PaaS provides developers a virtual workshop to construct new tech innovation.

By Scott Kersnar

Gartner called 2011 the Year of Platform as a Service, when the business world would go beyond acceptance of software as a service and start to embrace cloud-based development platforms, where applications are created quickly and easily as needed, and underutilized servers no longer waste maintenance dollars.

But so far, PaaS has not enjoyed much appeal to mortgage lenders—a recent Google search for “PaaS for mortgage lending” turned up more names of mortgage professionals with the last name Paas than examples of mortgage industry use of platform as a service. Meanwhile, mortgage industry adoption of SaaS continues to soar.

Though CoreLogic Dorado reports that its patented PaaS network architecture was first implemented at a client site in 1999 and is currently being used by major U.S. and Canadian banks to handle complex multiparty transactions, PaaS-based technology solutions for smaller lenders haven’t happened—at least, not yet.

The National Institute of Standards and Technology defines cloud computing, in brief, as “a model for enabling convenient, on-demand network access to a shared pool of configurable computing resources (e.g., networks, servers, storage, applications, and services) that can be rapidly provisioned and released with minimal management effort or service provider interaction.” Cloud computing comprises three services: SaaS, PaaS and IaaS, or infrastructure as a service. Mortgage lenders have become very comfortable about leveraging technology on a hosted basis via SaaS. IaaS is the delivery of servers, network and operating systems in virtual form over the Web.

PaaS is often described as the middle layer of software, the technology that intermediates between the infrastructure and the software applications in the cloud.

“Obviously we deliver our solution as software as a service,” said Ellie Mae COO Jonathan Corr. Predicting that SaaS will be the mortgage industry’s dominant technology “within three to five years,” he said SaaS “has great ROI and benefits and lowers total cost of ownership as well as upfront costs. That’s what I think is relevant today.”

While he said Ellie Mae is always looking closely at trends in cloud computing, he said it was doubtful at this point that even one out of 10 mortgage professionals could even guess what PaaS might be. “I don’t believe that it is important for end users to understand the ‘nuts and bolts’ of cloud computing,” said Roger Hull, former First American CIO and now vice president of Genpact Mortgage Services. “But I do believe it is important that the technology decision makers and their advisors become familiar with the components of cloud computing— meaning infrastructure as a service as well as SaaS and PaaS—and their specific value propositions.”

Hull agreed with Corr that the mortgage industry “has a different approach to technology solutions and how they create savings than PaaS delivers,” he said. “PaaS is more complicated than SaaS.”

He said that while SaaS, PaaS and IaaS all “theoretically enable a lender’s technology costs to easily adjust to changes in the lender’s volume,” SaaS is most effective at reducing cost “and IaaS provides the least amount of cost and complexity reductions.”

However, Hull, whose SaaS-based Quantum software platform was acquired by Genpact to support its mortgage business process as a service, or BPaaS, offering, acknowledged that PaaS may become more attractive if mortgage technology vendors begin running into difficulties deploying various SaaS applications from multiple platforms.

After all, Gartner predicts that the complexity of managing SaaS services will create a bright future for “cloud brokers” to build intermediation services atop existing cloud platforms. A mortgage lender having to add the cost of cloud brokering to SaaS may find itself looking at a PaaSbased solution as a thriftier choice.

Problem-free interoperability between various SaaS applications is not a given. Forrester Research principal analyst John Rymer has touted “adaptive PaaS” as a tool to migrate conventional application code “to the elastic scaling and multitenancy of cloud architectures” so that developers don’t have to use special languages like Salesforce.com’s Apex to create applications for the cloud. He cites Apprenda’s SaaSGrid for .NET as an example of adaptive PaaS useful for migrating installed applications to the Internet and converting them to SaaS via .NET.

One of the benefits that PaaS provides, according to Apprenda CEO Sinclair Schuller, is “providing a foundational architecture for guest application to preserve the operational and cost benefits” of these ‘guest’ apps. This is no small matter when, for example, many investors require their correspondent partners to use ComplianceEase or some other particular vendor on a SaaS basis to make sure the loans they ship are in compliance.”

And indeed, Avista Solutions CEO Mark Phleiger predicts that the industry will see more utilization of PaaS “as platforms become more complex and lenders don’t want to invest in infrastructure.” He said the emerging business case for PaaS is that “it picks up where SaaS leaves off” to help move business away from client-server technology to handle diverse SaaS applications for on-demand delivery.

Phlieger singled out automated re-use of templates as an efficient cost-saving PaaS feature harnessed, for example, by users of WebLogic and Oracle Virtual Machine to create templates that can be customized quickly via agile programming to meet a user’s particular needs. In place of services delivered by servers, PaaS substitutes the concept of “instances” and “resources.”

A template in use is an instance. Automated provisioning enables a PaaS system to efficiently “stamp out” reusable “appliances” that can be reused endlessly when instances match up. When use of a PaaS instance falls off, it may be decommissioned and the server can be returned to the pool of resources. Thus, savings are realized with PaaS when application usage is tied directly to resource consumption.

The downside with that automated efficiency is surrender of control. PaaS adoption can only proceed as quickly as would-be users are willing to accept the loss of control that comes with greater automation and lower maintenance costs. But many mortgage lenders regard their LOS, their system of record, as a competitive differentiator. But many others have discovered that their efforts at customization of the LOS have resulted in one-off inefficiencies they no longer can afford. Nevertheless, most mortgage lenders still have their LOS and other missioncritical technology installed on their own servers.

“Technology has to move out of confined environments, whether that’s your PC, your laptop, your storage closet or your full-blown server room,” argues Richard Johnston, president of Anaheim, Calif.-based Acris Technology. The company now offers Mortgage VCO as a PaaS-based end-toend software system for mortgage lenders.

Acris presents small to midtier mortgage lenders with a suite of software applications, IT resources and consulting services that enable running “a compliant, scalable, paperless mortgage business without the expense and complexity of on-site servers, software, maintenance and upgrades.”

Rather than a de novo tech offering launched from outside the industry, Acris’ Mortgage VCO is the end result of a 12-year development process at Laguna Niguel, Calif.-based Millenia Mortgage to originate some $10 million in closed loans.

Since 2005 Acris has been managing virtualized platforms. In 2011 it launched VCO Desk as a virtual office “tailored specifically for the mortgage industry,” replacing physical servers with virtual servers and enabling remote users to access all of their applications and data.

The cloud provider Acris employs is Citrix Systems, which bills itself as “the most trusted name in Application Delivery Infrastructure,” and has a business model that fits well with PaaS. Its footprint in cloud computing has been expanding since it launched its Cloud Center in 2008. While the Citrix app most familiar to most of us is Go To Meeting, Citrix has a long-standing partnership with Microsoft and plays well with the .NET development environment. Over the past year Citrix has made a series of acquisitions to support cloud computing, including, among others, VMLogix, a virtualization automation and management company; Cloud.com; ShareFile and App-DNA. COVERSTORY

“The large cloud providers will all supply a company with a platform from which to install and run their own IT environment,” said Johnston. “They essentially provide the hardware, the OS software, the power, connectivity and secure environment for all of the equipment. They rent you the platform based on memory storage, CPU capacity and access bandwidth. From there you install your application software packages; you provide the IT systems admin, the network admin, the programming support for all applications and the licensing to run all systems.”

He said users can have telephony, document management applications “and other supported tools like Acrobat layered into VCO Desk along with VCO Lend or another LOS, as well as “user-specific SaaS applications unique to their own environment. All of these IT elements are managed and offered to the user, accessible from any location on any device,” via a high-speed Internet connection to the Acris Technology cloud system.

“The cloud allows Acris to deliver not only the platform as a service but also the software, the licenses, and all levels of system support allowing the company to significantly reduce in-house IT staff from their overhead cost structure,” said Johnston. He said programmers and administrators that specialize in working with a multitenant platform inevitably are more skilled and efficient at creating custom applications to use with that platform than are a lenders in-house IT staff. And they pass along economies of scale by working on demand, at the lenders’ disposal “but not on their payroll.”

A paradigm shift that the Acris PaaS platform brings to mortgage lending is that it treats the loan originations system as a service that can be swapped out for any other LOS that the lender chooses.

“VCO Desk is the Acris PaaS; VCO Lend is the LOS,” explained Johnston. To those who see a danger of vendor lock-in with PaaS adoption, he stressed that Acris can easily enable access to an LOS other than VCO Lend via “a button on their desktop.”

Like other end-to-end offerings, Johnson said, some pieces of VCO Lend are better than others. He cited CRM and automated underwriting and pricing engines as examples of guest services that lenders would need to have installed from outside the system.

Huntington Beach, Calif.-based Notary Direct, a nationwide signing service providing over 20,000 mobile notaries and attorneys, uses the Acris PaaS technology.

“Our choice to partner with Acris was not based solely on the applications they provided but more as a long-term solution to ever-changing software and hardware advances,” said Shannon Seitzinger, president of Notary Direct. “Acris allows us to keep up with state-of-the-art programs, licensing, and hardware for one low monthly cost and allows us the benefit of a full-time IT team without the cost of employing or contracting services based on individual specialties.

“The Acris platform allows us access to the best possible employees regardless of where in the country they reside,” she continued. “We can expand or reduce our workforce with a simple phone call and a standard user fee.” Agility, reusability, variable cost structure and the ability to employ a geographically dispersed workforce are key benefits of operating in a cloud-based multitenant environment. PaaS enables all of them.

Given how long lenders have saddled themselves with ample office space to ramp up employee count when originations increase, the time is ripe for technology that enables a mortgage lender to cover all the bases involved in migrating to a distributed workforce model.

However, it must be said that the broad neighborhood Acris plays in has other players that operate successfully without yoking themselves to PaaS. Think, for example, of Indisoft’s RX Office on the default management side, Avista Solutions’ agile programming services and DocMagic’s freely available e-signing service.

Indisoft applies its experience with health care technology to the mortgage default space based on the match-up between a sick patient and a sick loan. Avista offer its lender users access to agile tech development teams that can customize features of its system more rapidly than the lender can do it with in-house IT staff. DocMagic makes it possible for lenders to alert their borrowers that they can offer them free access to the DocMagic ClickSign service for anytime use after the loan closes.

These are the kinds of value-adds that PaaS providers offer to spur adoption. Though none of these benefits are dependent on PaaS, the PaaS model can help lenders and vendors alike assess how well they are leveraging the promise of cloud computing.

As published in Mortgage Technology Magazine, January 2011.