The process of taking a software product and moving it to a cloud based software service is mystical at best.
When even leading, advanced software companies struggle with going to the cloud and with adapting the new business model required, you know it’s going to be something that will require careful planning and attention to offset the struggle.
Why Businesses Should Move to the Cloud ASAP
To keep your business ahead of (or on par with) the competition, you’ve got to be able to keep your customers ahead of their competition – otherwise they’ll find another service.
If a software similar (or even worse, in comparison) to yours is available for access anywhere: phones, tablets, multiple computers, and yours is only available on a system-by-system install without real-time syncing, your customers are going to convert to your competition’s service. That’s really all there is to it. Today’s workforce needs convenience and portability. They don’t want to be tied to one desk in one location.
For example, let’s compare Google’s Docs to the traditional Microsoft Office. Throughout the history of personal computing, Microsoft Office reigned supreme in helping people get their work done, whether it was with spreadsheets, creating company documents, or sending emails. It wasn’t even until Google Docs hit the market and started gaining traction that we all realized what we were missing.
With Google Docs, documents could be made by one person from any device and collaborated on with anyone invited to the doc via a Gmail-based account. Before, files had to be sent back and forth for collaboration and it took a lot of effort to ensure everyone always had the latest version. And, in order to open and work on a document, you had to pay for a device-specific version of Microsoft Office that could only be used on one machine.
SaaS vs. Product Software
Companies like Intuit, IBM, Cisco, Microsoft, HP and Dell are choosing cloud-based infrastructures for their services and moving away from traditional product software to being SaaS suppliers.
Going to the cloud almost inevitably means moving to a SaaS model of doing business rather than product selling. But more about that later.
The basic truth of it is, businesses and individuals are now highly in favor of purchasing software on service or subscription-based models rather than one-time product purchases.
The reasons for this can go on for days:
- They can update instantly and have the latest and beta versions of new features without being stuck with the service they bought.
- They can adjust and update their plans any time.
- They have anywhere, anytime access to their information and work.
- Their information syncs across their devices and co-workers’ accounts in real time, keeping them updated and more efficient.
With product-based software, none of this is possible.
Cloud Servers & Security
Though the process of taking your product to the cloud can be a bumpy ride, lot of problems will be solved by making the right decisions regarding server options and security issues.
Because cloud-based software is hosted on multiple virtual servers rather than in-office servers or individual machines, this opens the information your users put into the software to more security issues. Because the data is so scattered across physical locations and multiple devices, the complexity of ensuring security gets harder than data hosted on a single machine or one specific office-based server.
Fortunately, SaaS companies have some options here. One of the most popular is to go with hosting your software on the cloud across private servers since public ones don’t give ownership to anyone or give the full visibility and control needed to ensure the security and privacy of your customers’ data.
Changing Your Management & Internal Working Structure for Cloud Based Software
Moving to the cloud is not simply a change in product, it’s also a change in the way you handle your software, the way you relate to your customers, and creating a new operating model for resource allocation and product delivery.
Typically, new roles are required to either be added to the company’s structure or to be subtracted from other, outdated roles and added elsewhere within the management.
Most often, companies moving from product to service, cloud-based software need to add an upper-level person within their C-Suite or VP-level staff to handle all the complexities of working and hosting on the cloud. This position is highly tech-based and will most likely require a core team of dedicated, experienced staff to handle all the maintenance required.
Further, customer support will also look a lot different. In the past, customer support was synonymous with technical support – customers called when they had problems getting the software product to work on their systems. Now, however, getting the software to work on a system is not an issue, since everything is cloud-based. With SaaS, customers call in to learn and figure out how to better optimize the software within their business plans and day-to-day operations, making customer support more of a business consulting team rather than a team of tech support experts.
Adapt Your Monetization Strategy & Business Model
With traditional product software, you sold software either in a box or by download. It was sold on a price-per-install model, and usage was specific to certain devices.
By selling SaaS, payment methods change because the software is available from any device. Instead, payments are made based on time-based subscriptions or usage amounts.
Though ROI is harder to estimate with subscription-based payment models, it is a lot easier to carve out your niche and who you provide service to – hopefully helping your marketing and sales force sell at higher rates. For example, in SaaS, it’s typical that 2 seemingly similar products might be competitive, but only with a handful of features that actually overlap each other. Otherwise, solution A and solution B have separate capabilities and functionalities that are quite different from each other. What differentiates your product is what will help you better identify your target user, tailoring your sales and marketing strategies to them.
Further, your selling strategy also changes. Instead of making one-off sales to customers every few years or after a major update, your focus comes to loyalty and retention. With product-based software, your business isn’t affected if people buy the download and don’t use it. But with SaaS, if people stop using your software regularly, they stop paying.
To keep your customers using your software and paying for their subscriptions, consider implementing these strategies to increase their loyalty:
- Offering a freemium version or a free trial period
- Giving the latest updates for free
- Letting customers opt-in to trying beta versions of new functionalities or features
- A new consulting side of your business where you provide advice and education on how to optimize the use of your software
Writing exact instructions for taking software products to the cloud is difficult, since all softwares are not created equally and are so vastly different in how they operate and serve their users.
Taking a CRM to the cloud is going to look a lot different than taking a software created for video editing collaboration and file saving, but both are essential in the inevitable fundamental shift in offices to mobile computing and portability.
Do you have a software product you’ve taken to the cloud? Or are you still in the planning process? Let us know some of the challenges you’re facing, and we’ll be glad to give you advice based on our experiences working with cloud-based software.