Companies are moving to the cloud to consume the value of software solutions for a myriad of reasons, such as cost savings, quick implementation cycles, ease of use and accessibility, ease of maintenance and upgrades, better security, and high availability.
Software companies have less ability to lock-in pricing with SaaS than they do with expensive license software implementations. Software companies must stay nimble on cost management to deliver increasingly higher value to their customers at a lower cost. Another challenge is revenue impact because of spread out revenue recognition and cash flow impact because of the subscription nature of the payment stream compared to the cash-rich, up-front payment model for license software.
Cloud offerings also bring customer expectations of high-performance service, disaster recovery with hot and warm backups, and data center security. Whereas before, the customer was sharing the cost of application development with the rest of the product’s customer base, the customer is now also sharing the cost of the infrastructure for the platform on which the application operates. Customer expectations are growing for high quality solutions and service at less cost.
As you know, along with all of this there is considerable heightened sensitivity regarding data security. Data security is critical for reducing risks, preventing liabilities, and assuring prospective customers that their data will be safely transferred and stored in the cloud. Which secure protocols should you support? Should you author code to provide secure connectivity and offer your customer agent software or a web based portal to connect? Customers want to integrate with as little cost and effort as possible.
Software companies must modify their existing on-premise software offerings in order to effectively deploy in a SaaS/cloud environment. Yet, there is a global shortage of qualified talent to migrate existing applications to the cloud.