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
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