It’s been said before, but the software landscape really is changing. According to IDC and other leading analysts, over the last couple of years, a sizeable proportion of app spend went on SaaS applications. It’s also worth noting that more than 30% was spent on replacing traditional on-premise applications with SaaS offerings, year on year.
Technology has changed many industries in amazing ways. Transportation, manufacturing, healthcare—all have been transformed in the last decade due to increased collaboration, communication, and real-time access to contextual data facilitated by Cloud technologies, mobility, social networks, and analytics technologies. Despite being key enablers to advancement, technology software providers themselves have not always been at the forefront of using technology to transform their businesses from the inside out. However, pressure to transform is coming from all sides, most notably the outside–in. Customers are demanding change with their wallets. Cloud software is growing at more than five times the rate of the traditional packaged software market. By 2018, $1 of every $5 spent on software, and $1 of every $4 spent on applications, will be consumed via the cloud.
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?”
Cloud is changing the way Software Publishers (ISVs) are monetizing their offerings. An increasing amount of workload is now moving from on-premise to cloud. This transition is driven by two factors: what customers and/or competition are dictating, and the need for ISVs to expand their reach to new segments. As a result, more and more ISVs are making the inevitable move to cloud.
Software consumption is continually changing. Users expect an evolving hyper-connected solution while their consumption needs demand licensing flexibility. As a result, providers need to offer scalable and flexible solutions now more than ever.
SafeNet Inc. today announced that analyst firm Frost & Sullivan has presented the company with the prestigious Market Share Leadership Award for its leadership in the global software monetization market. Frost & Sullivan recognized SafeNet for its leadership in market share, growth outlook, continued commitment to the core business-to-business market, and focus on emerging cloud and embedded markets.
In today’s tough economic scene where cash is king, everyone is being driven to conserve cash. As a result, buyers are asking for discounts from their vendors, converting from CAPEX to OPEX or license optimization or a combination of these. Any of these mechanisms can reduce revenue for the ISV. CAPEX to OPEX movement is of specific interest recently as this usually leads to discussions on pay-per-use and/or subscription pricing models. ISV’s typically think of migrating into SaaS offerings when they consider offering these new pricing models. Offering SaaS has its own set of challenges including requiring a hosting infrastructure, collecting payments, R&D efforts to build the new SaaS platform and its impact on current product roadmaps.
As a long time partner for ISV’s in the software B2B market, we are often asked for help competing in a market that is becoming more and more cloud centric. Typically ISV’s have made a long term investment in applications that are deployed on-premise and therefore cannot efficiently be offered as a service.
While ISVs continue the move from traditional dongle support to software licensing and cloud licensing, it is important to note that many software vendors still use dongles as part of their overall licensing strategy. This creates an opportunity to improve how the back office functions for software activation, tracking, reporting, and license renewal, across all methods of licensing. Having a unified back-office for licensing and entitlement management that includes support for dongle, software licensing and cloud applications would greatly improve how effectively ISVs manage their offerings.
Listening to the presenters at last month’s LicensingLive! conference, I couldn’t help but think of the commonly used expression “the only constant in the industry is change.” The software market has been undergoing fundamental change for a number of years now with the rise of virtualization, cloud computing, SaaS, and mobile. What stuck out at the conference is how these changes are affecting the way software companies of all types are approaching how they do business.