Given the growing role of digital technology in every business’s operations, independent software vendors (ISVs) have excellent growth prospects for the next few years.
However, the enterprise software landscape is changing rapidly, and ISVs need to be nimble to keep up. The biggest disruption they face is the move to the cloud, accelerated by the impact of the pandemic.
According to Gartner forecasts, the market for cloud solutions – which includes software as a service (SaaS) – will be twice as large as the non-cloud market by 2022. This represents hundreds of billions of dollars in value in game. Yet many ISVs from the on-premises software world don’t know how to create a future-proof foundation for a SaaS business.
This is understandable, given that the transition will affect everything from the organization’s sales cycles and business model to the technology skills it will need. The good news is that SaaS is becoming a way of life for an ISV company. This new approach makes it easier to stay ahead of the latest changes in customer needs and the business and technology environment.
Given the rapid transition to SaaS, the most successful ISVs will be those that started out as cloud-native businesses or started an early transition to the cloud. This transition should be underpinned by a cohesive roadmap that sets milestones for converting on-premises customers to the cloud, reskilling development teams, and releasing new product features.
Choose the right platforms and ecosystems
When transitioning to SaaS, one of the key decisions an ISV must make is which platforms and which vendor ecosystems it will join. In some cases, it will continue to partner with the same vendors as in the on-premises environment; in others, the ease of joining cloud provider markets will create new opportunities.
The ideal partner for an ISV offers a mature development environment that facilitates integration via application programming interfaces. Products from major vendors should complement the ISV’s offering, enabling it to meet customer needs and help customers adapt to change.
Sage, for example, provides cloud-based accounting and payroll software. Nevertheless, we enable ISVs to potentially reach hundreds of thousands of customers in our marketplace, supporting SMBs with a richer solution. We look to ISVs to offer specialized horizontal functionality, such as document management or payment tools, and vertical industry solutions for industries such as retail, real estate or construction.
Get the right architecture
To successfully scale to a cloud-native SaaS product, an ISV must adopt future-ready technical architectures and re-skill their team in relevant cloud architectures and platforms. This involves moving from older monolithic products to a component-based architecture that makes it easier for developers to modify or add functionality.
Microservice architecture and serverless implementations are good starting points. They streamline the development and deployment of new features. It is also essential to work from a single code base to facilitate the implementation, deployment and maintenance of changes.
Finally, ISVs should leverage the public cloud to ensure scalability and speed.
Embrace a culture of continuous improvement
Moving to a future-proof SaaS business isn’t just about the technology, it’s also about the people within the SaaS business. Since the business model involves moving from large quarterly or annual product releases to continuous improvements and smaller product releases, the development culture may need to change. Companies that have not yet adopted Agile and development and operations (DevOps) will benefit.
Automation is another cornerstone of a future-proof ISV business – it relieves their teams of much of the manual work in development, testing, deployment, operations, billing, and customer support. This allows the ISV to focus its resources on developing new product features and staying ahead of technological evolution rather than manual, low-value tasks.
A forward-looking software company
ISVs have huge growth opportunities by championing the needs of SMBs by automating repetitive, low-value activities and providing customers with industry-leading solutions such as powerful analytics/AI capabilities and machine learning. By partnering with the right vendors, they can join a multi-level collaborative community, leveraging the scale and investments provided by leading vendor platforms.
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