10 Lessons from a SaaS Transformation
After three years of hard work, one software CEO shares best practices for a successful transition to the SaaS model.
By Brian Zanghi, Pragmatech
Jul. 14, 2007
When I reflect on the experience of transforming Pragmatech from a traditional enterprise software vendor to a Software-as-a-Service (SaaS) company, the expressions "extreme makeover" and "creative destruction" spring to mind. But the reality is that even those phrases don't quite capture the full impact of the undertaking.
After three years of transition, we are beginning to absorb some of the lessons learned as we approach the culmination of the transformation process. Based on our experience, here are some guidelines that might help other software vendors considering adopting the SaaS model to improve their chances of success.
1. Prepare to be a Trailblazer
Lesson One for any company seeking to adopt the On-Demand model is "don't look for road maps to guide you." They don't exist. This is virgin terrain. Be prepared to experiment and follow the process of trial and error. We learned this from a number of companies who have made the journey, including Red Hat. While they provided valuable bits and pieces of specific information - such as how to structure sales organizations, design comp plans and create new channel strategies - transferable master plans and blueprints simply don't exist. You are on your own.
2. Embrace Total Change
There isn't any part of a company that isn't profoundly impacted by the transition to the SaaS model. We tried to deal with the changes gradually - working through each department one at a time. Looking back, we could have accelerated the changes and sped up the entire process. We now realize that we had to change the thinking of the entire company, and doing that piecemeal isn't the most effective approach.
We also came to realize that the longer a company has worked in the enterprise model, the more difficult the change process is. I cringe when reading about Microsoft's ongoing efforts to incorporate (some would say co-opt) the SaaS model. Thirty-two years of enterprise software thinking stands in the way of achieving that objective. We wish Ray Ozzie well. He has a monumental task in front of him.
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After three years of transition, we are beginning to absorb some of the lessons learned as we approach the culmination of the transformation process. Based on our experience, here are some guidelines that might help other software vendors considering adopting the SaaS model to improve their chances of success.
1. Prepare to be a Trailblazer
Lesson One for any company seeking to adopt the On-Demand model is "don't look for road maps to guide you." They don't exist. This is virgin terrain. Be prepared to experiment and follow the process of trial and error. We learned this from a number of companies who have made the journey, including Red Hat. While they provided valuable bits and pieces of specific information - such as how to structure sales organizations, design comp plans and create new channel strategies - transferable master plans and blueprints simply don't exist. You are on your own.
2. Embrace Total Change
There isn't any part of a company that isn't profoundly impacted by the transition to the SaaS model. We tried to deal with the changes gradually - working through each department one at a time. Looking back, we could have accelerated the changes and sped up the entire process. We now realize that we had to change the thinking of the entire company, and doing that piecemeal isn't the most effective approach.
We also came to realize that the longer a company has worked in the enterprise model, the more difficult the change process is. I cringe when reading about Microsoft's ongoing efforts to incorporate (some would say co-opt) the SaaS model. Thirty-two years of enterprise software thinking stands in the way of achieving that objective. We wish Ray Ozzie well. He has a monumental task in front of him.
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