Microsoft is bowing out from traditional software licensing and in future will offer its flagship Windows as a Service (WaaS). Software vendors, who do not want to be left behind and also want to tap into new customers, should urgently investigate offering their own software not only “on-premises”, but also as “Software-as-a-Service” (SaaS).
For the past few years, Microsoft has, step by step, transformed its licensed applications – via a BPOS (Business Productivity Online Suite) and later Office 365 – into cloud-based services. The next logical step in this direction has been the launch of Windows 10, which will gradually migrate into Windows-as-a-Service (WaaS). The times, when many were highly anticipating the new Windows version, are coming to an end as in the WaaS model, only certain updates are performed in the background. Simply put: Microsoft not only changes its software offer, but its complete business model.
Here the fundamental transition from traditional on-premises licensing to subscription models is not really anything new. But the fact, that with Windows 10 Enterprise (E3 and E5), Microsoft has also, relatively quickly, taken its Windows operating system onto the journey into the cloud world, has been unexpected for many business customers. If these customers had been paying more attention at last year’s Worldwide Partner Conference (WPC) 2015, they may have not missed the following words from Phil Sorgen, the Vice President of the Microsoft World Wide Partner Group:
“In this mobile-first, cloud-first world, those businesses that embrace technology to reinvent themselves and their industries will thrive, and those who embrace status quo risk extinction.”
It is therefore vital for software vendors to get on the SaaS train with their Windows software if they do not want to be left behind. But what needs to be considered? First of all, a software vendor needs to visualise the different roles in an SaaS business. Apart from their own role as developer, there is that of SaaS providers, such as a data centre. While a software vendor grants licenses, the SaaS provider takes over contract agreements, billing, as well as SaaS management at the client premises. Data is processed and saved in the data centre.
Due to the complexity, it is advisable for a software vendor to rely on an eco system, such as the SaaS provisioning offer of oneclick. It makes it possible to put together an attractive programme package for customers, which complements software with other important offers such as infrastructure services. They also benefit from existing platform features to execute standard processes such as single sign-on, 2-factor authentication and automated user provisioning. Another possibility is the use of a Platform-as-a-Service solution (PaaS) such as Microsoft’s Azure Service Platform. Thereby the software vendor already uses the development environment in the cloud and receives there other additional services.
Of course, a software vendor can, at any time, engage with their customers as an independent SaaS vendor and market their software as a service. There are various hosting options in data centres available for this. However, it requires a stable financial ceiling to use this option. Another disadvantage is that as an independent SaaS provider to its customers, the software vendor also becomes responsible for the performance of the data centre and its prevailing security standards.
Above all, it means that a software vendor, who plans to make its Windows software SaaS enabled, should think about his business model. It is recommended to consult a trusted advisor. The advantages that the SaaS business provides for customers are evident.
Advantages of Software-as-a-Service
There is a wide range of SaaS applications. Software-as-a-Service makes sense in particular in organisations, in which teams need to access the same application from different business locations or while working remotely. Examples would be sales staff, who all use the same CRM solution or a team that works on a joint project. SaaS applications are recommended especially in a project business, as the project management software is only required for a limited period of time. Another strong argument for SaaS is the cost saving for the customer business, which can reduce the in-house IT infrastructure and connect virtual machines from the internet during peak demand. On site, SaaS providers can take on many tasks of the IT department (e.g. install updates), which also reduces costs.
Conclusion
The IT worlds is in a constant state of flux and if vendors do not want to miss the boat, they need to think about how they are going to offer their software in future. Windows 10, having taken the step towards Windows-as-a-Service (WaaS), is setting the direction. Now the right business model needs to be identified to keep pace with the worldwide market.
Blog contribution by Phil Sorgen (WPC 2015): http://blogs.microsoft.com/blog/2015/07/13/microsoft-announces-new-innovations-and-partner-opportunities-at-its-annual-worldwide-partner-conference/#sm.0000z3uob2zpjdl8sml1132l6zqrp
