It is clear that cloud awareness is increasing day by day and – while there is still some reticence about it’s adoption – most companies today are already looking into what cloud would mean for them, thus seems just a matter of time until enough best practices will exist in order to boost a certain mass adoption. But there is still one cloud aspect that is not enough discussed and puzzles a lot of businesses, especially the developing software ones: what are the new services/new customers/new ideas that can be generated by the cloud? How can the cloud increase my revenues?
While most of the small/medium ISV’s still do not fully understand the advantages that cloud can bring to them (but quite aware of the internal benefits), they are looking already into what would mean to migrate their existing applications into the cloud and become a SaaS provider. They go along and will figure out on the way – but this might not be the best way forward. Being unprepared to understand the new business model of cloud services and new ways to market/charge/… it might just make your service fail from the beginning. At least this is what Microsoft thinks.
A recent Microsoft Romania (Bucharest) event was targeted at just that: @making the ISV’s more aware about the cloud benefits and the key areas that should be considered before moving to the cloud. The workshop – Software Companies Business in the Cloud – was just one of the local initiatives Microsoft has launched lately in order to boost cloud services development (Cloud Factory and Your business/Your success contest are also programs aimed at creating new cloud applications with Azure).
“Software Companies Business in the Cloud” was mainly based on the ideas of “Succeeding with SaaS” Microsoft Webinar Series and presented the business changes ISV’s should consider when moving to the cloud:
– new financial drivers: CMRR, churn rate, cash flow (critical to cloud services health because of capital requirements and ongoing payment terms over life of contract), LTV (the cost to serve a customer – lifetime value of the customer)
– new pricing models: monthly fee, free-mium, per transaction, per unit of measure, ad based revenues
– sales & support: in the cloud business model the operations team will be part of the sales/marketing effort
The discussions were interesting, the main points raised by ISV’s being:
– what are the SaaS benefits, which advantages can bring as opposed to the standard/non-cloud applications? Is it just platform scalability (and the ability to serve traffic spikes easily) or there is more?
– Going to the cloud: is a trend that should be followed or is going to bring new services/type of customers?
– is it mandatory to move to the cloud?
– how to price cloud services?
The event answered most of the questions and opened interesting discussions, still at the end of the meeting there was one question open: which are the cloud benefits for ISV’s? And while Microsoft seems to be the only big name doing something in educating the Romanian ISV’s towards cloud (and the actions are very good and welcome) the aspect of cloud as a new business driver/generator is not too much detailed and discussed.
Maybe the answer is in the real SaaS cases all over the world or just particular for different types of ISV’s, still there are a lot of Romanian entrepreneurs waiting to understand a bit better the way the cloud will boost their revenues.