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Winning the Cloud Game: SaaS Rules
Jan 12 2017
Part 1 of a three-part blog series by guest blogger Charles Araujo, Principal Analyst of Intellyx. Full content can be found in our new eBook, "The Secrets to Winning the Cloud Game."
With customers demanding more software-as-a-service offerings, yesterday’s software leaders have to move aggressively toward the cloud. But moving from a traditional on-premises delivery model to a cloud-based, SaaS strategy is a high-stakes, bet-the-company game for independent software vendors. In this three-part blog series, I’ll cover the secrets to winning it all.
It’s a High Stakes Game, So Be at the Table
It’s time to put your chips on the table and get in the game.
As an independent software vendor, you are now living in a cloud-driven world — whether you like it or not. But the move from an on-premises deployment model to a cloud-based, Software-as-a-Service approach is more involved than you may realize.
Here’s the most important thing to know as you saddle up to the table: from here on out there is no such thing as a purely technical decision.
In the pre-cloud world, it was a little clearer. The development team created the product. The sales and marketing team sold the product. The support team deployed and supported the product after the sale. Then in a few years, you repeated the entire process all over again.
In the cloud-driven, SaaS world, everything has been turned upside down. Every decision will now span strategic, technical and operational dimensions — and it means that you need to saddle up and take a seat at the table. This is your hand to play.
This Game Has a Different Set of Rules
It’s tempting to think that you’re just playing the same game, but with a different deck of cards. You’re not. There is an entirely different set of rules to this game.
Moving from an on-premises deployment model to a cloud-driven, SaaS approach is about much more than just employing a new delivery model. It’s a fundamental shift in how you do business.
If you don’t want to lose it all on the first hand, you need to understand how to play this game — and you must realize that this new SaaS business model will impact everything from your revenue stream to your architectural complexity to how you approach customer retention and satisfaction.
You can’t afford to take anything for granted. If you want to come out on top, you need to start at the beginning and understand the new rules by the time you place your first bet.
You’re Going All In
The first thing that you need to understand is that you’re going all in!
You can’t place a few tepid bets to see what happens. To be competitive in the SaaS world means an entirely new business model — and that means a fundamental shift in your revenue and profit stream.
With the on-premises approach, you received large cash infusions up front. In the SaaS world, a smaller, but steady stream of income replaces those large, up-front cash receipts.
You know this, but have you fully considered the ramifications of this new revenue model — and the fact that customers will be able to switch more readily — on your business operations?
At the same time, you’ll need to invest heavily in an entirely new infrastructure to support your new business model. That’s quite a double-down bet: less cash up front and a greater capital outlay to fund your new infrastructure.
Push those chips into the pot. You’re all in!
Mastering the Secrets to a Winning Hand
The good news is that there are a few secrets to building a winning hand that makes your all-in bet a bit less risky.
The big secret is understanding that there is no simple, one-dimensional technique for winning this game. In this game, everything matters.
You can’t win by focusing on any single card. You need to put it all together — from the application, to the database, to the infrastructure — to build your winning hand.
When we said that there is no purely technical decision, we meant it. Each card matters. It’s how you assemble your hand — how you put all the pieces together as you prepare to move from an on-premises strategy to a SaaS model — that is the difference between winning and losing the game.
The question is: how do you put together your winning hand?
Tune in to my next blog in two weeks to get the answer.
Charles Araujo is an industry analyst, internationally recognized authority on the Digital Enterprise and author of The Quantum Age of IT: Why Everything You Know About IT is About to Change. As Principal Analyst with Intellyx, he writes, speaks and advises organizations on how to navigate through this time of disruption. He is also the founder of The Institute for Digital Transformation and a sought after keynote speaker. He writes a regular column for IDG and NetworkWorld, has been a regular contributor to both InformationWeek and CIO Insight and has been quoted or published in Time, CIO, Computerworld, USA Today and Forbes.
Charles can be found on Twitter @charlesaraujo