What I talk about, when I talk about the cloud

“OK Stavrinos, we hear you. The cloud is what it is. But our technology runs fine on our customers servers. Why should we adjust our model?”

I have been working with ISVs for quite a long time. Cloud born or next generation software houses, do not need any preaching on the business benefits of a cloud-based strategy. For them, it’s not “why cloud”. It’s mostly, “which cloud?”. There are, however, still quite a lot of traditional companies that have their doubts on whether the shift of their core technology to the cloud, makes sense on a business perspective.

As technology consultants, we need to stand in their shoes for a while. Try to understand, why they are not “all in” and eager to transform their entire business through embracing an obviously efficient and elastic architecture. Let’s take a step back for a minute.

Decision makers and founders in these organizations know the business and understand what’s beneficial for their organizations much better than us. After all, they are in the field day after day working to get the business going and keep the lights on. And they have been doing it for quite a while.

The cliché way to go about this, would be to attribute their approach to “resistance to change”. There is a natural tendency for all people and in extension systems, to avoid or resist any factor that threatens to modify or transform a well-established status quo. The cloud is indeed such a transformative element.

There is a natural tendency for all people and in extension systems, to avoid or resist any factor that threatens to modify or transform a well-established status quo.

However, we need to have in mind that change is the only constant when it comes to technology. Looking back in the past 20 years, most of these organizations have lived and adapted through changes both in their software development approach and the underlying infrastructure. They have embraced change more than once. Why are they yet not fully onboard regarding this change?

Sometimes, ISVs focus on the fundamental changes that need to be done to accommodate a cloud strategy and fail to visualize the business gains to be had. It’s more obvious to accommodate (given the proper timeframe and planning) the adoption of a new CI/CD approach or moving from bare metal to VMs (and even containers). The advantages are clearer, after all these are adjustments that can benefit the ISV development cycle and software efficiency. The cloud as a concept, entails significant adjustments not only in the way ISVs develop their solutions, but also in a way they do business.

When ISVs ask, why should they tinker with their well-established situation, my reply revolves around 5 subjects. This is what I talk about, when I talk about the cloud, to ISVs.

1) Focus on what matters.

ISVs think about moving to the cloud, loss of control. “The cloud vendor now controls everything; we are now puppets depending on Microsoft’s decisions and impulses”. Control however was always affected by outside factors, completely out of reach from the ISVs.

For example, a CRM system not working because a junior admin in the customer’s datacenter made a change in the domain controllers. A failed database or OS upgrade, that the ISV did not sign off nor approved in the first place. Failed storage systems, unresponsive network appliances, over-provisioned hypervisors, all those people and dependent systems that force ISVs to spend support hours investigating the problem to keep the system running and the customer happy.

An ISVs core business is to develop and maintain quality business solutions for their customers. It’s not managing and supporting all the surrounding infrastructure and hoping that no-one will mess with it. ISVs need to focus on what matters, their solutions, not the metal under them.

2) SaaS and the subscription model

During one of my recent discussions with a large and market established ISV, they shared with me a challenge that I had not heard of for quite a while. Piracy.

Yeap, what Microsoft understood and tried to take care of through a SaaS offering with Office 365 almost 10 years ago. This is still a problem with ISVs.

Software deployed on premise, under the customer’s infrastructure, becomes exposed to all kinds of tinkering attempts from anyone having access to the servers that host it. SaaS solves this. The ISV controls the software offering, updates, upgrades and most importantly, the revenue generated from the solution.

Software deployed on premise, under the customer’s infrastructure, becomes exposed to all kinds of tinkering attempts from anyone having access to the servers that host it.

SaaS enables a smoother transition to a subscription model. The customer now pays for the business solution, a relatively fixed amount for a period and in extension can predict the total solution cost. The ISV has recurring revenue from their established customer base and can focus on generating new leads. The cloud enables SaaS which enables the subscription model which in turn solidifies customer retention.

3) Expand geographic solution offering.

When an ISV depends on the customer infrastructure, the ISV also depends on the customer location. I have been to discussions where an ISV wanted to deploy their client-server-based software to a customer located in the other side of the globe. The plain logistics of this endeavor are a fundamental challenge.

Once the ISV controls the infrastructure and offers the solution on a SaaS model, the geographic barriers start to fade away. Yes, there are various compliance requirements and each country and region have their own dependencies. However, the cloud and a SaaS offering, removes at least an important barrier in an ISVs geo-expansion strategy.

In addition to the above, the ISV can expand marketing to other regions and as such, confidently reach audience and personas that were not reachable before. Cherry on the cake, reduce onboarding time.

4) Reduce onboarding time.

Remember the ISV that wanted to deploy their client-server-based software to the other side of the world? It took them months to go into a pilot phase. They spend a lot on travelling, setting up and supporting systems that had nothing to do with their core solution. And this was before Covid.

All those users could be login screens, deployed in a matter of hours, instead of months. Adopting a cloud first and SaaS model strategy, dramatically reduces onboarding time. Not only that, but it also opens the doors for ISVs to provision trials and demos to customers, which enhances lead generation and lead nurturing. Customers, like to see and experience what they are buying, and they want to do it quickly.

If you want to compete, you need your solution to be accessible and quickly deployable.

If an ISV cannot provide the experience, a competitor can surely do it. This is an industry fact. If you want to compete, you need your solution to be accessible and quickly deployable. The cloud can provide this.

5) Scale at will

Yes, I know, autoscaling is an infrastructure matter but hear me out. It is directly impacting and associated with business. Let’s look at the vaccination portal case.

A government deploys a portal for people to register and get their vaccination appointment set up. From a user experience perspective, it’s simple to use and uses modern design elements. The first time it goes up, people try to register and there are major issues.

The portal could not handle the traffic, it was most of the times down and not responding rather than up and serving. The team behind the portal, proceeded to do upgrades and probably increase the resources for the site. Still, this essential tool struggles with handling the user load.

The challenge was not that the people that build the site could not predict the traffic. On the contrary, there’s a given set of ages that can register on the website at a specific date. They knew how many people could access it and provision more resources to accommodate any miscalculation.

You can imagine the backlash. All the good work, the people behind the website put, all their efforts to provide an essential tool for the public in these difficult times, was overshadowed by the infrastructure not being able to handle the traffic. A good solution can be perceived as inadequate, if the user experience at any time, is bad.

Think of the above scenario, in business. Black Friday for a retail store, with some good offers that people compete to access. And the website is down because the infrastructure cannot handle the load.

With proper planning and architecture, the ISV solution will be able to handle anything the world throws at it. The cloud offers practically infinite resources.

A good solution can be perceived as inadequate, if the user experience at any time, is bad.

In reflection

When looking at the strategy and business benefits, a shift to a SaaS model and a cloud-based infrastructure makes a lot of sense for ISVs. Yes, it’s a journey and there need to be process changes, skilling up people and looking at our business from a different lens.

The shift to the cloud, is not plainly a technology or technical decision.

However, the return of this investment is huge in terms of generating new business, solidifying the customer base, ensuring a recurring stream of revenue, and providing a quality product to the market. It’s mostly a business and a strategy decision and has to do with growth and the vision for the future. Just from this point of view, I think it’s worth the effort.