For independent software vendors (ISVs) across all segments and markets, the stampede to cloud architectures is entering a new phase. Recently, Gartner predicted that by 2019, more than 30% of the 100 largest vendors’ new software products will complete the transition from “cloud-first” to “cloud-only,” meaning their investment will be shifting away from on-premises to cloud-based services.

The evolution of cloud has reached a point where companies are no longer asking: “Why cloud?” but instead “Why not cloud?” Cloud-based software provides important advantages such as IT cost savings, reduced capital expenditures, enhanced security, and flexible operations. And the scalability of cloud software solutions is a key benefit for companies, which prefer the flexibility of the per-user/per-month pricing models popular with cloud vendors.

Delivering software solutions through the cloud enables software vendors to reach wider markets, accelerate customer deployments, increase customer satisfaction, and create larger, smoother, and more predictable revenue streams. But becoming a cloud vendor means more than flipping a switch or buying a few extra servers. For ISVs, it means not just being cloud-enabled, but making a greater commitment to becoming cloud-centric with a world-class data center in which to operate its applications and provision its customers.

One major reason why ISVs are reluctant to build and staff their own on-site data center is because it involves many costs, risks, and uncertainties. For example, consider the capacity of the data center. If the ISV overbuilds, there are major amounts of capital tied up in nonperforming, rapidly depreciating assets. But if the data center is too small to scale, the ISVs face built-in growth constraints. Beyond concerns of scalability and infrastructure capacity, the ISV must also attract, train, and retain a large team of IT pros — people whose talents are in high demand — who can focus on maintaining, upgrading, and securing the data center (including disaster recovery).

Large, elite software vendors have the capital and expertise to build, staff, and operate their own data centers and roll out cloud solutions, but for the midmarket ISVs facing tough competition, SaaS platform vendors represent a compelling strategy for leveling the playing field and enabling them to capitalize on the opportunity of the cloud market.


A Case for a SAAS Vendor

In many instances, ISVs are turning to software-as-a-service (SaaS) platform vendors — companies that are equipped to accommodate the infrastructure and throughput demands of a commercial application vendor. With a SaaS platform vendor, the ISV’s commercial applications can be deployed and scaled immediately to meet market demand. What’s more, the SaaS platform vendor is better equipped to accommodate the ups and downs of the demand based business with scalability available from a subscription-based service offering.

Better yet, the ISV is freed from a never-ending stream of infrastructure upgrades and can instead focus on making its products as innovative as possible — unburdened by hardware and software maintenance requests and support questions, security initiatives, and network troubleshooting. When evaluating SaaS platform vendors, ISVs should consider the following:

  • IT security: Can the SaaS platform vendor deliver world-class security? Ideally, this should include password/credentials management, rigorous firewall/VPN features, 24x7 perimeter monitoring, intrusion detection, rapid response, mediation, and issue resolution.
  • Data center security: Does the vendor have strong security at its data center to prevent unauthorized access to your physical equipment? What plans and procedures are in place for fire suppression, business continuity, and disaster recovery?
  • Application availability: What levels of service can the vendor guarantee? What are the uptime and throughput levels — and what are the penalties for lapses/failures?
  • Support: Will your vendor be ready to respond to support requests — routine and emergency? What is the escalation process? What sorts of failover architectures are in place to minimize or eliminate disruptions and unplanned downtime?
  • Scalability: How quickly can the SaaS platform vendor provision and de-provision users? What are the upper and lower limits?

Answering these questions upfront will better enable ISVs to choose the right SaaS platform provider for their needs. It is important that ISVs not just look at the cost savings of SaaS, but ensure they are retaining a partner that provides the essentials for running applications in a cloud-based environment to simplify IT operations, maximize resource utilization, and manage growth.


This article was originally posted “Cloud and ISVs” from Cloud Strategy Magazine.