Transformation areas for ISVs - Strategy

In this article we’re going to talk about one of those transformation that you as an ISV have to deal with. We’re going to deep dive into strategy and talk about the topics that require some thought.

Published: 20 February 2020

In this series we are going to write about the 5 transformation areas we see for or with ISVs when moving from a legacy application to a SaaS application. We’re talking about legacy applications, tho the same applies to web applications running in a private data center. Although not all topics relate to web applications, a lot of them do (when moving to the public cloud). The five transformation areas we see with ISVs are Strategy, Finance, Organization, Go-To Market and Technology. They have some overlap, or one impacts the other a lot, so you can’t really see them as five different decisions areas, but they all have unique questions and topics to consider. This article will cover the strategy change and choices an ISV needs to take into account when moving from a legacy application to a SaaS application in the public cloud. I also recommend you to check out the ISV playbook by Microsoft. They cover a lot of these topics including in-depth research that can help you make the right decisions when moving to the public cloud.

In this article we’re going to talk about one of those transformation that you as an ISV have to deal with. We’re going to deep dive into strategy and talk about the topics that require some thought. Are you going for a single cloud or multi-cloud strategy? And what about your expansion plans, have you thought of geo-expansion? We’re also going to highlight things like Governance, partnering and security as part of this transformation.


Let me state that when I talk about a legacy application, I don’t mean that in a negative way. It is simply the shortest way to say: “an application which is based on older technology that is currently available in the public cloud”. That having said, you once saw a business problem in a specific industry and you wrote code for that problem and compiled an application which solved the problem. Job well done! Now when companies are being “cloud born” and everything is moving to be software defined, you need to work harder than ever before to catch up with this cloud and SaaS wave that is crashing into your customers. You want to stay relevant for your end users, you want to add new functions and you want to out smart your competition.

Moving to SaaS application could do all that for you. But what path do you choose?

Cloud or multi-cloud?

First of all, if you move to the public cloud do you go multi-cloud or do you choose for one cloud. If you choose for example Microsoft Azure it does not necessarily mean that you can’t switch to AWS, but it is always good to think about your exit strategy. Where you first sold licenses to customers and if that one customer was impacted with bad performance, you would work on that and fix it. If now your public cloud isn’t performing all your customers are impacted. A not performing cloud is usually due to bad sizing and architecting, so before you you switch, always start with a good design and please read orf checklist how to migrate to Azure. Obviously, this choice has a lot of impact on your SaaS design. My advice is to make a comparison of the preferred cloud vendors taking in to account: pricing, performance and partner community that can help you migrate and manage, security and governance etc.

Geo Expansion

Let’s assume that you moved to the public cloud. Now your application is scalable, secure and you can expand to different countries. For example: a software company from Germany, with its software on Azure, can now sell their application in the US. Deploy it there and all the same standards apply. When moving from legacy to SaaS do you want to expand your business in different countries? If that’s the case, have you thought about different time zones and supporting those customers 24 x 7. You are now always open for business. If you expand, do you also sell your licenses 24 x 7 and online? Or do you still require a face to face talk with each one of your customers. You need to think about that. If you are a SaaS application you can use different marketplaces to expand your business into multiple countries, but your billing also needs to align with that. Please see this article on how to expand your business through the Azure marketplace. More on the financial side of geo expansion in the next article about the financial transformation area.


Cloud governance and security

If you migrate to the cloud, and every customer is impacted when something happens, you need to think of a governance model and a security model. How do you manage the cloud from this perspective. One of the resources Microsoft provides is Azure Lighthouse, which helps you to audit and log your activity in Azure. You can find more on this topic here. Azure lighthouse is free of charge to use. And you can manage multiple customer environments, if you would like as an ISV. If you trust a partner with the management of you Azure environment, make sure they use Azure lighthouse. They will enable Azure Log Analytics and Azure Security Center (which comes with an extra charge but is worth enabling) and make sure that you are in charge of your security and compliance. For more information about the Azure and compliance, you can also visit the Azure service trust portal and learn more about all the certifications and audit reporting. 

One more point on this topic. If you want to adopt cloud as an ISV you can also use the Cloud Adoption Framework for how to set up your cloud governance. It not only helps you with thinking about design etc, but also about your employee expertise and how to get them to the next level which is necessary for your cloud strategy. You can find the cloud adoption framework here and a blog on how to start with the cloud adoption framework from Wesley Haakman here.


Migrating to the cloud as an ISV could help you create more scalability, uptime and performance, hence more relevance going forward. But the question is are you going to do it all by yourself or are you going to use a partner. In the Microsoft landscape there are indirect partners who are connected to the distributors like Tech Data, Comparex, ALSO and there partners who directly buy the cloud consumption with Microsoft. The latter are called direct partners. One advantage of working with a partner who’s connected to a distributor, is that they are really strong in go to market and have a marketplace. More on that in one of the following blogs about ‘go to market as a transformation area for ISVs’. Besides buying it from a partner you can also use the credit card for payment or change that to direct billing, but it is not supported by default by Microsoft. You have billing support, but no technical support. You need to purchase that. If you think it is worth thinking of partnering, think about it not only in a technical way but also in terms of management of the cloud platform, so that you can develop new functions in your new cloud app. And think about ways to help you innovate faster, create more business and truly reach scale, so that you can save costs and improve across your entire business. That’s what a partnership means in my opinion.

More about pricing, cost control and billing models in the next blog about finance in the cloud as transformation area for an ISV.