The Race to Platform Cloud Migration for ISVs: Business Triggers and Benefits
High-Tech | 6 min READ
    
The Great Cloud Movement for ISVs
The fast-paced changes in technology are integrating the whole diaspora into a coherent platform. A testimony to this fact is the evident transformation in the growth of Independent Software Vendors (ISVs) in every single industry & category.
Nitin Jindal
Nitin Jindal

Digital Partner

CMT Vertical

Birlasoft

 
The global ISV market is expected to reach ~US$ 4,077.72 Bn by 2027 from ~US$ 1,573.29 Bn in 2019, expanding at a CAGR of ~13% from 2019 to 2027, according to research by SDKI.
 
 
Moving towards the Cloud seems to be the right choice for ISVs in expanding their horizons and offerings in a competitive landscape. The following advantages for ISVs for moving towards the Cloud, including their software development teams and software products.
Some of them include cost optimization, packaged/hosted offerings for customers; improved application performance and customer satisfaction; enhanced application agility, scalability, and maintainability; secure, developer-ready cloud environments to accelerate innovation; and increased productivity in development cycles through the use of native-cloud architectures and services. Looking at all these benefits, all ISVs are looking forward to replatform their existing products and services on the cloud.
In short, it’s not just about being cloud-deployed but also cloud-enabling customers’ solutions.
Business Triggers For Platform Cloudification
There are many driving factors for ISVs to move towards the Cloud. It empowers ISVs towards stable and sustainable growth and provides them an opportunity to scale their applications quickly. It also drives ISVs towards enhanced revenue predictability, with more services being built into the subscription model. An easier integration by way of the Cloud enables ISVs to find growth in adjacent segments and build new partnerships.
Cost Pressures
Cost savings and operational efficiencies are the two most significant factors for ISVs for moving data management to the Cloud. A recent survey by OpsRamp revealed that 47% ISVs voted for the public Cloud’s budgeting flexibility, which allows them to avoid large capital expenditures.
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In comparison, 47% mentioned usage-based pricing models that enable infrastructure decisions based on business need. Cost savings have a massive impact on the enterprise cloud adoption uptick where 94% ISVs foresee reducing infrastructure setup and maintenance costs with on-demand public clouds.
Higher Market Potential
The Cloud offers ISVs the ability to reach not only local but global customers. Various models help them expand their market horizons. For instance, subscription-based pricing and service sign up aids customers and users to try a new cloud software service before going for a long-term commitment. Once they are satisfied with the service, they can continue the subscription for a longer tenure. Such a value proposition promises customer stickiness and exponentially expands growth pastures for ISVs. Further, cloud is the underlying foundation on which most of the ISVs are launching their industry aligned products and services.
Improved Revenue Streams
A study by Forrester highlighted that 80% of ISVs had realized an increase in revenue growth for existing applications that were transitioned to software-as-a-service (SaaS).
 
 
The surveyed ISVs stated that two years ago (before the study was conducted), revenue from SaaS subscriptions was 36% of total company revenue, while the on-premises software share was 45%.
Today, revenue from SaaS subscriptions has grown to 45% of total revenue, surpassing the current on-premises software share of 38%. Yet another study also emphasized that SaaS transforms how ISVs drive value and evolution opportunities to customers to monetize their potential.
Simplified Deployments
The cloud migration by ISVs enables them to eliminate the need to install and maintain expensive and complex computer infrastructure, ensuring faster and easier application deployment.
Cloud migration facilitates ISVs to retain complete access to programs and files wherever they are located and offer business continuity. It also enhances flexibility in their work locations. The pandemic brought the importance of cloud migration to the fore, where the Work from Home culture has forced companies to move towards such solutions. Cloudification enables easier remote working as teams can securely access applications from their own devices using secure cloud platforms.
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Better Customer Experience & Lower Churn Rates
The advent of SaaS has opened up new avenues of customer engagement for ISVs. Migrating to the Cloud is a viable solution to enhance customer experience. Customers are in a better position to recognize product value, and simultaneously vendors can move away from traditional licensing models, resulting in more efficient revenue strategies.
ISVs can also pass on the non-core activities to the cloud provider, allowing them to focus on their core development skill. This ultimately results in lower churn rates as their focus is only on offering reliable & efficient solutions to their customers.
Business Triggers For Platform Cloudification
Business Triggers For Platform Cloudification
Cloud Migration Strategy
How to Cloudify Platforms
Once ISVs decide to migrate towards the Cloud, they need to have the right strategy to architect and build each customer cloud environment, integrate it with other systems, migrate to it, and operate it sustainably.
This is critical because ISVs need to deliver success ‘on time’ ‘every time’ and drive sustainable customer value. Besides this, ISVs need to prepare their organizations for this transformational change.
Clear Objectives
Basis the targeted business goals, ISVs should formulate an appropriate migration strategy by identifying which applications/components should be migrated with clear timelines. In the case of established ISVs with an enterprise-class application, adopting a phased and incremental approach for cloud migration works the best, minimizing the impact for existing customers.
The right cloud platform, viz., either a public, private, or hybrid model, needs to be selected basis the data needs of the application as well as other critical factors such as resource utilization, security, control, and Total Cost of Ownership (TCO).
Execution Strategy
Building a robust cloud migration strategy covering cost analysis, labor productivity, business value, operational resilience, cloud cost optimization, and business agility are some of the crucial parameters that need to be emphasized enough before going in for cloud migration. Once the clear objectives are vetted comes the final execution process.
It usually involves four states: Assess: Evaluating an existing asset and make a plan for migrating it; Migrate: Replicate the functionalities of an asset in the Cloud; Optimize: Balance the costs, performance, and access of the asset; and Secure & manage: ISVs need to make sure that the asset is ready for ongoing activities.
Business Triggers For Platform Cloudification
Business Triggers For Platform Cloudification
Measuring Success and Governance
There’s no denying that governance can be quite challenging when moving towards the Cloud, even if it’s a single cloud provider involved, let alone the challenges surrounding organizations moving toward multi-cloud. Cloud strategy and governance is the basic building block for cloud adoption to scale and be successful, as cloud adoption without cloud governance would lead to failure.
Any change to business processes or technology platforms presents potential risk. The right governance framework focuses on developing corporate policy and the disciplines of cloud governance, which mitigates risks and ensures minimal interruption to adoption or innovation efforts.
Business Triggers For Platform Cloudification
Business Triggers For Platform Cloudification
Having weighed the pros & cons, it makes perfect business sense for ISVs to migrate towards Cloud. With the help of the Cloud, ISVs will be better placed to deliver a better end-user experience, besides achieving enhanced scalability, flexibility, and anywhere access through cloud-based deployment & infrastructure. It offers recurring revenues from a subscription model, far more attractive and valued by financial markets than licensing revenue.
ISVs will incur reduced infrastructure and application maintenance costs due to shared infrastructure, resulting in opportunities for reducing the TCO while providing greater scope for mass customization.
 
 
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