ISV Archives - Dr. Petri I. Salonen Views on Life, Entrepreneurship, and Software Business

Software Vendor – are you moving your SharePoint Solutions to the App World?

October 31, 2013 by DrSalonen Leave a Comment

SharePoint and its market penetration in enterprises can’t be denied. It is used by a massive amount of organizations and there are hundreds of thousands of developers building solutions using SharePoint as foundation for developing solutions. According to AIIM, one in two corporations are using SharePoint.

SharePoint is a popular platform for system integrators (SI) as well as independent software vendors (ISV). The former category typically sells custom application development services based on time and material or fixed cost projects. These solutions are typically “one-offs” even if the SI accumulates software assets in their internal code repositories. Effective SIs try to reuse these assets as much as they can, but that is unfortunately not a common practice among many organizations.

ISVs want to create productized solutions where the software assets can be reused in many organizations. However, creating real packaged solutions that can be deployed “as is” requires different skills than implementing customized solutions for different companies. I have seen quite a few system integrators struggling with productizing their offerings even if there is a real pressure for SIs to sell solutions due to price pressure on projects based on time and material. Creating solutions with real intellectual property (IP) provides a springboard to better profitability as well as higher hourly prices if the business model is built in the right way.

I have been part of organizations using SharePoint 2007 and 2010 in solution development but the architectural model and delivery methods have not been very flexible specifically for ISVs. For an SI that wants to sell time and material, the platform is perfect as some things are labor intensive and just need time to get done. Both of these releases of SharePoint (2007 and 2010) are built on “full trust” model while the new SharePoint 2013 is based on a new “app model” that Microsoft introduced in this new SharePoint 2013 release. What makes this model exciting is that it opens up the world for ISVs to reuse existing codebase as the foundation of the architecture is not to build intelligence in the SharePoint Server, but outside SharePoint. Besides this, Windows Azure is a perfect companion that can be used to house some of the solution. I am convinced that there will be quite a few solutions that combine technology from both SharePoint as well as Windows Azure.

SharePoint in some scenarios becomes the user interface (UI) to information and the logic resides outside SharePoint. An example would be a calculation engine that resides outside SharePoint and provides an API (Application Programming Interface) for other applications to consume. Microsoft guidance for SharePoint developers is to develop an App for SharePoint rather than classic solution whenever that is possible. There are of course many scenarios where this is not possible.

Most of the current SharePoint 2010 solutions have been implemented by using the “full trust solution” approach and these solutions can’t run for example in current Office 365 environment (with SharePoint 2013 Online). Microsoft enabled a new model in SharePoint 2010 (Sandbox) where some of the code would live in a “Sandbox” environment. However, the current recommendation is not to use the “Sandbox” approach due to different restrictions.

When I read about this new SharePoint 2013 app model first time, I thought about ISVs that have existing code assets that can be reused in different scenarios. I also got excited about this model as it provides a better experience for end users and IT to provide upgrades of the app in the same way as you would upgrade any tablet app. The application logic and the heavy-duty lifting can in many cases live in Windows Azure or even existing private hosting environments where the ISV just services new types of user experience to end users in a form of an app.

There is going to be lots of users in on premise SharePoint environments for quite a while, but starting to learn and review the possibilities in SharePoint 2013 environment should be a top priority for any ISV and SI that want to stay on top of the game.

Does your channel partner program play a strategic role in your cloud business?

August 19, 2013 by DrSalonen Leave a Comment

In preparation to my upcoming workshops and seminars, I am updating myself on multiple different things in respect to ISVs (independent software vendors) and one of the key drivers based on the workshops we have delivered the past 2 years is by far the question how ISVs should align themselves with channel partners. Today when doing some reading, I run into an interesting study by Forrester Consulting (commissioned by Avangate, September 2012) where 79% of the researched ISVs (53 US and UK SMB enterprise software publishers) feel that their channel partner program is of strategic importance.

One of the key concerns that ISVs had in this study was that channel partners are ill-equipped in changing their business model from front-loaded licensing model to a recurring model where partners are incented to renew customers as to acquire them. As much as 49% of the ISVs where concerned that channel partners are not going to be able to support new or evolving business models.

Another key finding in the study was that smaller software vendors are ill equipped to expand to new markets and this mainly due to support-related issues. Channel partners expect ISVs to help in marketing and generating demand, but smaller ISVs are typically not funded to be able to support this type of activity.

The study revealed many other factors that the channel partners were concerned about such as channel partners now been able to support end customer over the lifetime of the contract, inadequate efforts in renewing the end customer contracts and overall bad visibility over the end user customer. The roles are responsibilities are definitely changing in respect to ISVs and channel partners and this I have had the opportunity to run a bunch of channel alignment workshops where we map the ISV business model with the channel business model and if there is any misalignment between these, the results are typically miserable.

ISVs have a tendency to dream that their solution is the only solution on the planet that matters, but unfortunately there are others with the same belief. I like to use Business Model Canvas in the channel alignment exercise as it portrays extremely well potential issues that ISVs have to deal with such as giving the opportunity for the channel partner to become profitable. That is easier said than done.

Did Google find out that open source does not pay out as expected?

August 15, 2011 by DrSalonen Leave a Comment

Here we go again. The mobility world is changing with Motorola Mobility being acquired by Google for $12.5 billion. This was widely reported this morning when I woke up. Doug Barney from Redmondmag.com concludes that this move from Google might anger device manufacturers. My personal belief (that many other analysts support) is that Google woke up to realize that it might be good to make money on the phone business and not have it “free” as it is now. The fallacy of open source might have finally caught up even with Google….. It could be that Google executives also realized that the winning formula is about ecosystems and not only about the operating system as Galen Gruman conclude in his blog entry today.

I have stated in many of my writings that I do not believe in the open source model for an ISV and there are many reasons for it. One reason is obvious: the more success you get, you will have patent trolls suing your ass with our without reason. I have seen it so many times and it is frightening. Yes, large companies do the same thing to each other, but I guess the reasons are little different. Large companies can afford lawsuits but for the small ones this can be a death sentence.

Another reason has to do with valuation of the company in case you want to sell it in the future. There is no question that a company with real IP has more value that the one that assembles things from pure open source. In some cases this might be OK, but if you want to build something that has real value, some pieces have to be closed from competition to view it. I have been part of software organizations that have been sold (both as CEO and as Chairman of the Board) and there is no question in my mind that the buyer is interested in where the code (and algorithms) came from. I am sure there is a place for open source as well… If I had to start a company today, it would not be based on open source.

The announcement from Google to acquire Motorola is has caused a stir in the marketplace with speculation of whether Microsoft is now going to buy Nokia to have the same situation with Google. One blog entry suggested that even RIM might be a target now, but based on CNBC analyst interview this morning, RIM does not bring any additional value to the table so the market does not expect them to be bought up. This is going to be a race between Apple iPhone, Microsoft Phone and Android.

How should we now read the market and the intentions from these three players? Nokia’s share shot up 10 percent today: maybe Nokia will also be bought and or Android will be loosing attractiveness to players such as HTC and Samsung that are now going to compete directly with Google in hardware design and manufacturing. Interestingly, I read today from the news that Apple has ordered 95 million iPhones for the fall and Samsung is going to be one of the largest manufacturers, which makes this game very interesting. Samsung and Apple are fighting for the same markets and are in fact even in a lawsuit on patent infringement but still doing business together. Go and figure out……

The Business Insider blog entry today concludes that the deal between Google and Motorola might end in a disaster mainly because of Google stabbing HTC and Samsung in the back by now competing against them. At the same time, Microsoft now became the only big player that does NOT manufacture its own handsets and this could potentially be really good for Microsoft and Microsoft Phone future. It could be that Microsoft ends up also acquiring Nokia going forward, but this is purely my own speculation. Some bloggers from ZDNet think this would be the most logical option for Microsoft. It seems that the embedded software/hardware design ala xBox Kinect could work well where Microsoft would design the best handset to be optimized with Microsoft Windows Phone operating system. This is probably what the Nokia-Microsoft partnership is trying to do.

Another interesting perspective that Galen Gruman provides is to claim that Android really isn’t open source and now with the Motorola deal we are most probably going to see more closed sub-systems within Android that Google will not disclose from algorithm perspective. Gruman also concludes that the Android open source system development does not have an iron fist to make decision like it has in the Linux development environment with Linus Torvalds in the helm. Failed attempts such as Moblin, Maemo and MeeGo are examples of open source mobile platforms that never really got the traction that the platform needed.

What today’s acquisition confirmed to me was that the future of smartphones really does not have anything to do with just to operating system, but it is about software ecosystem and how software developers, handset manufacturers can manage the user experience. Nobody besides Apple is making really serious money on smartphones today as the entire market has matured and margins have come down.

IT IS ALL ABOUT ECOSYSTEMS AND FIGURING OUT WHERE EVERYBODY WILL PROVIDE VALUE.

Cloud ISV: What technology will you be using when supporting different mobile and tablet devices?

August 1, 2011 by DrSalonen Leave a Comment

I explained in my previous blog post that the cloud era is here to stay and with this new era, there are also quite a few technologies that the ISV has to select to build a solution. One key thing is to select the cloud platform but an increasingly important technology that the ISV has to evaluate is what development environment to use to support hundreds of different mobility devices, both smart phones as well as tablets.

When I look back not more than five years, the requirements for applications were much different that today when it comes to consuming information. Today, the end user expects to be able to use a smart phone and tablet to view/update information using a solution that typically is built on cloud technology. Flash used to be the main technology to build applications for the Internet browser, but with the decision that Steve Jobs and Apple did on Flash of not supporting Flash on Apple iPad, the success of Flash is doubtful in the future. Consumers do not care about technology, they care about having the ability to consume information and this is something that the technology industry forgets every now and then. If somebody has any doubts about this, just look at what is happening on the US markets and what has happened for example for RIM and BlackBerry market share on smartphones. It is brutal.

Back in 2010, there were quite a few articles of whether HTML5 will kill Flash. There are millions of Flash web sites whereby I do not think Flash will go away anytime soon, but the real question is whether the ISV should believe that Flash is going to survive going forward. My personal opinion is that I would not invest time and money to Flash anymore as we all know it is not going to support all of the relevant mobility interfaces and I do not think that for example RIMs approach by marketing its BlackBerry PlayBook to support Flash makes a difference in the large scheme of things. The question that each ISV needs to evaluate is what technology it expects to support from a long-term application development perspective.

We already know by now, that Flash will not survive in the long run and has already become a major limitation for many ISVs. When you really think about it, users have already won the battle by ignoring the Flash and showing this by buying iPads even if they know it won’t support Flash. Can you afford building sites and ignore the millions information consumers? I do not think so. Many entrepreneurs (me included) have made the decision not to allow any Flash technology to be used on the web-site as most smart phones and tablets do not support Flash and Flash not optimized either from SEO and SEM perspective. Check your web site analytics/statistics and you will find out that smart phones and tablets are becoming more relevant in information consumption.

I believe that the next wave of innovation will be coming from software vendors that are able to combine the cloud and mobility in a way that helps end user organizations to become more effective and productive in whatever the application area happens to be. I read an interesting article “Building An Enterprise Software Company That Doesn’t Suck” where the author described how large enterprise software packages are losing the appeal from both end user organizations as well as users. People are sick and tired of complicated and hard-to-use software solutions that do not bring any value add to a user’s daily life. Organizations have forced users to use software to fulfill some type of compliance rule but I my bet is that with the new generation of users, this will change whether organizations want it or not. The new generation entering the marketplace is fluent mobility users, they use social networks as we used to use the regular phone and they would not care less about the corporate compliance stuff and based on research, they won’t even apply to organizations that are old-fashioned way of viewing the world.

Technology selections for an ISV business is always tricky and I have had to do this many time during my career and I have also had a few misses such as selecting an application development tool from Synon (acquired by CA) called Obsydian that never really took off in the marketplace and my developers were never really able to use it effectively. The same applies to the selection today in respect to mobility development. Can you afford making a mistake, spend money in development and then suddenly realize that something else should have been used. I do not think so.

I recently read an interesting article “Seven Reasons HTML5 is Killing Flash” with some interesting points of why HTML 5 could potentially kill flash. According to the article, there are more than 109 million mobile users with HTML-5 ready browsers, but by 2016 the estimate according to ABI Research is that there will be more than 2.1 billion mobile users with compatible browsers. According to ABI Research, there will be 25 key features that will make HTML 5 competitive and the seven that was picked in the article are as follows:

1) Video Play: HTML5 includes a tag for videos that allows it to play with the start, stop, pause etc.

2) Video Record: This will become even more important going forward as mobile phones have video recording and HTML5 will support this

3) Audio Play/Record: Today, the user needs, Flash, QuickTime or Java to play or record audio, but with HTML5 it is just another tag.

4) Apps: HTML5 allows Web pages to access the same routines that make browsers work and enables them to become like any application. I think this is one of the key things when you think about mobile application development using HTML5

5) Rich 2D Graphics: All types of sophisticated two-dimensional graphics will be built into HTML5

6) IM: Instant messaging will be built into HTML5 by virtue of Web sockets

7) Real-time Streams: Web sockets will also allow any Web-page designer to easily add real-time data streams to the application.

HTML5 could become the best friend for the ISVs going forward as it will provide the broadest support from a device/browser perspective and when smart phones will get HTML5 compliant Internet browsers. HTML provides a better way to support multiple devices as is explained in the article “Enterprise App Stores Harness HTML5” by Colin Johnson.

Software solutions we are using on a daily basis when running a consulting business with people distributed in different parts of the world

July 28, 2011 by DrSalonen Leave a Comment

I get questions from other entrepreneurs what software we are using to run our business and it has been my intention for a while to create a blog entry about this and I finally got to do it so here it is.

I founded TELLUS International six years ago after having been part of a software company exit (sales of a software business intelligence company). When founding TELLUS, I made a firm decision not to invest any money in hardware which forced me to select solutions that would run as a cloud solution (SaaS). This was a pretty bold statement back in 2005 as the cloud really became reality and part of “accepted” much later and there really wasn’t that many SaaS solutions back then.

Throughout this blog entry, you will see that solution integration plays an important role when running a business. Integration is by far the most important thing that an organization should pay attention to. You do not want your personnel having to re-enter things to many applications, the focus should be on sharing information across different applications. For us, Microsoft Office Suite with Microsoft Word, Excel, PowerPoint, Project, OneNote etc. are obvious selections for the office productivity tools but all fo the data and documents have to live in the cloud.

There are some applications that are better suited to run as desktop apps with the ability to save data to the cloud and therefore I really see a hybrid model to be the case in many solution areas and I have some examples of this later in this blog entry. If we work in Microsoft Word, the document will be saved a cloud vault so nothing will be lost even if the laptop/desktop fails or hard drive goes bad. In our case, M-Files document management solution was the right choice due to many reasons that I explain later in this blog entry.

Let me start this journey by working through each operational area where software is needed. I will start by looking at company accounting as that is what is usually needed immediately after the company has been created. You could potentially keep your books using Microsoft Excel (I have seen this happening as well), but I decided to base my company on a real foundation from get-go and Excel was not the solution for TELLUS accounting and was not cloud based either.

Accounting in the cloud back in 2005

Back in 2005, the only real SaaS vendor for accounting was Intuit with QuickBooks Online and that is what we have been using from get-go. I had exposure to QuickBooks Online already before 2005 when I was running a business intelligence software company so I knew what I was getting myself into. The reasons why we went initially to QuickBooks Online from regular QuickBooks was due to the need to share financial information with the headquarters in Finland. A SaaS solution enabled any user get immediate access to the books. What a great concept and Intuit was the first one to get a SaaS solution to the marketplace.

The benefits of having accounting in the cloud are many such as:

1) I can have my CPA review on my books anytime, anywhere without me having to worry about hardware or software to be installed.

2) I can generate invoices and have people to enter their time for billing purposes just using the browser

3) With the mobility era coming even stronger, the mobile interface to QuickBooks Online are getting even better what it is today.

Communication tools with the external world

As a Microsoft partner it was very natural for us to select Microsoft-hosted Exchange environment for our email needs. We have been using Microsoft-hosted version since it came out and could not be happier. The environment supports different types of mobile devices as well and which is the reality of many organizations today. The days when everything was standardized into one specific device are gone.

Document Management Solution – Getting documents and workflow processes into control

A key part of any consultancy is to standardize how documents are managed, where they are saved and what type of workflow processes are attached to different document types. During the past six years we have tried many solutions and luckily I was able to find something that not only made sense to the users, but also supported my vision of having a cloud-based solution for our document management. The solution is M-Files with Windows Azure backend (storage) and a small plugin that enables fully integrated user experience when working with Microsoft office environment. Let me explain what I mean by fully integrated document management experience.

First of all, the end user does not have to think about document management when using M-Files. M-Files is like a drive on a laptop/desktop with the difference that the user does not have to worry about directories or file naming when saving the document to the M-Files Azure repository. The user is presented with a metadata card that includes information for that specific document type (document class) and this is much more meaningful to the user as everything then becomes searchable and structures can be changed without really having to think about directories. How many times have you wondered where you saved a document and whether the document is the last one that has been touched? According to some studies, a document exists on average 19 times in a typical corporate environment. What a horrible way to spend money and time for nothing.

In our case, we have also integrated M-Files with Dynamics CRM 2011 Online environment with full two-way synchronization. What this mean in practicality is that all customer names and contacts are automatically synchronized from Dynamics CRM 2011 Online to M-Files Windows Azure repository. The synchronization is two-way where any change in M-Files is automatically synchronized back to Dynamics CRM 2011.

The reality is that all of us use Microsoft Office as the main environment when working with documents and what M-Files brings to the table is a native plugin to each one of these apps, including Microsoft Outlook: each application has a button to save the document to the M-Files Azure Document Vault and that is very powerful. Nobody in the organization has a need to explain that he/she does not have time to save documents, because the effort is in fact less as the document metadata card is automatically driving the saving process.

We also use the workflow engine in M-Files to drive our approval processes in proposals which is important to keep the quality high on the documents that are sent to the prospects.

If you reflect on the text above about how we integrate things within our organization it is easy to say that M-Files is almost like the traffic controller sitting in the middle and documenting what we are doing. We have seen many organizations with disintegrated applications with lots of re-entry of data and that is not only useless but also frustrating to the end users.

On top of the integration capabilities between M-Files and other operational applications on the metadata and metadata related records, any document that flows through any of the employees will have metadata associated to it and any document will have full support to audit trail as well as company/contact information associated to it. M-Files enable organizations also to integrate the solution into ERP/accounting database whereby M-Files really becomes the central hub for any information flow.

Sales and Marketing in the Cloud

Salesforce.com is a pioneer in SaaS-based sales force automation solutions, no question about that. Back in 2005 when I had made my decision to only use SaaS based solutions, I had to go with SalesForce initially but we agreed in the management team that once Microsoft comes with its own SaaS-based solution, we would convert to Dynamics CRM Online. We did exactly that with the Dynamics CRM Online that Microsoft introduced to the marketplace. I am glad that I did this transition. With the new Dynamics CRM 2011 Online release, the third-party market was given the opportunity to create add-on applications whereby the use of the CRM could be extended to new functional areas.

A key element in our CRM use is a Microsoft Outlook plugin from a company called Linkpoint360 that enables us to save emails either to Account/Contact or Lead contacts. What makes this different to the very effective native tracking in Dynamics CRM is the easiness to flag things to the database. It is just one click “Record to Microsoft CRM” and you will be presented with a dialog box where you can select how you want to save it and if you want to add a follow-up action on the account/contact/lead. This solution is one of those things that you can view as a “non-brainer” and I would highly recommend to test it out and you will see that the money you pay for it is worth and the return on investment from productivity perspective is just ridiculous.

Another related technology to CRM use is marketing and email automation and we made a decision to use CoreMotives Marketing Suite that has a native Microsoft Dynamics CRM 2011 Online solution that enables tight integration to the CRM use. What it really means is that the CRM becomes “the place” to go to for everything. When we send out emails as part of the campaign, everything will be tagged inside the CRM and the analytics will give us a 360 degree view of how the campaign has progressed, how many reads the campaign message has had and what type of actions the user has taken. Very effective and what makes it also interesting is that Coremotives uses Windows Azure as the backend for the solution which is obviously something we like ISVs to do when building solutions. That is part of TELLUS educational series when making selections of technology. This is exactly the same technology that M-Files is using as it backend cloud technology.

As our business model is to work with Independent Software Vendors (ISVs) and Systems Integrators (SIs) we depend on our marketing and sales process as we apply this to both channel building for our ISV clients, sales to end user organizations but also to market our services to prospective ISVs and SIs.

With M-Files integration to our Microsoft Dynamics CRM 2011 Online with LinkPoint360 and CoreMotives we have a fully integrated lifecycle management of our entire marketing/sales process.

Research tools

My life is about research and writing and part of this process I have had to search and pick the best tools for this work. When you think about the process that one performs in research, the internet with search engine becomes one of the most important tools. The question now becomes where you save all of those links that you might need, the regular “favorites” folder in an Internet browser just isn’t enough. I ended up by selecting Microsoft OneNote 2010 as the most important tool for me to collect data and this has become invaluable to me in everything I do. Besides Microsoft OneNote, I also use mind mapping tool from Mindjet to plan and categorize things as I explained further down in this blog entry. The main tool for any of my writing is Microsoft Word 2010 that has been the foundation for two of my latest books and the third one I am working on.

Other productivity tools

Besides the operational tools that I explained above, we use a few other very handy tools when working on projects.

Graphical tools

One that has become a key and core software solution for me is Snagit from a company called Techsmith. Snagit enables me to grab anything from my current screen and reuse that image in my presentations or documents that I am authoring. Snagit has really become a core tool in any work that I do.

Mindmapping tools

Another application is a mind mapping software MindManager from Mindjet. We have used mind mapping in all of our research projects as it gives a nice overall view on the information that you are trying to portray. This has been extremely useful in our influencer intelligence studies that we have worked on during the years.

We started by using the Windows version of Mindjet, then signed up for the SaaS-based version of Mindjet called Mindjet Catalyst but realized pretty soon that it was not able to scale to the mind maps that we were building so we discontinued the use of the SaaS solution. I believe that the horsepower that this type of application takes is not really suited for a pure web-based solution seen from a usability perspective.

Presentation tools

The key presentation tool for our TELLUS workshops and events is Microsoft PowerPoint 2010. For the online video presentation we use Camtasia Studio Screen recording & Video Editing software from the same company Techsmith that is the creator of Snagit software. This software enables us to record PowerPoint slideshows with voice/and video capture with lots of different output options for different devices.

Scanning software for business cards

One of the key tasks that I do after a conference or having met a person is to scan the business card by using Dymo Cardscan 800c device with its embedded software. I have been using this technology for years, but unfortunately since it was acquired by Dymo, I have seen no developments for the software or integration to other solutions such as Microsoft Dynamics CRM 2011 Online environment. They have their own SaaS environment where you can synchronize the cards from the desktop software but that environment does not have any other integration possibilities so it remains to be seen how long I keep using this package. Once somebody invents or creates a solution that integrates well with Microsoft Dynamics CRM environment, I am ready to move over.

I will add new tools/software by updating this blog entry and in future blogs I will go in more detail to explain how each of these tools are used from a practical sense in our daily lives. I would love to hear what other tools you are using and also the use cases behind them.

What is needed for traditional Independent Software Vendors (ISVs) to move to the cloud?

July 22, 2011 by DrSalonen Leave a Comment

If you have not heard enough of the cloud and its importance, you have probably been sleeping or being ignorant of what is happing in the IT industry. I have to say that I am unbelievably excited of having the opportunity to be part of this change and there are many reasons for this. The first and foremost is that the cloud has brought the software industry something new and exciting and a reason to re-learn a few things that keeps the innovation happening in our industry. I have lived three different IT industry eras: the minicomputer, client/server and dot.com era. The latest and very much transformational will create a new generation of solutions/applications that we all will somehow benefit from.

I still hear from many ISVs that “this is nothing new as we have had managed services for years” demonstrates that these naysayers do not really have the understanding what the cloud will bring to the table such as “pay as you use”, scalability etc. The cloud platform will give new opportunities for innovation, opportunities that traditional hosting can’t provide. If you are one of the naysayers, you can keep doing that but I will remind you in a year or two about this and let’s see where we are at that point in time.

If you are an ISV and have not looked at the cloud possibilities, you could be soon overtaken by a competitor that you would never have expected. There are hungry entrepreneurs that want to take over established vendors that might not be any longer as agile as a small startup can be. To become agile again, we have to think outside the box and forget about our old routines and thinking and accept that the change is here and that people will be consuming software in a different way that we are used to. I still think it will be a hybrid model where some of the apps will have to live on the device due to usability factors, but most of the data and logic will stay in the cloud. The cloud era has been here for a while and the early adoptors have accumulated experiences that the rest of the IT industry can benefit from. Some best practices can be found from CIO.com and an example of this is an article “Which Apps Should You Move to the Cloud? 5 Guidelines”. My recommendation is to do your homework (=planning) before you go to the execution phase. The cloud is different and requires different skillsets from people involved with it.

What if you are a traditional software vendor with a legacy application that relies heavily on a traditional business model? What are the actions that you need to take when taking the steps forward? I like the advice from Ben Kepes blog where he lists six different things that he feels that are important to understand. He also emphasizes that it is not that much of a technological change, but more of a cultural change that has to happen for Independent Software Vendors (ISVs). I fully agree what Ben is saying. My typical comment to ISVs is that it is a change in the DNA when an ISV moves to cloud architectures and some people will never get it and I expect there will be some turnover within the ISV community. A good example is the change in sales model where the commission structure has to change for the sales rep whereby the traditional commission plan with one-time deals is gone that made some successful sales reps to really make big money in short-term if successful in closing large deals during a financial year. Let’s view on what Ben Kepes views as the six culture changes are:

1) Accept that disruption is going to occur and identify that it’s better to disrupt from within than without

2) Accept that for disruption to occur, control needs to be given up.

3) Dedicate resource – people, money and time – to building a development team charged solely with finding the “golden disrupter”

4) Accept that disruption will hurt short and medium term revenues, but will ensure long term survival

5) Once the product is there, don’t try and subvert it to suit the current status quo

6) Don’t even think about having the same sales personnel or strategies selling the traditional and the disrupting offering – it won’t work

The first statement is what I always try to bring up in my workshops. You have to face the reality now and not delay the decision to innovate using the cloud. If you do not, you might have the same fate what Nokia had with Symbian platform.

The second statement is also important to understand. You cannot control the change, but you have to try to live with it and make the best out of it.

The third one is what ISVs usually fail with. If you try to push the “cloud transformation” to the same team that is taking care of your traditional software application/solution, you will not only burn these people; you will also fail in your cloud attempt. Software development using cloud architectures is not the same as developing for the traditional software architectures due to many reasons such as multi-tenancy, latency and also how the application is consumed using different mobile devices. Ensure that the people that are assigned to work on the cloud solution will have the means to do it including sufficient investment and realistic expectations.

The forth statement is in line what I have been blogging about for months, where the ISV has to plan how to manage the financial impact on the ISV business with a strong transitioning plan that takes into account the change from perpetual licensing model to subscription-based model where the payments are divided into the contract period. Based on our research and discussions with lots of different ISVs, three years or 36 months seems to be the magic number where the organization should start to see the real benefits of an ongoing subscription-based revenue model.

Statement five and six has to do with the change of ISV DNA that I explained earlier in this blog.

Remember also that traditional geographical boundaries that you thought kept you secure are also gone with the cloud. End users will test-and-try solutions regardless of location and there is nothing that the IT department can do about it. We have seen it so many times that it is not even funny anymore.

ISV transitioning to the Cloud, Cloud Financials and Operational Metrics

June 9, 2011 by DrSalonen Leave a Comment

I divided in my previous blog post how a cloud transition will impact an ISV. The first blog entry was about the change in business model and this blog entry is about the impact in financial model. However, it is important to recognize that the financial side has lots of different drivers and I will only portray a few of these in this entry, and deal with some others such as sales related metrics later.

Independent software vendors (ISVs) have the concern of profitability when running a cloud business. Mature software vendors with ongoing annual maintenance and support revenue are wondering how to make a transition to avoid future cash flow issues. The most typical question that I get from ISV management team members is: “how do we transition to the cloud without jeopardizing our current business?” Unfortunately there is not one and simple answer to this and what nobody wants to hear as an answer is: “it depends”. There are many different variables to consider and some of them are ISV specific and cannot be generalized. It is like comparing two different cars that have a different purpose: one that is used for racing and the other for transportation of heavy equipment. How does one compare these two and what is the comparison metrics?

I can still remember my early career when we did a bunch of comparisons between publicly traded companies in my business school using metrics that was regarded as “industry norm”. We had to learn in our accounting class each ratio that could be calculated concerning income statement and balance sheet. When we added cash flow statement to the equation, we were sometimes completely lost… me included. Once I understood the connection between income statement and balance sheet, life become so much easier. I would argue that ISV management has to do the same thing to really get to understand where a cloud business is taking them. I am sure that the ISV CFO and controller are on the right page, but I am not that convinced that the management team members all understand the impact of the change. That is just my observation from both research and talking to a bunch of entrepreneurs.

It is obvious that accounting metrics has not changed but was has changed is how we measure our operational activities that eventually leads into the financial accounting metrics that we track and our auditors are interested of. If we change our model from classic perpetual software licensing model to subscription-based model and keep our operational metrics in the prior, I will guarantee that the company will run into a wall pretty soon and one of the things that would be recognizable is that there is no cash in the coffers. Do we really know how to recognize revenue in a way that tax authorities are OK with it? Do we know how to recognize service revenue with a software sale from revenue recognition perspective? You do not want to find this out later on when an audit is taking place or when you are during due diligence when selling your company.

The ISV management has many questions to answer. Is your current business and software solution built in such way that it is easy for the current client to move to pure SaaS environment? What is the current complexity of your solution and does it require lots of human interaction to get delivered? Does your solution have lots of integration points to other operational applications? Does your current software solution support a migration to a pure SaaS environment? If it does not, what is the alternative? I am sure you are getting my point here. Running a solution from the cloud is not just to “port” the solution, but it is to have it run natively and I do recognize that this is not easy for many legacy ISVs.

What about the financials? The number one term that you need to familiarize yourself with is CMRR (Contracted or Committed Monthly Recurring Revenue), Churn and Cash. Other key metrics are Customer Acquisition Costs (CAC), Customer LifeTime Value (CLTV) and there is a bunch of others that are related to different operational functions such as sales, marketing etc.

Fortunately there are lots of good resources in the Internet that I have found very helpful in doing my own research. Many of these examples come with lots of use cases and practical advice so my recommendation to any ISV is not to try to figure these out on their own, but to really learn from what is already known.

Some of these resources such as David Skolp that maintains a blog for entrepreneurs with a specific focus on SaaS business as well as Joel York that brings lots of financial mathematics to the game. He also addresses something that I have not seen anybody else do which is the concept of Net Present Value (NPV) in the calculations.

What many ISVs forget is to keep their Customer Acquisition Costs (CAC) down as much as possible as many ISVs are still used to the old model where the prospect/lead needs lots of human interaction before the deal is closed. This is no longer possible in scenarios where the price is on a level that the ISV can never achieve break-even with providing too much support in the deal closing. If you look at the Customer LifeTime Value (LTV) and Customer Acquisition Cost (CAC) figure below, the trend needs to be according to the following picture.

If the ISV did not control the CAC, it would very soon run into a situation where LTV and CAC are getting closer to each other and the ISV would be bleeding money.

Following picture from Joel York gives an even more interesting view how Customer Acquisition Costs (CAC) combined with Churn will impact an ISV and how each customer adds to the accumulated CMRR until it covers the accumulated CAC cost. In the picture the sixth client creates a situation where company becomes profitable. The picture also shows how churn will impact the overall MRR with time.

The picture gives us an idea how CAC and Churn plays a central role in SaaS financials, but there are many other financial measures that an ISV should think of and also measure. Skok provides an interesting breakdown in how key SaaS goals can be divided into different components: Profitability, Cash, Growth, Other (like Market Share) and each one of these components can be divided into smaller components.

If we further divide the profitability into components, this is how it can be seen:

When you view the picture in more detail, you can see how Customer Acquisition Costs (CAC) and LifeTime Value (LTV) drives the customer profitability, Monthly Recurring Revenue (MRR) and Services Revenue drives the overall revenue and when you add expenses and COGS to the formula, you will have the regular accounting related profitability. Measuring your employees can be done from many perspectives and I will address sales measurement separately in a later blog entry.

As we can see, there foundation for an ISV is still the same, to generate ROI for the investment and dividends for the shareholders. What has to change is how and ISV measures the operational activities when running a SaaS business. ISVs that have not made the move towards the Cloud might really have issues with their competitiveness going forward. My recommendation to mature ISVs is to start looking what can be done in the cloud world and get the development team focused on the changes that a pure Cloud solution will require to be truly multi-tenant so the ISV can achieve the scalability benefits of a PaaS platform such as Windows Azure. Stay tuned for more about metrics and changes in operational models for an ISV.

An Independent Software Vendor (ISV) moving to the cloud – what are the financial implications of this?

June 7, 2011 by DrSalonen 1 Comment

I have to say that I am living in a nirvana from a researcher perspective (even if I am an entrepreneur on daily basis working with practical execution). Nobody of us will have the chance to experience too many profound transformations in our lifetime. I was asked to write a report on ISV transformation from traditional software business to cloud business from financial perspective and I loved the nights and weekends that I spent on the Internet doing research. Coffee, music in the background, two large screens side-by-side and the feel of really learning and assembling pieces of information together is a feel that is hard to explain. No wonder I like to write books, dissertations, and reports…

My personal background is that I came from school when minicomputers such as HP3000, VAX/VMS and later UNIX computers where the ones that software was built to. The next era was the move towards client/server architectures where I really made my personal career in product development. Then we all remember the short period of web-enabling solutions and the huge investments in hosting facilities which many have now disappeared. This new cloud/SaaS era is much more than just making your solution web-enabled. It will change not only the way you build software, but it will change the way you run your business. Let me explain how by reviewing the picture:

I will start with the business model in this blog entry and continue with the others in later blog entries. The change from perpetual software license model to subscription-based model will change the way the ISV sells its solution and it will change the way the ISV structures its partner channel. It will also change the way the ISV markets its solution. The main driver for this is that the ISV will not be able to sustain its cash flow with a traditional sales model as the sales team needs to keep much higher pace in sales when moving to the cloud environment. The sales model for an ISV has to be either fully automated with customer self-service or it can be highly transactional where you can have some human elements but the amount of transactions will cover the cost of maintaining people to close the deal. The ISV has to be able to control the Customer Acquisition Costs (CAC) as that is one of the key drivers to be able to achieve break-even point and start generating pure profit. This does not typically happen in less than a year, whereby the ISV has to maintain a happy client so they sign up for a new contract period assuming that the contract period is 12 months. I will analyze the metrics in my later blog entries. This just gave you an example of the operational changes that an ISV will experience.

How does an ISV manage to plan appropriate scenarios that it can take when moving to the cloud? Obviously, the assumption is that the Board of Directors have made a decision that the ISV has to make the move to survive in the new global competition where anybody from anywhere in the world can enter the competitive field. There are no geographical borders that will keep the ISV from competition. If you are an ISV from Italy, you can expect to get somebody to enter your territory from France, Germany, Brazil or Bolivia. Once the strategy has been set, you will have to use a model to operationalize your strategy and I am used and thrilled about Dr. Osterwalder’s Business Model Canvas that provides all of the needed elements to analyze and “paint the picture” on a high level. I have witnessed several experienced senior management team members to become enlightened of the power of the canvas and it really has become our number one tool when working with ISVs. The Business Model Canvas consists of nine building blocks: Value Proposition, Customer Segmentation, Revenue Streams, Cost Structure Key Resources, Key Activities, Channels, Customer Relationships and Key Partnerships.

The power of a business model framework such as Business Model Canvas is that the management is compelled to take a position on each of the nine building blocks on a Business Model Canvas. Each building block can also have its own key metrics and these can become the foundation for a dashboard that the management team tracks on the monthly basis.

Besides the question whether the ISV has the right core competence to move towards a cloud business, the key question that any ISV has is how this change is going to impact the financial model and the canvas above shows how the Revenue Stream building block has to be in balance with the Cost Structure block. In the perpetual software business model the metrics on the cost structure and Revenue Streams are completely different.

To summarize, the ISV and its management has many different questions to answer in its journey to the cloud. The first is to make sure that the owners, the management team and the Board of Directors have a common understanding where to go with the strategy. The role of the Business Model Canvas is to help the ISV to lay out a few possible operational scenarios that it can take in its cloud transformation. In my next blog entries I will explain in more detail the financial impact on an ISV when moving from traditional perpetual software license business to subscription-based business model. Stay tuned for more.

Cloud as foundation for innovation: Are you willing to take your company outside your own comfort zone when innovating products?

April 7, 2011 by DrSalonen Leave a Comment

I got the burst and desire to write this blog entry after having read an article about Microsoft and Toyota forming a partnership to develop new IT-based services for electric vehicles when to recharge. Think about it. In the future, the cloud will become the place that connects devices and vehicles and if this is not an opportunity for ISV’s, what is? Also, when you add mobile solutions to this formula of the cloud, you have something that can become big and create a new market for the ISV.

I will never forget the day when I was sitting in an advisory panel with other software executives when one of the participants from a large software company suddenly said with a loud voice to the entire group: you are looking at your business inside the box, not from outside. That was the first time when I had a real wakeup call how the cloud can change not only our lives, but also how products are innovated and how we can make a difference with software.

The cloud has unfortunately lots of hype around it, but many Independent Software Vendors (ISV’s) such as M-Files (Motive Systems) has taken Microsoft Azure as an enabler of new opportunities and not just as an “object for migration”. M-Files is the first Document Management Solution that is built using Windows Azure as the foundation with tens of thousands of users around the world. Windows Azure provides a scalable and robust platform for an ISV to build solutions that can be distributed around the globe.

Anybody can migrate to the cloud, but the winners are the vendors that really look at the current business model and make something bigger of it like what M-Files decided to do. As a software vendor, M-Files will rely upon Microsoft to build data centers and infrastructure to these centers and the role of M-Files will be to innovate on top of this infrastructure. Windows Azure and SQL Azure are part of a Platform-as-a-Service environment (PaaS), but without an application Windows Azure is just infrastructure and there is nothing that you can do with it. Microsoft relies on Independent Software Vendors (ISVs) to build applications that can then be deployed to the Azure cloud and be part of the Windows Azure Marketplace or Windows Azure DataMarket with the possibility to accelerated sales. Other solutions such as Dynamics CRM 2011 Online are positioned to another category (SaaS) and can be consumed “as is” or by customization by the company or a System Integrator (SI).

ISV’s are living in turmoil. Some of them have built solutions for years with an architectural model that will be hard to move to any cloud infrastructure even if there was a desire. There are many alternative ways to make the transition, and one of them is to do a gradual move by building extensions that utilize the cloud and this gives the ISV the taste of the cloud and what it really is to develop to that environment. Sometimes the architectural model just is meant to be for the cloud and those are the lucky ones that are typically in the minority.

Having travelled the world, having seen hundreds of ISV’s, I am convinced that the ones that do not even have a transition plan will have huge issues going forward. I have analyzed the situation from System Integrator (SI) and Independent Software Vendor (ISV) perspective and I have to say that both groups will benefit from the cloud if positioned correctly. The former can serve the latter in the transition and the latter should be thinking and innovating outside the box. Think big, do not think about migration, but think about things that you were not able to do in the past that you can do now. Ulf Avrin provides advice in his blog entry in the transitioning to the cloud and what types of changes one can expect in the transition.

Do you have a transition plan in place and are you going to benefit of the cloud?

Will Independent Software Vendors (ISVs) without a cloud strategy have a slow but certain death?

October 10, 2010 by DrSalonen 2 Comments

Independent software vendors (ISVs) and system integrators (SIs) will have a wakeup call very soon unless they spend some time contemplating how the cloud will change their strategy. What I am seeing around the world is that innovative ISVs and SIs are eating the lunch of traditional and more established vendors and I expect this trend to continue. This is not just a change from client/server era to cloud architectures; the change will have a tremendous impact on how we consume software and what end user organizations expect ISVs and SIs to deliver. My company is getting requests from very traditional end user organizations to move their solutions to the cloud and this is happening in an ever increasing pace. The most logical move is to move email and document collaboration to the cloud to be followed by accounting if you are in the SMB space.

My professional career started when the mini computers were the hot platform for software development. Mainframes were still very much the main platform for large organizations, but mini computers with HP 3000, Digital VAX/VMS and UNIX grew in market share. It did not take long until client/server architectures grew in popularity and this is the era where I led product development of more than 20 software products in the business intelligence/data warehousing and forecasting/planning domain.

Jumping forward to the cloud era (ignoring some trends such as PC etc.), I have heard many people referring that it is the same thing as mainframe era. In some respect it is, but there are considerable differences as well. These differences have to do with how we innovate and how we build software to be consumed by the outside world. The mainframe era was more contained to services inside the corporation and any outside connection was controlled via physical machines or in some cases pre-determined integration mechanisms. Cloud era will not change this, but it will change the way organizations interact from within the organization to the outside world and how they consume services provided by software vendors.

The cloud era is completely different to any prior era when you view it from software development perspective. The software world (Internet at large) includes a massive amount of services providers that expose services that can be consumed by third-party software development organizations. A good example of this is Microsoft Azure platform and the new services Dallas (codename as of now) that allows developers and information workers to easily discover, purchase, and manage premium data subscriptions. In this case it will be more about data, but it could be anything, anything at all that software vendors are melding into their solution and building a composite application. Gone are the times were small ISVs were focusing on building infrastructure elements/components. I can still remember the times when software vendors were developing infrastructure to enable applications development. I have also been forced to spend money on building proprietary communication protocols based on SNA and TCP/IP as it gave our solutions a competitive edge. This is history and will never come back again.

Is consumer buying behavior also changing how corporations will buy software in the future?

I am tempted to claim that consumers are driving buying behavior in corporate world as well. Executives are now exposed to software solutions on the net and are forcing corporate IT to view the cloud world with applications that are consumed based on use. Executives download apps to their smart phones and get exposed by younger generation how apps are used from the net. The question that many executives might have is why some of the internal applications that are used in the corporation are so clumsy to use and any change to the system takes weeks/months to accomplish. You have probably read in business papers and magazines that sales of traditional enterprise solutions are not growing anymore the way they used to. It could be market saturation, but I also believe that there is a fundamental change in adding solutions that take care of the issue and not try to solve all of the problems in the world. This could be very smart for many smaller vendors that sell high quality packages to enterprises with a price point that is very low. It is about easy buying and I know that large enterprise deals are hard to get in today’s economic environment.

There are still enterprise solutions that will not work in the cloud due to many reasons. It could be due to regulatory issues but I am convinced that with time, regulators and lawmakers will have a wakeup call where any country’s competitiveness is founded on openness and not on closing the borders. With the buying behavior changing, some less complex areas are already making huge progress like an interesting software vendor in the security play called Spectorsoft. The company sells and develops Internet monitoring software for home uses, business, education, and government. Most of the sales happen over the Internet and the software is assumed to be easy to install and to use. This will be the most typical scenario when it comes to software purchase.

Software buying can happen in 30 thousand feet

When you review your own shopping behavior, you will also understand how most solutions will be bought in the future. A few days ago on my flight from Seattle to Dallas on American Airlines, a gentleman sitting beside me was doing extensive search on products and made finally multiple different transactions by using his credit card. This has been made possible with innovation in wireless space where American Airlines provides wireless access for its passengers. It is fascinating to think about the new software era and compare it to the era when I started by software career. We can now sign up for CRM solutions without having to talk or consult the software vendor. We can deploy accounting packages in our company such as Intuit Quickbooks Online and we can manage our daily personal financial lives by using cloud solutions such as Mint.com. We can be sitting in 30.000 feet conducting business without really thinking about it. Another gentlemen that was on the same flight was chatting on Microsoft Office Communicator the entire flight with multiple people whereby he did not miss any working hours as we were flying towards east. He seemed to spend most of our 4 hour flight using the messenger.

My company is run in the cloud and any solution that is not SaaS-based, will not be considered

I run my business in the cloud. We have not owned or managed a single server since I started TELLUS more than five years ago. All of our operations are managed from the cloud such as accounting, email, collaboration, project management etc. I do not consider any new solutions that are not SaaS-enabled and this is the situation with many other organizations as well. The market is moving into “targeted” point solutions where we buy and consume services from the cloud. Integration of these solutions to possible onsite applications needs to happen either in the cloud or in some on-premise integration software tool. Integration still remains a factor that prohibits large organizations to move its operations to the cloud, but there are already numerous different solutions that enable integration between on- premise and off-premise (cloud) solutions. With time and new cloud solutions in the enterprise space, integration issues will become easier and new standards and interfaces for integration will emerge.

Maybe not this year or the next, but I am convinced that solutions will be based on “good enough” concept where organization buy solutions they consume on the need, and not on the “elephant” model we have been used to. A typical ERP project with customizations will probably be forgotten in the future and workflows and processes will be built in a new way that does not take down the company from both cost and labor perspective.

Large organizations with ongoing cost cutting can stifle innovation

What makes the new cloud ecosystem interesting is the innovation that can happen around it. Any software company, anywhere in the world and of any size, can bring new innovation and become something in the new cloud era. Some large organizations have been focusing on cost cutting avoiding risks instead of taking bold moves to create new market entries or new products. One of these fatalities has been Nokia as it has been reported by the press like New York Times recently.

According to the press, Nokia has had many of the ideas and prototypes built that Apple is now riding with, but management has not had the courage to make them to become true. Then on the other side of the spectrum is Apple that is known for bold moves such as iPhone that Nokia positioned to consumer with marginal importance. It reminds me of Nokia’s miss on the Motorola flip-phone market with the results of huge downfall in the US markets. With new leadership by Stephen Elop Nokia is trying to change its course. The change has already started by two senior executives leaving the company. The first announcement was when Nokia smartphone head Anssi Vanjoki decided to leave. The second noticeable departure was last week by Mr. Ari Jaaksi, the leader of MeeGo platform. I am sure we will hear more news in the upcoming weeks of additional changes. The incumbent Apple has also been able to put many established smart phone vendors in disarray and the rise of Android phone software platform will give additional grief to all vendors, including Apple.

Software is everywhere and software will be embedded in our daily lives.

I expect the software market to bring new innovative solutions that combine the cloud with smart devices that communicate to the cloud. This will create new opportunities for ISVs around the world and the winners will be the ones that are innovative and create new solution areas and products. Software is part of our lives already today and will continue to be even more so in the future. Embedded software will continue to rise in importance which will also create new opportunities for rising ISVs around the world.

One of the leading software development tool vendors MetaCase has been able to penetrate the embedded software space with its innovative domain-specific modeling tool that enables more effective variation of software products from a platform. This type of software product line engineering will also be of great importance to enable rapid variation of embedded software solutions and still maintaining the quality of the end product.

A couple of weeks ago I had TXU Energy install two new thermostat controllers to my house that enables me to control heating and cooling in our two story house. We have two cooling units and each of them can now be controlled from the Internet and enables us to save hundreds, if not thousands of dollars each year. The temperature in Texas is brutal in the summer so any optimization of cooling has a big impact on our electricity bill. I can create multiple profiles based on our family patterns (when we are in and out) and the system feeds information to the cloud and the cloud provides me information how to optimize my electricity consumption. This is a terrific example of intelligent use of web services, where I have much better handle of my daily/weekly/monthly electricity use.

Another example of smart devices is Fitbit device that enables me to track and control my calories burnt, steps, distance and sleep quality automatically. Whenever I am close to my laptop with the Fitbit device, it automatically loads data of my daily movement to the cloud. I can compare other people in the same age and get additional information of my health based on real data, and not on some assumed numbers that I have estimated. This is made possible by intelligent and embedded software that is becoming even more relevant in the future.

Cars are full of software devices and embedded software. My son and wife has a Ford car and both of them have Microsoft Sync that enables automated synchronization of music playlists, phone books and hands free phone use when driving. The system also provides information about vehicle health, business search, traffic alerts, 911 assist and many other things. All this is managed by GPS, wireless and Internet technology.

Software ecosystems with cloud will change ISVs whether they want it or not.

Some software domains have been slow to move to the cloud space, but this is also changing and I will be writing another blog entry of this topic very soon. One of these domains is business intelligence/data warehousing space. There as some challenges in the BI/DW arena concerning the cloud, but many of these perceived obstacles will hopefully go away sooner or later with new innovation and solutions.

Some ISVs in smaller countries/regions have been protected from competition, but the cloud will also change this slowly but surely. There will always be new software vendors (ISVs) that are soliciting business across borders and many organizations are willing to test out new solutions even if they do not know anybody from the software company. Yet again, watch your own behavior when consuming web services/solutions. Do you really care where the solution is from? The only thing you might want to make sure is that the SaaS/Cloud vendor has an option to take backups of the data to a local environment in case the vendor disappears from the marketplace.

ISVs can’t avoid developing for the cloud anymore. I am surprised how some enterprise vendors and SMB ISVs defend their turf by concluding that cloud is not an option in their software world. Not only are these conclusions wrong, they might be lethal for the company when considering the future. According to research, cloud adoption is accelerating specifically in the US market and if old trends are intact, rest of the world will see similar kind of growth as well.

Another clear trend that I have noticed is that organizations do not care anymore to have hugely complex applications/solutions and prefer to buy user friendly solutions that can be quickly deployed. I am convinced that the famous multi-year ERP deployment era is gone and organizations require solutions that can be easily purchased and quickly deployed. What ISV organization have to recognize is that the perception of solutions is changing whether we want or not and the price points and the usability and deployment is change forever. It will still take a few years for most organizations to move towards consumption-based software world, but it will happen as we have seen in so many cases.

If you are an ISV, you do not want to miss this window of opportunity to be innovating something new and get your footprint in the market. Does your company have a strategy for the cloud yet? If you don’t, you should take action now before your competition will eat into your market share.