With the growth of cloud technologies, most ISVs whether startups or established software product companies, are looking forward to move their products on to the cloud. Offering their products on the SaaS model does make clear business sense but this change comes with its set of business challenges.

Key challenges that pose a threat to ISVs while migrating to the SaaS model include:

  • Renew marketing strategy: A SaaS model might make a difference in the audience profile that you target and the user expectations from the offering. A SaaS based offering involves selling directly to the end users or the non-decision makers unlike the traditional on-premise IT installations. Also, a SaaS model will require the provider to have an effective website with the right marketing message hence resulting in direct online conversions.

 

  • Devising new subscription & billing models: A SaaS model reduces the ISV firms to have forced customer lock-ins as is the case with conventional IT installations. It provides the buyer the authority to pick and choose the features they want and only pay for those features instead of the entire product. Hence it becomes imperative for the ISVs to devise subscriptions and billing options which offer enough value to the customers.

 

 

  • New Sales models/Business relationships: Traditional commission models for re-sellers or system integrators might not work in a SaaS setup. An on-premise installation results in a bigger revenue hence it is possible to forego a sizeable commission to resellers or partners which is nowhere the case in the SaaS model. For partners who fetch you a subscription on a SaaS model there has to be a different model based on the revenue that subscription fetches you.

 

Moving to the SaaS model is not that simple since apart from the business challenges mentioned above there are technical challenges which need to be taken care off. However the changing market dynamics, technology landscape and a more customer centric market makes it imperative for ISVs to move to the SaaS model.