Nov 07, 2011

What strategic considerations do I need to make before a launch offer when moving from traditional software and hardware sales?

If I am a traditional provider of hardware and software transitioning to cloud provider, what strategic considerations do I need to take into account before I release a launch offer? What are some of my options?



I'm not certain that the issue of existing customers fleeing is all that prevalent in the market.  Since most customers have already purchased the licenses and you already have an obligation to support them to the end of the product's life cycle, they are not going to worry or make a switch.


The issue is slightly different than that; If you are a traditional provider of hardware or software, what strategic considerations do you need to take into account before you release a launch offer?  What are your options?


There are three choices:


1.  You could build (or buy) a cloud specific offering targeted to a specific market that is distinct from your current market focus.  That new market could be a new customer segment, new use cases, or customers located in new countries.


2.  You could enhance your offering to deliver "value propostions" that customers associate with the cloud, i.e. I don't want to manage infrastructure, I want flexible pricing options, I want simple and easy to implement turnkey solutions, etc.  Companies are launching new managed service models to bridge the gap between being a pure on-premises provider vs. being a pure cloud provider.


3.  You could completely migrate your product portfolio towards a cloud based model,  This is clearly the most cathartic of shifts, and requires a very dramatic market rationale to justify the move, e.g. if you have a lower share of the market and want to completely disrupt the status quo, or if the new SaaS based competitors are rapidly stealing market share from your business.


Making any of the above shifts is not easy.  Each has associated operating model implications to sales and delivery, as well as corresponding economic model implications.


Dhaval Moogimane, Partner, Waterstone Management Group www.waterstonegroup.com  


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