Catalyzt analysis covered 3 different levels of design complexity:

• Component Design
• Design of Sub-systems
• Design of complete Systems

In all cases, the dezineforce SaaS costs significantly less than Conventional Design, with this cost advantage increasing with the volume of design activity.  The costs of the SaaS-based approach are typically 60% of the cost of Conventional design at very low volumes, but this falls quickly to 30% for larger design volumes. The costs decrease more rapidly with volume for the SaaS service compared to the Conventional Design Approach.

The sources of the SaaS cost advantage are

• multi-tenancy exploitation of IT resource, including licences, hardware, and IT support
• higher designer productivity
• better risk management of late-in-cycle changes, recalls, late delivery penalties, warranty claims, due to early-in-process analysis and higher design quality 

The rate of decline in cost with volume is greater for SaaS because

• Licence costs per design decline with volume, to a limit, with the conventional approach, but there is little change to designer productivity with volume
• By contrast, designer productivity rises with volume with SaaS, due to design data and workflow (embodying business processes) re-use through better data management, and product mapping enabled by  optimisation technologies

Overall impact assessment

The annual global market for technology-enabled design products and services is currently estimated at around $13bn, of which CAD expenditure accounts for some $7.7bn per annum and Computer-Aided Engineering (CAE), the market dezineforce is addressing, some $2.6bn. The SaaS model, as pioneered by dezineforce in this space, has the potential to radically transform this huge industry.  dezineforce is well-placed to take advantage of this transformation, which will be accelerated by the increasing interest in cost management brought about by the credit crunch and the impending global recession.

Note: This analysis was performed by Cartezia, as part of its coverage of the SaaS marketplace to highlight the transformational benefits that SaaS can provide over conventional software. For additional insights into SaaS, Cloud computing and other related topics, are available from Catalyzt, Cartezia's digital market perspectives service.