If you’re a traditional on-premises software company, you’re in the right place. Today, I will talk about how cloud computing can transform your business. In a subsequent Cisco Blog, I’ll discuss the implication this move will have on your sales and distribution strategy.
Model One Business Model
Traditional software companies have operated in a Model One Business Model. In this on-premises model, the customer buys a perpetual license for software and then pays annual support and maintenance fees, which turn out to be another kind of subscription revenue stream. While that might seem to be the end of the cost to the customer, it’s not. The customer is going to have to spend money managing the software – and it’s not cheap.
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Tags: CIO, Cloud Computing, isv, onpremise, software
Many years ago I found myself talking to venture capitalists about the differences between SaaS, outsourcing, ASPs, MSPs, online applications; etc. Also I noticed that my Stanford students had little understanding of the economics of software, so I developed the idea of seven business models to cover everything in the software business, and remove the buzzwords and replace them with economic models.
In my previous blog post we discussed the first four models, this post will cover Models Five through Seven.
We ended the last blog talking about Model Four being able to provide management of the security, availability, performance and change of the software at nearly 10x less cost.
The question we left with was “how”?
How is it possible to decrease the cost of management without just paying people a fraction of what they made previously?
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Tags: business models, CIO, Cloud Computing, isv, on-premise, open source, outsourcing, SaaS
Many years ago I found myself talking to a venture capitalist about the differences between SaaS, outsourcing, ASPs, MSPs, online applications; etc. Also I noticed that my Stanford students had little understanding of the economics of software, so I developed the idea of seven business models to cover everything in the software business, remove the buzzwords and replace them with economic models.
In my previous post, I talked about the Seven Ways to Move to the Cloud. In the second issue (there’s a lot here), I’ll break this into two separate posts, discussing models one through four here, and models five through seven in the next issue publishing on Monday, March 2.
Note the dollar numbers used throughout are intended to be relatively representative.
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Tags: business models, CIO, Cloud Computing, on-premise, open source, outsourcing, SaaS
While cloud computing is based on a number of technology innovations, I’m going to write for the non-technical person who I think needs to understand this major shift. In the end, cloud computing will affect every business, every industry. I’ll start this blog by sharing a story.
A few years ago, I was in a meeting with six CIOs of one of the largest healthcare providers. I asked each a question as they introduced themselves: “What are you working on?”
The first CIO, Bill, replied, “I’m working on a strategy to move to cloud.”
Next, I asked Mary, “What do you do?” Mary also said she was working on a strategy to move the cloud.
We got through every one of them and every one of them had the same answer.
I asked, “So what does that mean, working on a strategy to move to the cloud?”
They collectively said, “We’re really not sure, but we’re working on it.”
I wasn’t actually there to talk to them about cloud computing, but I said, “Give me 10 to 15 minutes to help you think about what it might mean to move to the cloud.”
I’d like to share an abbreviated view of this discussion in this blog, beginning with reviewing my cloud-computing framework.
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Tags: CIO, cloud, Cloud Computing, move to the cloud, services
Let me start with a few ideas that should be pretty uncontroversial:
- Digitization is transforming even the most old-school industries. Who would have thought the taxi cab business would get turned on its head by an app?
- The old way of doing IT—where every company builds and maintains its own vast infrastructure—is going to change. For decades, survey after survey has said that companies spend 70 or 80 percent of their IT resources just to keep the lights on.
- Companies want to shift their IT risk onto IT companies. They want to press the proverbial “big red ‘easy’ button” on their networks so they just work.
Cisco is taking a giant step in that direction with Cisco-Meraki cloud managed IT. The idea—which should be pretty uncontroversial—is to make the network as easy to operate as your iPhone.
When Cisco acquired Meraki a couple of years ago, people thought of it as a company that supplied wireless networks to midsized businesses. But it’s never been just about Wi-Fi or small and medium-sized businesses.
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Tags: analytics, CIO, Cisco Meraki Cloud Managed IT Challenge, cloud managed IT, cto, digitization, Enterprise Networking, Internet of Everything, IT, mobility