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Invest in Transformation (or Risk Becoming Obsolete)

Ernst Veen
February 25 2019

The best business models arise from solving problems. The use of new technology is often a driver. This is how Netflix came about after the founder had to pay a $40 fine after dropping a rented movie off too late. Previously, the Netflix business model was based on renting DVDs for an indefinite period of time that were sent by post. Thanks to the availability of the internet, they started using streaming to offer videos. Netflix had not directly invented the wheel, but by continually adapting their product to the needs of the customer and available technology - including smart security - they have become incredibly successful.

Harnessing Your Own Strength, Together

Earlier I wrote about how powerful and rich ingredients work together and how to use those powers. If you add focus to that equation and can resist the temptation of short gains and other typical pitfalls, this can yield irresistible results.

The proposition that SaaSplaza has made to transform software companies is the result of collaboration within SaaSplaza as a company and with the Microsoft ecosystem. Coincidentally, this was also the starting point of Microsoft Inspire 2018. Utilize your own power together with that of others and unprecedented opportunities arise. "Together you are stronger" is a well-known creed.

All Software is Already in the Cloud... Right?

Software development companies are also looking for a growth strategy. As standard, software is currently available in the cloud... right? National borders no longer exist, and everything revolves around use… or does it? There are more than 25,000 companies worldwide that make business software, but not yet are they all for the cloud or have a cloud offer. Meanwhile there are growth opportunities, but also fear. How do you adjust your strategy? What will your rates be? Calculate your new offer according to usage or per-user. What does your transformation cost and how do you ‘Swallow the Fish’? And how do you ensure user adoption? Do you have support from your own employees who sell and support your product? How do you ensure that your new cloud variant will also be sold? Can you even support this cloud software? And also important, how do you ensure that your customers begin and continue using all new functions?

In October 2018, the Dutch Rabobank published a survey showing that change in the software market is necessary. It states that in five years, about 50% of the current providers will no longer exist in their current form and that the larger cloud providers will play an important role in this.

Swallow the Fish

Re-inventing your business model is a recurring phenomenon for the technology industry. “You can’t make an omelet without breaking a few eggs” is an age-old statement of which the following figure also shows clearly: transforming is investing.

 

Fortunately, you do not have to change your strategic course tomorrow and take a U-turn immediately. As far as I am concerned, you do not have to move all customers and products to these new subscription forms at the same time in order to absorb the cash-dip. In fact, you do not even have to stop selling products via a traditional model. Make the transformation manageable. For example, first make options and new features available to your subscription-based customers, also known as implementing a subscription-first strategy. Obviously, pay attention to this with regards to marketing so that your existing customers know it as well. An important point of attention for success when you continuously add functions is knowledge of your products with the users. Make sure that you can continue to teach users.

In our Dutch-language Masterclass for software companies on March 20, we specifically discuss the financial side of the transformation to subscription-based software.

Click here to register!

Don’t speak Dutch or can’t attend? Not to worry. Click the button below if you’re interested to learn how SaaSplaza can help your software company achieve more.

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