Making The Move: Getting The Right Business Model, Advice And Support

BCW

BCW, 17/09/2009, posted in "Analysis"

Business Computing World (BCW) is a blog focused exclusively on business technology. BCW offers technology-led companies up to date information on issues affecting their businesses. Founded in September 2009 and ...more info

Business Computing World (BCW) is a blog focused exclusively on business technology. BCW offers technology-led companies up to date information on issues affecting their businesses. Founded in September 2009 and aimed at IT decision makers who need at-a-glance coverage of core business technology, BCW enables IT professionals and business leaders to interact with their peers and connect with vendors. We specialise in discussing how technology improves business processes―making it a vital read for IT workers. ...less info

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Independent Software Vendors (ISVs) and Value Added Resellers (VARs) are under increasing pressure to adapt to the utility computing trend and offer customers a Software as a Service (SaaS) option for software acquisition. But making the transition from on premise to SaaS requires more than finding a technically robust data centre.

From creating the right pricing model to gaining support in the sales process and ensuring ongoing innovation, just what are the questions organisations should ask of a potential managed services provider? Keith Bates, Chairman of managed services provider, ESG, offers some important guidance on the key components of a successful partnership.

1. What data centre resources do I need? It may seem a simple process to sign up to a data centre provider, indeed many provide pricing based on information completed by the ISV via a basic Web form. But for any organisation moving from on premises to SaaS, defining requirements is not this straightforward. ISVs need to work closely with a provider that is experienced in delivering cloud computing and is able to discuss and debate the proposed business model to ensure the right, flexible data centre resources are acquired.

2. What are the new contractual issues to consider when moving to utility computing? Creating the right type of agreement for the new SaaS business model is a key consideration for ISVs. Does the managed services provider offer a white label agreement that can be used as part of the sales process?

3. How do I determine viable Service Level Agreements (SLA) for customers? ISVs need to translate the SLA delivered by the managed services provider to an SLA that can be offered to customers which will incorporate additional elements, such as application service and support. This SaaS model typically includes performance led rebates and penalties and it is essential that ISVs understand both expectations and customer commitments up front.

4. What is a competitive price? How does an organisation transition its pricing model from on premises to SaaS? Critically, is the ISV taking advantage of the new software licensing offerings from key vendors including Microsoft and Oracle? Microsoft’s SPLA licensing for example, offers monthly licensing that can be flexed up and down in both volume and version, providing perpetual software version assurance, allowing organisations to utilise just the licences required.

For example understanding the differences between ‘authenticated and non authenticated’ licensing can yield potentially huge savings in Web-based applications. The appeal is great, reducing the need for capital expenditure, but the pricing model is complex, so it is essential to work with a provider that can provide a highly transparent approach to this flexible software licensing.

5. How do I ensure customers achieve continual upgrades? It is also important to consider software assurance, so ascertain what software upgrades are included in the pricing to ensure customers achieve continual improvements. The right provider should both advise and manage the delivery of software, ensuring that upgrades are bundled within the monthly cost.

6. Can I expect support in building up the market? Look for sales collateral―from a complete micro Web site that can be rebranded by the ISV to brochures, editorial and white papers to support the new business model.

7. What about during the bid process? Does the provider offer sales education and support, including coaching for the sales team to ensure they understand the benefits of cloud computing? Will the company be prepared to undertake joint sales activity, especially in the early days, to get the new business model off the ground? The chance to leverage proven expertise in SaaS delivery can transform the viability of the sales process.

8. How can I ensure my software is optimised for the Cloud? Whilst ISVs and VARs are experts in producing software for on premises solutions, when it comes to cloud computing there are software and environmental re-engineering issues to address. Can a provider offer support, guidance, advice, even training courses for software engineers? Unless organisations can work with the right experts to re-engineer the application for the cloud, there is a very real risk that customers will experience performance issues that could undermine the new business model and compromise profitability.

9. What about Business Innovation? ISVs might expect technical innovation as part of the contract―although it is always worth checking the small print―but what about business innovation? Can the provider work with the business to support ongoing change, to add new services or meet new requirements?

The move from on premise to SaaS is a significant shift in business model and will undoubtedly result in continual change for the foreseeable future. The right partnership with a managed services provider that can offer proactive consultation could be essential in resolving problems and delivering the innovation required to evolve the business.

10. Can I get a Complete Solution? It is essential to remember that an ISV’s customer base will still have desktop equipment and peripherals located on site and determine just who is responsible for the support of that equipment. Just what is delivered in the data centre agreement and how will that affect the end customer? Does the data centre provider take ownership of planning and supplying telecommunications, for example? Nothing can undermine a customer relationship quicker than overseeing a data centre provider quibbling with the ISP over who is to blame for poor performance.

Ensure that the lines of responsibility are clear and, preferably, look for a provider that will take ownership of the complete solution―from data centre to PC―to boost overall performance levels and, hence, deliver a better service to your customers.

In conclusion, while ISVs are understandably focusing on the technical issues associated with a move from on premises system delivery to SaaS, there is a raft of operational concerns that must also be considered for this new business model to be successfully delivered. The right contract, based on a viable pricing model and relevant SLA, combined with proactive sales support and consultancy from the provider cannot only ease the transition between business models but, critically, deliver the expertise and experience to provide ISVs with a significant advantage in this new marketplace.