The Cloud And The Accelerating vs Deflating Time To SaaS Revenue

Accelerating vs. deflating time to SaaS revenue

Over the past 8 months, we have seen an increase in the number of ISVs contacting us to help them plan a roadmap to SaaS. After reviewing these conversations, a trend has started to emerge.

1. On-Premise ISVs see the need to begin the journey, typically due to competitive and market pressures.
2. They understand and want to get to the technical end game — a true multi-tenanted, singular code basis — but they don’t know how or even why they should get there.
3. They want to get to that end game as quickly as possible.
4. They haven’t really evaluated and understood the financial implications of moving from a perpetual license model to a monthly recurring model.
5. They don’t understand the changes needed in their support and operations teams to maintain a true SaaS business.

Many ISVs are testing the SaaS waters by simply re-branding on-premise solutions as SaaS and developing ‘one off’ managed hosted solutions for each customer.
Unfortunately, these approaches are fraught with problems and they set the ISV up for failure. Without understanding the financial and operational impact of the above, companies often find it hard to project profitability with their SaaS solutions; many abandon their SaaS plans.

From a financial perspective, one-off ‘managed hosting’ silos for each customer can be very expensive and these costs are often passed through to end clients. End customers in turn don’t appreciate the value of the service as ISVs struggle to create the sales and marketing messaging for SaaS. This compounds the problem and results in a decline of sales. In addition, companies often struggle to understand the cash flow impact of moving from large perpetual licenses to smaller, monthly recurring revenue models.

Operationally, ISVs struggle to provide the necessary changes in their support organization to enable true 24x7x365 support. The technical skill set(s) and operational processes needed to support always-on operations with SLAs are vastly different from a traditional support model. Many ISVs don’t appreciate the increased number of technical staff required to enable a 24/7 operation (especially if you have 100’s of separate silo’d client implementations). They typically bootstrap this vital function by having fewer resources on call all the time. We have seen incidents in the press where this has backfired. Tired resources make mistakes leading to more outages and downtime due to stress related human errors. It also brings up the interesting topic of liability. Many companies today are not aware of HR laws that prohibit excessive working hours.

By Tenzing

Founded in 1998, Tenzing is a managed hosting company trusted by leading software-as-a-service (SaaS) providers and Ecommerce systems integrators to deliver business critical applications to some of the world’s largest companies and most recognizable brands. Tenzing’s mission-critical hosting infrastructure, mature IT Service Management (ITSM) practices, and comprehensive application-level Service Level Agreements (SLAs), enable the reliable, secure, and scalable delivery of complex SaaS and Ecommerce applications. Tenzing is ISO 27001 and SAS 70 Type II certified with data centres in Toronto, Vancouver and Kelowna, B.C. For more information, visit www.tenzing.com.

About CloudTweaks

Established in 2009, CloudTweaks is recognized as one of the leading authorities in connected technology information and services.

We embrace and instill thought leadership insights, relevant and timely news related stories, unbiased benchmark reporting as well as offer green/cleantech learning and consultive services around the world.

Our vision is to create awareness and to help find innovative ways to connect our planet in a positive eco-friendly manner.

In the meantime, you may connect with CloudTweaks by following and sharing our resources.

View All Articles

Sorry, comments are closed for this post.

Comics
Cost of the Cloud: Is It Really Worth It?

Cost of the Cloud: Is It Really Worth It?

Cost of the Cloud Cloud computing is more than just another storage tier. Imagine if you’re able to scale up 10x just to handle seasonal volumes or rely on a true disaster-recovery solution without upfront capital. Although the pay-as-you-go pricing model of cloud computing makes it a noticeable expense, it’s the only solution for many…

Connecting With Customers In The Cloud

Connecting With Customers In The Cloud

Customers in the Cloud Global enterprises in every industry are increasingly turning to cloud-based innovators like Salesforce, ServiceNow, WorkDay and Aria, to handle critical systems like billing, IT services, HCM and CRM. One need look no further than Salesforce’s and Amazon’s most recent earnings report, to see this indeed is not a passing fad, but…

Cloud-Based or On-Premise ERP Deployment? Find Out

Cloud-Based or On-Premise ERP Deployment? Find Out

ERP Deployment You know how ERP deployment can improve processes within your supply chain, and the things to keep in mind when implementing an ERP system. But do you know if cloud-based or on-premise ERP deployment is better for your company or industry? While cloud computing is becoming more and more popular, it is worth…

How To Humanize Your Data (And Why You Need To)

How To Humanize Your Data (And Why You Need To)

How To Humanize Your Data The modern enterprise is digital. It relies on accurate and timely data to support the information and process needs of its workforce and its customers. However, data suffers from a likability crisis. It’s as essential to us as oxygen, but because we don’t see it, we take it for granted.…

Three Factors For Choosing Your Long-term Cloud Strategy

Three Factors For Choosing Your Long-term Cloud Strategy

Choosing Your Long-term Cloud Strategy A few weeks ago I visited the global headquarters of a large multi-national company to discuss cloud strategy with the CIO. I arrived 30 minutes early and took a tour of the area where the marketing team showcased their award winning brands. I was impressed by the digital marketing strategy…

2017 Brings DLP Technology and IoT’s Weaknesses to Light

2017 Brings DLP Technology and IoT’s Weaknesses to Light

DLP Technology In regards to data loss prevention (DLP), in the last five years many companies rushed to implement DLP solutions without taking the time to first identify the data that should not transit egress points. Most of these rushed implementations have not been successful. Security analysts, in particular 451 Research, have been recommending that…

How Formal Verification Can Thwart Change-Induced Network Outages and Breaches

How Formal Verification Can Thwart Change-Induced Network Outages and Breaches

How Formal Verification Can Thwart  Breaches Formal verification is not a new concept. In a nutshell, the process uses sophisticated math to prove or disprove whether a system achieves its desired functional specifications. It is employed by organizations that build products that absolutely cannot fail. One of the reasons NASA rovers are still roaming Mars…

The Cancer Moonshot: Collaboration Is Key

The Cancer Moonshot: Collaboration Is Key

Cancer Moonshot In his final State of the Union address in January 2016, President Obama announced a new American “moonshot” effort: finding a cure for cancer. The term “moonshot” comes from one of America’s greatest achievements, the moon landing. If the scientific community can achieve that kind of feat, then surely it can rally around…

The Key To Improving Business Lies In Eye-Interaction Tech

The Key To Improving Business Lies In Eye-Interaction Tech

Eye-Interaction Technology Analysts at Goldman Sachs predict virtual reality revenue will surpass TV within the next decade. More than just some gaming fad, VR represents a whole new way for organizations to train, research, and explore vast amounts of data. Despite its popularity, however, VR is still not in the hands of the majority, and…