21 Mar Software companies: embark on your journey to subscription-based consumption
If you’re in the business of software you need a subscription-based consumption model, whether you like it or not. Some companies have already made the transition, others view it as a looming, expensive chore, while a few may very well still be in denial.
The change is inevitable. Customers are demanding subscription models and will leave companies behind that don’t offer this as an option. And the risk of overspending while making this change is real. It is not, however, inevitable. Despite what you may think, you do not need to completely re-engineer your business to move your software solution to the cloud.
It is possible to make the transition to a subscription model with minimal upfront cost and in a way that fits in with your business and that you have control over. CT4 assists software companies with this transition and we’ve learned a few key things in our many years’ experience.
Tech spend optimisation is putting pressure on all companies
Most software companies will be familiar with the overt or covert sense from clients that IT is a cost they would frankly rather not have. Every company is grappling with how to keep up with changes in technology while at the same time trying to cut costs. When it comes to IT, the perception swings on a pendulum between ‘too expensive to change’ and ‘shouldn’t it all be free by now’?
As a software provider it’s not easy to position yourself along this sliding scale of fears and expectations. But if you can present workable, cost efficient, time efficient solutions to your customers you will be well ahead of the pack. Acknowledge the pressure they are under and show how you can ease it.
Software companies are being forced to update their business model in line with these changes
As themselves consumers of IT solutions, software providers – just like their customers – are struggling to update their operations to a more agile cloud model. This is in addition establishing cloud-based product delivery models so that they can also take a subscription-based solution to market.
Yet many are still operating under a ‘buy and install’ model. While, in the meantime, the customer base is moving on. Customers are no longer interested in large upfront outlays for an on-premises software solution. They want scalable and flexible consumption-based software plans.
The reaction from software companies to this change in customer demand can sometimes be an overreaction. In the face of companies saying they won’t buy from you unless you offer a subscription model, the temptation is to build a cloud service from the ground up. This is as difficult as it sounds and can cost millions, resulting in funding delays at best and inaction at worst. It also causes stress at different levels of the company as everyone tries to navigate such extreme change.
There is another way: Let a specialist partner do all the hard work
Rather than a massive capital outlay you can put significant changes in place at low cost and low risk.
Imagine if your software was seamlessly transitioned to the cloud, wrapped up and delivered back to you as a subscription service you can then pass on to your customers. The cost of doing so is minimal in comparison to restructuring your business, and quite often the upfront investment can be avoided all together. Instead, your PaaS partner also makes money on a per-license fee.
You get to deliver the changes your customers are demanding without massive disruptions to your own business and in partnership with an expert who knows how to roll out a transition, will ask the right questions and ensure the transition suits your needs. And, critically, a partner that will continue their support – to ensure smooth and consistent delivery on an ongoing basis.
You stay in control of your product
This may be a concern for some software companies. But this model is not a takeover, it’s an outsourced partnership similar to others you may already have in place. You still run your application. You keep ownership of the apps and the data. You keep developing the source code. Your partner simply manages the delivery, ensuring you have a great platform via which to deploy your application.
While responding to your client needs
One of our landmark client success stories is Clubware, a leading gym management software. When one of their clients, a Brisbane-based gym, wanted to move away from running software on local computers, Clubware took charge. We helped them create a hosted environment through a platform-as-a-service model which enabled them to offer a subscription service to all of their gym customers – initially in Australia and expanding to service the demand in NZ, UK and the USA.
Be part of the IT spend optimisation solution for your customers – without re-engineering your business
A complete and sudden shift to the cloud can be terribly disruptive and simply not appropriate for most businesses – including those delivering software products to the market. You can be part of the solution for your customers without investing heavily to re-engineer your business. And by acting swiftly, you will be among the first movers – and therefore in a better position to reap benefits from this changing landscape.
Speak to us to determine the best path to transitioning your software product to a cloud-based subscription model – we guarantee it will be worth your while.