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Traditional ISVs’ road to SaaS: Building “Company 2.0” – Part 1

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I recently returned from visiting an independent software vendor (ISV) selling traditional on-premise Enterprise Resource Planning (ERP) software. They want to offer it as software as a service (SaaS) because they don’t have much choice anymore; the SaaS pure players are kicking them too badly. That’s fine, but how do they move ahead?

When I came in, discussions focused on comparing the merits of different public cloud, infrastructure as a service (IaaS) offerings. Choosing a technology provider when you don’t even have a complete picture of what you need to do is reassuring, but it’s a bad idea.

Don’t start by looking at IaaS providers

A cloud workshop highlighted that choosing the right IaaS platform was an important decision, but this company had much more to address to be SaaS-ready. In fact, they had to reinvent their whole business model. For this kind of company, going SaaS is really building “Company 2.0.”

To put things in perspective, I’ve built a quick, nonexhaustive list of the topics to be addressed, highlighting “IaaS,” which was their initial focus.

on-premise saasOther interesting challenges to address

From the list above, it’s quite obvious that this ISV has a few interesting challenges to handle on top of choosing an IaaS provider:

  • Build a service provider organization, including the front and back offices. This is because they do not have any and would like to go to market directly on top of their traditional indirect model.
  • Change their go-to-market and channel strategy. That’s a big one for this ISV, as their channel is extensive and very central to their current business model. What value do you provide to your partners in the new model? Can the traditional partners evolve or do I need to recruit new ones? How are direct sales going to be perceived?
  • Create or change processes; enable and train employees and partners. This is basically transformation, which is no easy thing to do.
  • Make the required technology enhancements to their ERP platform to begin the SaaS journey.

This is a rather dramatic move for a company that, so far, has thrived on the traditional on-premise licensing software model. It’s a complete revision of the business model and a disruptive culture shift.

Business model revision can be far more reaching than one might think at first. Indeed there are plenty of opportunities to rethink the company value.

So, what is the right path to SaaS? Stay tuned for part 2 to find out.

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