|
|
|
21 Jul 2009
Comments:2
The channel may be finding it hard to meet demand for software as a service (SaaS). In an ideal world, an ISV with a successful enterprise application would offer customers a choice of an on-premise and an SaaS version of their product.
The first barrier ISVs face is the considerable migration costs of porting software from an existing on-premise application to the cloud. Secondly, they must shoulder the financial burden and complexity of maintaining and servicing two applications. Thirdly, with the subscription-based SaaS model, it is a long time before they can start seeing the sort of revenue to which they have become accustomed.
They could consider a SaaS-only route but, in reality, ISVs cannot afford to give up their current client-and-server customer base. A typical enterprise SaaS seat would cost around £100 to £250 each month, but the same seat could have been sold on a perpetual basis for about £2,000.
So it looks like SaaS simply doesn’t compare. ISVs would have to wait almost two years to make the same revenues that a single on-premise sale would generate. Companies could choose to rewrite their application ‘in the cloud’ using a Platform-as-a-Service (PaaS) technology, which would mean avoiding hefty up-front costs.
Some PaaS offerings use metadata to develop applications, which is simpler and much faster than writing code. Yet ISVs must still maintain a separate on-premise version of the product or lose that revenue stream.
Why not create one application that could be deployed different ways – both on-premise and in the cloud? This is becoming possible via a new generation of application platforms. Like PaaS offerings, these platforms use metadata to improve productivity and cost-effectiveness, but also offer the ability to deploy the same underlying code-base in both on-premise and SaaS formats.
This enables ISVs to move faster into the SaaS market, while lowering the costs associated with development, deployment and maintenance.
David Akka is UK managing director at Magic Software
Related articles
In this video find out about the fast-growing Chinese vendor's plans for market domination and how the channel is its route of choice
Find out what gifts Acer has in store for partners for 2012 in this exclusive roundup of its recent conference
CRN's premier networking event is back on 17 May at the Ricoh Arena
Date: Thu 17 May 2012
Channel fighters preparing to square up once more on 24 May
Date: Thu 24 May 2012
The proliferation of endpoint devices within the enterprise has highlighted the shortcomings of one of the traditional approaches to data security
This Forrester report compares the costs and benefits of legacy email and productivity software with Google Apps
Dave discovers that rozzers are seemingly living in the technology dark ages
Mark Needham, founder of distributor Widget, argues that John Browett leaves for Apple with Dixons in better shape than when he arrived
|
|
|
Do you agree?
Adapt or Perish ? but do not commit suicide
I am a bit confused by Jim's comment - in what way is the SaaS value proposition compelling to ISVs. The industry consensus is that it certainly is compelling to end-users, but that ISVs have to adapt to much longer ROI delays given the smaller amounts they get paid up-front, and at the same time invest in improved software quality and customer service. I specifically related to this in my post about The widening gap between SaaS demand and supply (http://bit.ly/mmE5x).
A key word that I retained from Jim's comment is 'augment', and if I read Dave's suggestion correctly it is also what he promotes - to extend the portfolio with a SaaS option, while retaining the on-line customer base. I am repeatedly told by ISVs with existing business that abandoning that base to go 100% SaaS would be suicidal.
Posted by Avigdor Luttinger | 27 Jul 2009
Adapt or Perish
There is no question that traditional on-premise VARs face some challenges in migrating their business models to the cloud. But the idea that any of these businesses, in the face of SaaS's compelling economic value proposition, should continue to realize the on-premise profits of old is foolhardy. Those days are gone, mate--just ask any Sage VAR today how the old profit margins are doing. VARs that cling to the notion that the cloud is a passing fad, will eventually find themselves changing careers. The smarts one are already moving to augment their on-premise solutions with one or more cloud offerings.
Posted by jim lewis | 22 Jul 2009
Have your say