While the majority of enterprise Software is still deployed on-premises, the SaaS (software-as-a-service) market continues and accelerates its growth. Gartner has recently predicted a total market of 22$ billion through 2015 in SaaS. Patrice Chéret, Dimension Data’s Managed Services and Cloud Business Development Manager says that in this changing market, ISVs (Independent Software Vendors) have no other choice but to transform their business model to enter this challenging but growing market.

Not harmless but several adaptations

• Adaptation in the application to become “SaaS ready”. The main characteristic of a “SaaS ready” application is the multi-tenancy feature. Multi-tenancy means that the same running application, running on the same pieces of hardware, can be shared across different organisations called tenants.
• Adaptation in the business model. With traditional on-premises licensing, the ISV directly receives the revenues linked to an order. With the subscription model linked to SaaS, the ISV receives only a small percentage per month based on the real usage of the application; the so called pay-as-you-use model.
• Adaptation in the sales channel model. SaaS applications are not sold the same way as a software license is. There are associated contract clauses that limit the possibility to sell through other channels.
• Adaptation in the provided solutions. The SaaS vendor must not only provide the application but also all the infrastructure to host the software. It includes the computing, the networking, the backup environment and all the security features to protect the application.

Tree choices

Being aware of these challenges, the ISVs have three choices:

1. Ignore the SaaS trend and remain in the traditional ISV business.
   This strategy could be risky taking into consideration that direct competitors can decide to move to the SaaS market and thus create a competitive advantage.
2. Embark into this transformation and address all changes alone.
   This strategy could also be rather risky based on the innumerable issues the ISV may have to face. This could conduct in an important investment in resources, time and money.
3. Embrace this transformation on its core business and rely on a cloud services partner providing all the necessary layers. This strategy is the least risky one as the ISV can concentrate on its core activity.

At Dimension Data, our Cloud strategy is focused on helping ISVs to transform their business models. Our trade marked Managed Cloud Platform (MCP) can be Public, Private or Hybrid. Our application programming interface allows ISVs to interact easily with all layers of infrastructure; from the networking, and the underlying security to the computing and the backup. To summarise, Dimension Data’s Managed Cloud Platform is “SaaS ready”.