Independent software vendors face a changing competitive landscape. Every day, more companies are offering cloud-based solutions, developing products for general use and niche businesses. To keep up and grow, it makes sense to transition to a software as a service business model. For this to work, though, you need to understand what the change means for you.
Your Newer, Bigger Client Base
When you move to cloud servers, you give yourself a chance for a broader audience. This is exciting; growth requires new customers, and your transition gives you an opportunity to find them all over the world. Still, the opportunity brings with it challenges for your business structure. To grow internationally, you need to understand how taxes, laws, and regulations in other countries affect you. You need to ensure your offering works, both legally and logistically. Even more, you need the structure in place to serve a larger client base. To maximize the value of this change, you need to plan and be ready.
Moving from Products to Service
Perhaps most important to understanding the transition is realizing you will become a service company. Your software offering needs to fit within the systems that clients have in place already. The more customers you serve, the more variables will be in place for your transition. Moreover, any compatibility concerns become your problem to fix. As such, your product becomes not your culmination, but your starting point. Your software developers, for you to get the most out of your SaaS offering, need to become service providers and be ready to address every issue customers face.
Managing Cash Flow
When you operate as a SaaS provider, you typically sell subscriptions rather than products. But as an ISV you provide a product as the end point of your sale, while service subscriptions operate as the starting point. A subscription can include varying levels of service support and other add-ons, as well as payment processing fees. The more you provide in your service model, the more revenue the service generates. Look for ways to build out processes that expand your bottom line.
Focus on Core Competencies
Finally, no matter how much you grow as a SaaS provider, don't lose track of who you are. With all of the different opportunities, it can be easy to shift resources away from the expertise that got you where you are. If you operate within a business niche, keep studying that niche and updating your understanding. Think of it as growing within what you do, rather than growing from it. Expanding the ways you operate should never serve to negate the reasons your customers have worked with you.
You can experience tremendous growth as an ISV when you transition to SaaS models. Keep your focus on your niche and your customers' needs, and you can manage the shift relatively smoothly.