From staying relevant to enabling hyper growth – Cloud is imperative for ISVs! A recent business report estimates that, 85% of new software firms in the market have SaaS (Software as a Service) based software delivery, whereas 65% of new software from established ISVs is delivered as SaaS. One of the latest IDC report also forecasted that SaaS revenues grew 5x faster than traditional packaged software. This implies that Cloud is challenging traditional ISV business models. While Independent Software Vendors (ISVs) are under pressure to rapidly offer cloud ready or SaaS models of their application versions, to stay relevant and be competitive in the market, cloud offers opportunities to reach out to newer market segments and open new revenue streams rapidly. Cloud has leveled the pitch, offering the same benefits and opportunities to ISVs of all sizes and maturities. It is now up to the ISVs to adopt and exploit these opportunities to their benefit.
Challenging the Traditional Model
The way packaged software is developed, sold, distributed and serviced has changed significantly over the last 5 years, with cloud and mobility being the major drivers for the disruption. ISVs can no longer rely on the traditional model of selling perpetual licenses supported by annual maintenance contracts, which limit their involvement and risk in actual operations of their products in the production environment.
Enterprises, SMBs (Small and Medium Businesses), Telco’s and startups are rapidly looking at migrating their application workloads to public, private or hybrid cloud models. While doing this, they utilize the opportunity to modernize their application portfolio by adopting maximum SaaS or cloud ready versions of their business applications rather than migrating their legacy applications. These companies are increasingly moving towards ISVs that offer consumption based pricing, backed by superior managed services and support, even if that involves changing vendors. This makes it imperative for ISVs to have either a SaaS version or at least cloud enabled versions of their products available in the market place.
Opening up New Market Segments
Cloud enables ISVs to reach out and gain market share from new market segments, primarily in different geographies.
- ISVs can leverage the global footprint of public clouds, to serve various market geographies, without making significant capital investments on infrastructure or operations
- Cloud enables ISVs to manage various global deployments remotely from a central location, eliminating the need to setup local operations, while consolidating and rationalizing operations costs
- The OPEX nature of cloud, allows ISVs to scale their deployments up or down, depending upon the demand in the local market, thereby removing the barrier to entry and exit to serve newer geographies
- Cloud allows ISVs to offer consumption based per unit pricing of their products, enabling their customers to move their CAPEX to OPEX
All these factors enable ISVs to rapidly provision and deploy consumption based SaaS versions of their products, lowering the time to market and cost to on board new customers from different geos and market segments.
Scaling up on Cloud Enablement and Managed Services
Typically, deployment, configuration, managed services and support are not core competencies of ISVs. Till now, these were normally handled by either the customers or their vendors. However, cloud based models require ISVs to scale up on these competencies, and hence they need a trusted partner who can help them rapidly offer them these services on a variety of cloud, both public and private, at a cost effective manner. ISVs need partners who can help them SaaS enable their products, as well as manage them on an ongoing basis. This is where Aricent, with our end to end cloud services, is well positioned to play the role of an efficient cloud partner for ISVs.
Aricent as a Trusted Cloud Services Partner for ISVs
Aricent offers end to end cloud services to ISVs, enabling them to offer SaaS models of their applications rapidly, along with managed services that deliver 24×7 availability and reliability, which are critical to businesses today.
Wrapping it up, or rather Getting Started
ISVs have no choice but to adopt cloud, to stay relevant and grow in a dynamic global marketplace. However, they need not take cloud journey alone, and can rely on partners to help them make this transition. In subsequent blogs, I will touch upon the various business, technical and operational transformations that ISVs will have to undergo, in order to adopt cloud. Specifically, from a business perspective, I’ll talk about transformation around delivery models, customer acquisition/ retention strategies and pricing strategies. From a technical perspective, I’ll touch upon transformation around product roadmap and feature release cycles, single to multi-tenant models and freemium to enterprise product variants. Finally, from an operational perspective, I’ll cover operations transformation needed for 24×7 and 99.9% availability and reliability of services, customer data security and transitioning to DevOps model for agile product delivery. In each transformation journey, I will also talk about the various challenges and risks that ISVs will face, and how they can mitigate it using structured processes and frameworks. So keep watching this space.