With technological advances making inroads in every aspect of business and otherwise, Independent Software Vendors (ISVs) are not far behind. Increasingly ISVs are adopting the SaaS model of delivery. Traditionally, the on-premise model has been used. However, the pay-per-use option offered by the SaaS delivery model for consumers of software eliminates the CAPEX. It is proving to be a propitious route for businesses wanting to shift from a CAPEX-driven model to an OPEX driven one. In order to move from an on-premise model to the SaaS model ISVs may go through up to three levels of maturity depending on their business goals.
Level 1 is the Hosted Model where the traditional single-tenant software is hosted as a dedicated instance for every customer. Here only the infrastructure is shared between the tenants. At this level, the ISV benefits with a faster go to market. At Level 2, the Hosted and Usage Based Model, the software is still single-tenant and requires a dedicated instance running for every tenant, but the customer is not required to pay for the entire license of the software. At this level, the software licenses are also shared between the tenants and there is greater customer centricity. At Level 3, however, the software is completely multi-tenant. This means that a single running instance of the software can be shared by multiple customers. Here the software instance is shared between the tenants as ISVs look to achieve greater operational efficiencies.
An ISV can choose to move into SaaS model at a suitable level and then migrate to higher levels of maturity depending on the operational efficiency, competitive pressure or customer demands. Depending on the maturity level of SaaS adopted, the ISVs will reap different benefits. The level that should be adopted by an ISV will depend on its short term and long term business goals. Ultimately I believe that the ISV will choose the level of maturity that gives an extra edge over its competitors given that all ISVs will be looking at adopting the SaaS model. The level of maturity will determine the price point that an ISV can offer to its customers while addressing all their concerns around security and data privacy.
A Wipro paper on SaaS maturity evolution for transforming ISVs business explores these levels in detail. Read it
What do you think of SaaS adoption of ISVs and its impact on their business?