More and more we're seeing examples of how on-premise software and SaaS can work hand-in-hand, and not necessarily in opposition. Consider Panaya, the provider of a software service for automating on-premise SAP upgrades, which just got $5 million in a second round of venture capital funding.Panaya is used to identify errors that can occur with SAP software upgrades and can suggest corrections, automate test plans, and estimate budgets for projects. It's designed to help SAP users avoid much of the work and costs associated with SAP upgrade projects and implementation of support and/or enhancement packages.

Tamares Group led the funding with the help of Benchmark Capital, which led the first investment round.

Panaya says it'll use the money to expand sales, marketing, and product development operations. Its customers include Bosch, Sony, and Volvo.

Panaya says its SaaS works by mapping a customer's SAP system configurations to the functional behavior of the system. Its code crawler analyzes the customer's SAP code and builds a database that maps between customization and functional behavior (Panaya describes the process as similar to a Google search).

The company's CEO and Founder is Yossi Cohen, a serial entrepreneur who also founded Alexandria, a database migration tech company acquired by BluePhoenix in 2002, and Predicate Software, an integration services company based in Israel. He's currently working on completing his Ph.D., which describes a framework for building database software analysis tools.