Cloud computing has introduced a new set of complexities for businesses to manage, with more specific sets of challenges for different segments of the IT industry. Cloud is forcing independent software vendors (ISVs) into several arduous business challenges, including how to deliver software as a service (SaaS (News - Alert)) and deal with the issues of licensing and monetizing SaaS services.
As part of this era of IT evolution, cloud is changing how software is developed, bought, sold, paid for, and used, which is having a transformative affect on how ISVs conduct business. For ISVs to succeed in this new environment – which, by the way, is still being defined – there are three major areas of change that ISVs need to understand, according to a whitepaper by Saugatuck Technology. The cloud strategist IT firm investigated the challenges that software firms face and presents several recommendations as to how these challenges should be managed by ISVs.
The first challenge is organizational and the timeframe involved in the transition to cloud. According to Saugatuck’s research, the majority of new software purchases by all types and sizes of user firms worldwide will be cloud-based by the end of 2014 – this gives ISVs very little time to get on the cloud bandwagon, if they are not already there. However, the firm expects an earlier tipping point in emerging industrial and commercial markets that have less established traditional software, such as China, India and Brazil.
Considering it takes between 24 and 36 months to transition a typical ISV business to a cloud-based model, “there is not a lot of time remaining to adjust every core aspect of your existing business, and it is a very limited time in which to build a thriving and competitive new line of software business,” the whitepaper said.
There are also technological challenges for ISVs, and the cloud technology platform selected needs to be able to position the company to respond quickly to change. Many ISVs make the mistake of choosing the wrong cloud platform simply to speed along the transition to cloud, but fail to take into consideration longer-term objectives that will lead to success as a SaaS provider.
As for operational challenges, ISVs need to manage several challenges including: security; service levels; back up and recovery; operational metrics; initial functional requirements and ongoing enhancements; facilities to automate and efficiently “manage” the processes required for a SaaS business; and service.
Another critical point the whitepaper underscores is that no ISV is able to transition to cloud without help from an expert.
“One critical lesson that we have learned in working with ISVs is that no one can get up to cloud speed efficiently and effectively by themselves,” the whitepaper said. “Even global market leaders such as IBM, Microsoft, Oracle (News - Alert), and SAP are bringing in partners to help with their own transitions.”
For example, a partner with expertise can provide an ISV with the technology platform that will allow them to drive their core value better than they can if they were to attempt to build it themselves.
A company that has a great deal of experience in the area of SaaS licensing and the best practices listed above is SafeNet. Its Sentinel Cloud services provide software packaging, control, tracking, and management tools for managing any variety of application delivery on-premise, as a service, or anything in-between. The company has more than 25 years of experience coaching the software industry on how to monetize their offerings and should be anyone’s short list of resources for building an effective cloud monetization strategy.
Edited by Peter Bernstein