Cultural issues rather than technology or business models may be the biggest hurdles for conventional software vendors that want to transition to the software-as-a-service model. That's one of the key takeaways from An ISV Cookbook just released by industry analyst Saugatuck Technology, which specializes in researching the impact of emerging technologies including cloud and SaaS.
Saugatuck says that 30 percent of ISVs have already adopted the SaaS model and expects a further 40 percent are at some stage of planning a move to adopt SaaS over the coming year. But it says that getting to grips with "the cultural aspect of transitioning to a service company" will be the biggest obstacle to success for many of them. "Focus on keeping your customers happy and continuously measure your success (especially MRR)," it advises. "Renewals are the lifeline to long-term growth and profitability."
So even though there are more platforms emerging to help ISVs fast-track their path to SaaS — see my podcast last week with SaaS veteran Mike Seckler on What it Takes to be a SaaS Provider for a discussion of this — it will take more than technology and infrastructure to ensure a successful transition. Customers should bear that in mind when considering SaaS options.
Next week, I'll be publishing a podcast I recorded yesterday with Saugatuck's CEO Bill McNee on the prospects for enterprise adoption of cloud and SaaS in the coming year, in which he makes the case that the economic downturn will make these technologies more rather than less attractive.
Phil, Excellent observation about the cultural hurdles to a successful transition to SaaS. Marketing and sales, for example, need to make significant strategic adjustments:
They're selling to new audiences (e.g. existing customers to ensure renewals)
They're presenting a new value proposition (e.g. selling a complete customer experience vs. a set of product features)
They're usually working on a much more frequent product upgrade cycle (e.g. once per quarter vs. every 2-3 years).
Adopting a "SaaS mentality" in marketing and sales is as important to success as implementing the SaaS technology and business model.