One of the most common questions that I come across when meeting with software providers from around the world is “How can we make the transition from being an on-premise software vendor to a cloud software provider?”

I understand why they are asking the question. New statistics about the growth of cloud and SaaS are being presented every day, such as IDC’s recent prediction that cloud software will grow to $76.1 billion by 2017, growing about five times faster than the overall software market. Run a Google search and you’ll find pages of results linking to articles explaining why every software vendor needs to become a SaaS provider or they run the risk of going out of business in a few short years.

However, I think many of these software providers are asking the wrong question. Instead of “How can we make the transition from being an on-premise software vendor to a cloud software provider?” they should be asking “How can we leverage the cloud?”

Each ISV is in a unique situation. Before making the transition to offer cloud software, the ISV needs to truly evaluate the dynamics of the market they serve. They need to consider their customer’s needs, their current offering, the competitive environment, the economics of their business model and exactly when the time is right for them to make the move to the cloud.

There are those software providers that will find that now is the right time for them to transition, others should have made the move and are already late to the cloud and those who will realize that they do not need to rush to offer a cloud service.  That said, what I have found consistently across all types of ISVs is that they want to leverage the cloud to better serve their customer’s requirements for more flexible business models, for insight into how their customers are using their software and they want a consistent recurring relationship with their users. They don’t necessarily need to deliver their software in the cloud to gain these benefits, what they need is a cloud connected software monetization solution that leverages what the cloud has to offer. With cloud licensing, the ISV could provide their customers with subscription or usage based billing models, gain insight into how customers are using their software and offer their users a flexible model to access their software anytime and anywhere – whether their software is delivered in the cloud, on-premise or in a hybrid deployment.

Getting back to the original question, when a software provider asks “How can we make the transition from being an on-premise software vendor to a cloud software provider?,” I often respond that as a first step you should offer your customer a cloud-like experience by leveraging a cloud-connected licensing and entitlement management solution. Both the ISV and their end customers benefit from this approach of truly leveraging the cloud, no matter how the software itself is being deployed.

So, what are you doing to leverage the cloud?