Moving from traditional on-premise licensing to a SaaS Usage-Based Model

The subscription economy is clearly eating the software: a more predictable cost/revenue model including new product offerings on consumption or per-usage basis, giving customers the absolute flexibility to try new solutions and expand usage as their needs grow.

Nevertheless, moving to SaaS is not an easy exercise. 

It requires a total shift in the way the entire company operates.

And everyone, from sales and marketing to operations and finance needs to align on this new way of running the business.

For enterprise companies making the move, here are the three key areas to focus on :  

1) Pricing and bundling

The change to a subscription model fundamentally transforms the way products are developed and delivered. Enterprise technology companies must offer a compelling value proposition to persuade their customers to switch as well as provide a simple and straightforward path to do so.

=> Incorporate data-driven customer segmentation early while developing the company’s strategic roadmaps.

2) Sales transformation and customer incentives

The move toward subscription also requires enterprise technology companies to completely rethink how they incentivize, 

measure and equip their salesforce and third-party sellers

=> Be prepared to demonstrate the costs and delivery benefits of subscription models. 

3) Operating model change

Many enterprise technology companies are often unprepared for the move or are unsure about their organizational readiness. 

=> Develop an end-to-end integrated operating model to support a combination of new and existing offerings

In summary: 

The transition into a subscription or consumption-based delivery model requires fundamental structural changes along with adopting an entirely new perspective on customer relationships.

Based on your company’s maturity for this change, there has never been a better time than right now to join the move.

Source: Ernst & Young