Cloud deployments are gaining in popularity as cloud platforms become more abundant, less expensive and more secure. Recently, IDC reported in “IDC FutureScape: Worldwide Software Pricing and Licensing 2016 Predictions” that at least three major software providers will announce in 2016 their intent to end perpetual software licensing models. This bold prediction is the outcome of an established trend in the enterprise market towards adopting cloud-based SaaS applications. My friend Tu Le also echoed similar views in his blog “4 Trends of 2016: Will Your Business Evolve or Die?” If you’re an application producer with an on-premises offering, I am assuming you must have seen this trend in the marketplace and have started preparing for the shift.
Unfortunately I’ve seen many companies shift too hastily to cloud deployments from on-premises deployments. Here’s where your customers may feel the pain:
Customers often under-estimate the effort required to transition and bleed heavily in terms of time delays, customer sat or unplanned expenses because of a lack of proper planning. Unfortunately many software vendors don’t provide the tools and methodologies for making this transition less painful and less costly for the end customers.
I will be leveraging my learnings from managing an industry-leading entitlement management (“use rights” management) product that is offered in both on-premises and cloud deployments to highlight three keys to ensuring a successful transition to cloud that your customers should consider:
1. Pricing: Customers often don’t think about the pricing impact of cloud. If the customer is using the on-premises version for quite some time and arguably has been deriving value from the product, most producers would treat cloud subscription opportunity for this account as a new sales pursuit. In such case, customers will have to budget for the cloud subscription appropriately. Moreover, subscription software licensing is treated very differently financially and operationally.
2. Migration: Based on how long your customers have been using your applications they may have accumulated tons of data in their on-premises application. First they need to decide whether they want to move all the existing data to cloud. One best practice I have seen in the ERP world is that some will leave the historical data in the current system and take only current/active data into the new environment. Some customers may use this migration project as an opportunity for data cleansing and consolidation. There are broadly two approaches: Cleanse the data in the existing application and move the sanitized data to the new cloud deployment or move the data “as is” to cloud and do data cleansing/consolidation on the cloud environment. In either case, your customers will have to budget for performing data migration efforts. As an example, our product offers export/import capability to facilitate this activity.
3. Customization: During my past tenure running an end-user IT team, I have seen that customers running applications on-premises tend to customize the application quite a bit to meet all possible business requirements. Are those zillions of customizations really needed to meet your most frequently followed use cases? Customers reap great benefits long-term if they minimize user interface and business flow customizations and stick to the “vanilla” application as much as possible. They may have to change their business processes to accommodate it. If there is serious business impact, implement those customizations in another tool. Plan ahead what customizations need to be moved to SaaS product or which ones have to be done in another application (which could be a totally home-grown app) and budget for implementing and maintaining these customizations.
In my experience some of our customers (that are application producers) that are using the on-premises deployment of our entitlement management product have shown strong intentions to move to our multi-tenanted SaaS/Cloud deployment. We always bring up these points for discussions upfront so that moving to the cloud is pleasant for our customers. We also offer various tools, methodology to facilitate this transition – and recommend you do the same for your customers to ensure success.