99 problems but the Cloud ain't one: SaaS for ISVs

Cloud computing has helped to re-shape the entire IT industry and has made technology services more available and affordable to businesses of all sizes.

Over the years cloud has become the advent of computing; this, in turn, has positively impacted the cost of infrastructure meaning that service providers can offer more services for a lower cost. Due to the flexibility of cloud there has been an emergence of pay-as-you-go models for applications which is often referred to as Software-as-a-Service (SaaS) or software on-demand”.

The SaaS model is redefining the business model by creating opportunities for both customers and independent software vendors (ISVs). The use of pay-as-you-go in the SaaS model enables businesses who are unable to afford the high cost of applications before to now use these applications and optimise business processes to achieve higher efficiency, productivity, sustenance and growth.

A cloud based model primarily helps businesses to convert capital expenditure into operational expenditure. This is done by a service provider creating a strategic business model tailored to the business’ needs, which will allow it to engage with customers based on its requirements. Service providers provide a platform for these applications to be rolled out in a virtual environment where investment involving infrastructure is reduced, making it a low cost proposition right from inception stages.

Over the past few years there has been a demand for ISVs to change the development of its traditional software and move to software on-demand. Moving away from traditional methods means that applications can be charged out on a pay-as-you-go basis and are made more widely available.

Due to the low cost of cloud infrastructure, it is possible for ISVs to build new web-enabled applications and change existing applications into a SaaS model. Additionally, the cloud platform reduces the time to market for new or updated applications. Like any other cloud offering, ISVs will not have to worry about the OS maintenance as the cloud infrastructure takes care of functionalities like patching, replication, redundancy and security. The main benefit for ISVs is that the SaaS model is vastly cheaper than traditional applications which a majority of businesses cannot afford; changing its model means opening up to a bigger customer base. There are obvious benefits to making this transition but there are challenges ISVs need to overcome including changing development processes and overall business models.

It isn’t possible for ISVs to change all of its applications to a SaaS model, so software vendors need to strategically look at its portfolio of solutions to see which ones are being demanded and will be the most profitable on a pay-as-you-go basis. This will then provide the foundation for ISVs to change their entire business strategy. If you have been part of an ERP implementation, you know that it requires a lot of customisation for each individual customer so is not a good fit for a SaaS model. Applications which have a vast number of features which can be easily changed or configured, and, most importantly, not customisable, are the most suitable for a SaaS model. Any application that has a variety of features which can be configured to a business’ needs are usually the most desired in the market so will be the most profitable choice for an ISV. It is vital to invest the time and money to evaluate existing applications which will make the most return on investment before making the move to SaaS.

Last but not least, there are multiple service providers that offer a variety of cloud services – which can often be the best option for customer based applications; however, businesses need to take care when selecting a service provider. The main things to consider should include the uptime commitment with the service provide based on the critical need of the application; if they offer a private, public or hybrid model for the security your application demands; a billing mechanism built-in with the cloud offering.

Remember, to ask if the provider supports the services-based application you are trying to market and such other areas to be discussed and analysed before you are able to partner with the right vendor.

Vivek Vahie is senior director at Navisite India.