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 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.
Cloud computing provides a reliable and seamless infrastructure to address both the business and operational priorities of the semiconductor industry.
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.