In the past few years a number of organisations have started to transition, or at least begun to think about transitioning, to a SaaS business model. How are they doing? Well the jury is still out. Yes it’s true some ISVs have been successful and some have been wildly unsuccessful. But for the most part, we’re now almost in a period of stasis, realising that perhaps this journey, this complete shift in philosophy isn’t as easy as anticipated. One of the issues is that since the general trend to move from ISV to SaaS began three or so years ago the cloud market itself has matured and our end customers are expecting solutions and support that are in line with those changes.
If you’re just starting off don’t worry, all is not lost. There are lessons to be learned from organisations that have successfully made this move and, of course, there are service providers who can help. It’s also important to remember that often we get bogged down by focusing too much on the technology — a successful transition is encompasses a lot more than that and includes culture shifts, changes to operations and looking at remuneration and revenue models in a completely new way.
To put things into perspective, consider these five steps for SaaS success.
Transform Legacy Code/Applications to be Cloud-Ready
As an ISV, your business has traditionally focused on developing applications to be consumed by individual customers. Now, you need to design your applications and architecture around a completely new model. Making the move to a SaaS provider means that you’re now taking on the responsibility for application infrastructure and the user experience it delivers. So things like cloud supportable code, multi-tenancy, multi-site system availability and maintaining performance need to be considered.
Adjust to Changing Revenue Profiles
In an everything-as-a-service world there are significant changes to the ways in which customers expect to pay for your services and, in turn, this affects your cash flow and day-to-day operations. In a nutshell, you need to develop a business model that is aligned to this consumption-based charging because the age of large upfront payments is truly over.
Transitioning to a Service Provider
You’re no longer selling applications. Now you’re effectively selling a service and this means taking a fresh look at your business processes and the changes that are required. The biggest difference here will be around the fact you’re delivering against SLAs and your customers expect you to be able to prove a level of service maturity and performance.
Sales Training and Remuneration
With new solutions and a shift in focus your sales team needs to be up to speed. Training on the application architectures and how to sell the benefits of a SaaS solution to your end customers is absolutely vital.
Of course different revenue models also affect the way you pay your sales teams. With no large upfront payments you need to adjust commission schemes to reflect new contract structures, such as per-user-billing, growth over the term and flexible consumption.
Sales and Marketing Strategies
It’s not only the sales teams that need training. Your sales and marketing approaches will have to change, too. Your brand new go-to-market strategy will need to include refreshed promotional campaigns and new target audiences. The benefit here is that you now have the opportunity for joint marketing activities with strategic partners.
Where to now?
This idea of SaaS enablement is a journey — and with that in mind we’ll be writing a few more blogs to guide you through it. Keep an eye out for the next one where we’ll take a look at what ISVs that are busy with the transition need to take into account.