SaaS Business Model and Public Cloud are a Winning Combination for ISVs

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With the seemingly unstoppable growth of cloud computing, and the rising trend of subscription-based services, many large organisations are committed to purchasing software as a service (SaaS) rather than buying and hosting software internally.

The already crowded software market is evolving, and industry researchers and commentators are taking note.

Gartner has for a long time asserted that “by 2020, all new entrants and 80% of historical vendors will offer subscription-based business models”.

For independent software vendors (ISVs) that built their business around the traditional model of selling licenses and maintenance agreements, moving to SaaS involves changes in everything from their business model, to their development strategies and their own IT requirements.

Cloud based models allow ISVs to focus on their core goals of developing and delivering applications and improving their customer experience.

Challenges

SaaS turns the traditional model of software delivery on its head. Rather than purchasing licenses, paying an annual maintenance fee for upgrades and support and running applications in-house, SaaS allows organisations to buy only the number of “seats” they require at any time.

This is not only less expensive than the traditional license model, but it also allows them to reduce or increase their software purchases as their needs fluctuate.

However, SaaS requires ISVs to transform from software developers to services providers. From an operational perspective, this requires new capabilities, such as meeting service level agreements, establishing real-time usage monitoring and billing capabilities and meeting strict security requirements.

The robust infrastructure required to provide SaaS services 24x7 requires a substantial investment.

The business challenges are even greater, ranging from the dramatically lower margins provided by SaaS, to changes in cash flow and pricing models, to requirements for customer support.

Faced with all these challenges, and because there are no standard pricing models, it may at first seem too daunting to embark on this journey. However, your competition may not feel the same way.

Opportunities

The SaaS model is creating new opportunities for both ISVs and their customers.

Consumption based charging models enable low-cost-of-entry and low-cost-of-software so clients can experiment with applications that optimise business processes, drive higher efficiency, productivity and growth.

Cloud based models allow ISVs to focus on their core goals of developing and delivering applications; and improving their customer experience. Tasks like capacity management, infrastructure budget management and platform availability can all be offloaded to a cloud partner; and importantly these costs can be married to usage and revenue for the ISV.

Potentially other tasks can be offloaded too – ISVs working with a Managed Service Provider can also offload tasks such as patching, replication, redundancy and security. With the right partner the ISV can deliver agility to the DevOps cycle and then rely on the MSP to implement change control, security or compliance enhancements, business continuity and a robust availability and performance SLA for the production applications.

It may at first seem too daunting to embark on the modernisation journey, however, your competition may not feel the same way.

Is it right for your software business?

The combination of opportunities presented by cloud and SaaS business models has expanded the options available to ISVs for software development and delivery; and in turn provided a greater number of options and better value solutions for end-users. The cloud is reducing barriers to entry for new software businesses and allowing existing ISVs to be more agile, customer responsive and innovative.

Both customers of these solutions and the ISVs themselves stand to gain considerable benefits in transitioning to the cloud and taking advantage of cloud infrastructure and managed services as long as due diligence is undertaken in this transition.

Nordcloud have helped many ISVs to leverage cloud technologies to effectively transition their business from that of a traditional software vendor to a SaaS provider, and are hosting a series of workshops to share our experiences and help you to decide when (or indeed, whether) to embark on this modernisation journey.

In the workshops, we will explore the business and technology challenges for ISVs moving to a SaaS model and highlight how effective use of cloud technologies and expertise can overcome many of them by providing entitlement, analytical, billing/payment and security services.

All ISVs are invited to attend, whether you might be considering taking those first steps, or perhaps you are well on your way and looking for some guidance and advice on best practice…?  Come along and join the conversation.

Dates & locations 

Amsterdam, the Netherlands

12.11.2019, 09:00 – 12:00
21.11.2019, 09:00 – 12:00
17.12.2019, 09:00 – 12:00

Microsoft Nederland

Utrecht, the Netherlands

3.12.2019, 09:00 – 12:00

REGUS Oorsprongpark