Why should Independent Software Vendors (ISVs) look to offering their services in the cloud?
There are a number of reasons that ISVs are looking to the cloud as part of their continued business growth. These can be summarised into three groups:
- Software as a Service (SaaS) is one of the fastest growing sectors within the IT industry
- IT vendors and industry peers are all executing Cloud Strategies.
- Customers are looking to cloud based services before they look at other options.
One key advantage of a Cloud based SaaS model is that it allows the Independent Software Vendor (ISV) to focus on their core competency – offering a software service that provides a solution to clients requirements. It is a given that all software solutions depend on a stable and scalable IT infrastructure, therefore moving the application to a scalable and resilient cloud environment allows the business to focus on developing the application to meet ongoing requirements.
SaaS fastest growth sector
Recent numbers from IDC show that Public IT spending in 2016 will reach US$98 billion, which is reported to be five times that of the overall IT industry spending. While the US remain the market leader with a 44% market share estimated for 2016, Western Europe is expected to follow with a 25% market share.
Recent surveys of those companies that have already moved into the cloud are reporting growth across all key business performance indicators:
- 1.6x more gross profit %
- 2.4x increase in new customer mix
- 1.3x greater revenue per employee
- 2.4x faster growth
Cloud based ISVs are reporting that having a SaaS offering opens doors to both new and existing clients. With a smaller upfront investment customers using service can be on-boarded quickly and presenting up-sell opportunities in the future.
Vendors executing Cloud Strategies
The established cloud applications such as Email and Collaboration, will continue to see growth in uptake, however traditional ‘Line of Business’ applications that initially were not seen to be cloud ready are now making the transition. Current growth areas are:
- Business applications
- CRM applications
- ERP (financial/accounting applications)
- Design & engineering
- Human Resources & Human Resourcing
- Supply chain & logistics
ISVs that have already made the move report that the barriers to entry were lower than expected and that adapting to a cloud environment is similar to many of the other recent architecture changes that have been dealt with in the past. Previously a key challenge to adopting to a new architecture has been capex driven, however moving to the cloud tends to require little capital outlay.
Customer choice via cloud
With applications being available ‘in the cloud’, the customer decision process has seen a change. Many businesses look to SaaS with a view to use the application to grow their business in a scalable way, rather than finding a cheaper software solution. Key reasons for choosing a cloud application are:
- Ease of access for remote workers
- Deployment speed and ease of on boarding new users
- Scalability of the solution
- Line of Business support regarding software
- Decrease in both time & cost for maintenance and management
With the customer now being able to take the sales process from the traditional demonstration, to a try-before-you-buy approach, the customer is able to get a more hands on feel for the capabilities for the application. This allows them to work with line of business and management to ensure that business requirements can be understood and met.
Making the decision to transition your applications to the cloud enables you to focus on the value that your application adds to the customer. Managing this transition should take the same approach, working with a partner who understands the challenges of application migration will allow you to focus on the application and the customer requirements.
To talk about how your business can transition your product into a cloud offering, contact our transition team here.