More businesses are transitioning from traditional on-premises software to SaaS subscriptions than ever and for obvious reasons. SaaS model has experienced a massive growth over the recent years, while the growth rate of on-premises software has been pretty stagnant. We have already covered the benefits of using SaaS solutions and how the SaaS subscription model can be a game changer for SMBs so you might want to have a look at these posts for more details.
Despite all the benefits inherent to cloud computing, there are still a few things businesses need to consider when transitioning from traditional software to SaaS solutions. Transitioning into the cloud is like a chasm that businesses have to cross to move from present to the future.
However, to cross the chasm they have to rethink how they do businesses and understand the challenges associated with the transition, including operational, technical and financial challenges. Setting the right SaaS strategy, being ready for business transformation and learning from companies that have already made the move can help a lot in the process.
SaaS strategies can vary according to business objectives and although most successful providers will help businesses prepare for the transition, there is no one strategy that works perfectly for all companies. Businesses want to cross the chasm as quickly as possible, but a more measured approach helps a lot in the long run. Considering the competitive dynamics and the customer is essential when evaluating different transition strategies and picking the level of transition and speed. SaaS might be the only option for some businesses, while some might view it as the last resort.
Understanding the Challenges
Moving into the cloud is a business transformation rather than just being a change in the pricing model. It’s not uncommon to see businesses underestimate the challenges and level of business transformation associated with the transition.
On the other hand, many businesses that are hesitant to make the transition are the ones who fully appreciate the level of business transformation required and don’t want to take up the challenge yet. That’s why businesses should avoid check-the-box approach and carry out due diligence otherwise, their huge ambitions might not get in sync with the reality later on. Not having a proper understanding of the challenges associates with SaaS can lead to bigger problems down the road and inhibit growth.
Although the initial cost of SaaS solutions seems pretty low compared to expensive on-premises solutions, things are not as straight forward in the long run. What makes it difficult to accurately predict future cost is the scalable and on-demand nature of SaaS solutions. Businesses experiencing rapid growth might need to upgrade their subscriptions sooner than they thought. While it’s a good thing from a business perspective, it makes it difficult to predict subscription costs.
Better and accurate financial analysis & reporting, management reporting and considering sales forecasts can help in this regard. Managing security is another significant challenge that businesses have to face, which comes at additional cost. Wasted cloud spend increases the overall cost (around 30% waste on average), which makes it important to optimize cost.
Cloud computing in general and SaaS in particular is advancing at a rapid pace, which often makes it difficult for businesses to keep up with the modern technology. As a result, this increases the cost associated with hiring highly qualified professionals. This can be an issue for small and medium businesses that want to keep up with the technology but don’t have financial and technical resources to manage everything.
Regular training and development of the IT staff can help a lot, while many of the tasks can also be automated by using DevOps tools. These tools make it easier for SMBs to manage things such as monitoring resources and usage patterns, automating backups and optimizing security.
IT Governance and Compliance
Proper maintenance, implementation and control of IT assets requires well-defined IT polices, governance and control. IT assets are meant to support business goals and strategy and not all businesses have complete control over provisioning, operations and other aspects of their IT infrastructure. To minimize discrepancies, businesses need to include the cloud into their IT governance/control policies. This also relates to small and medium businesses that need their IT staff to play a major role in choosing, brokering and governing SaaS subscriptions.
Compliance can especially be an issue for businesses that need to move their data to the cloud or want to use cloud backup services. The data has to comply with applicable laws and industry regulations. For example, HIPAA compliance is required for US healthcare organizations, while PCI DSS and SOX compliance is mandatory for retail companies.
Organizations have to choose a provider that provides compliance to local laws and industry regulations and is itself regulated by those standards. In some cases, both companies and vendors might have to provide additional input to ensure compliance despite the vendor offering certified compliance.
Businesses have to depend on the service providers when it comes to performance, which is tied to various critical business systems such as BI. The SLA (Service Level Agreement) determines the kind of performance and uptime companies should expect from a provider.
Although rarely, outages do happen and provider must have the right processes to notify customers on time. The SLA should clearly define the processes and steps a provider must take when such things happen. Real-time monitoring helps mitigate most of the issues related to organization’s lack of complete control over data processing.
Migrating an app to the cloud can get pretty complex and challenges can arise due to tight deadlines and budget. Security challenges, extensive troubleshooting, application downtime and cutover complexity are among the most commonly cited challenges during the migration phase.
Segmented Adoption and Usage
A large number of businesses transitioning to SaaS solutions don’t actually have a robust adoption strategy. This can lead to various issues including lack of shared standards and ad-hoc security configurations. Strong IT governance, centralized IT and robust control policies greatly help make the SaaS strategy inline with adoption and usage.
Multi and Private Cloud
Businesses, especially enterprises and large businesses have to manage multiple clouds, while many are combining both public & private clouds for better control. Building a private cloud can quickly become a major challenge for businesses that have it as a top priority. Although building one has the significant advantage of having in-house data and complete control, businesses have to manage everything themselves. Automation of common manual tasks and orchestrating them streamlines things and ensures that each tas is executed in the right order.
According to Gartner, by 2020, 80 percent of old providers and all new entrants will offer services based on a subscription model. However, businesses don’t have to rush and move all their products, services and customers to the new model at once and cross the chasm quickly. The transition from on-premises to SaaS solutions can actually be a lengthy process that involves proper due diligence, following a well-defined SaaS strategy and monitoring. For most businesses that want to keep up with modern technologies the transitioning is not a question of ‘if’, but when and how well.