SaaS Mindset: Don’t Leave Your On-Premises Customers Behind

By Akshay Patel, Principal SaaS Business Lead – AWS
By Jacob Cokely, Principal Partner Development Specialist – AWS

In the dynamic world of software, there’s a common challenge that plagues providers who have traditionally relied on on-premises licensed offerings: the transition to software-as-a-service (SaaS). As they embark on this transformation journey, they frequently grapple with two pressing questions.

Firstly, they find themselves pondering the stagnation of their revenue streams—a concern rooted in the absence of fresh growth opportunities. Secondly, they watch their loyal on-premises customer base slowly trickle away, lured by competing solutions in the market. How is your company proactively addressing these opportunities to secure a brighter future?

For software companies with a large installed customers base, accelerating the migrations to the SaaS offering could solve for both growth and retaining customers. Software companies with SaaS and on-premises deployments do struggle with real issues.

For example, investing in support for many versions of on-premises software versions and code bases, increasing complexity in operating on-premises customers, convincing customers who don’t want to move because of costs or other reasons, demand from on-premises customers for innovation and cost reduction, or even macroeconomic challenges which create unplanned demand.

In this post, we’ll delve into the strategic investments made by Amazon Web Services (AWS) and the AWS Partner Network (APN) to empower software providers in their SaaS journey to create distinctive SaaS solutions. We’ll explore how they cultivate a potent growth strategy through tailored go-to-market (GTM) initiatives and harness their resources to facilitate the transition of on-premises customers to more modern SaaS offerings.

While migrations can be daunting, we’ll also examine the success stories of other companies and strategies they’ve employed to conquer these challenges and thrive in the SaaS landscape.

Building Innovative and Differentiated SaaS Offerings

According to Forrester’s research study, The Partner Opportunity for Building SaaS on Amazon Web Services, when surveying 2,457 decision-makers regarding their digital transformation strategies, more than 50% of them favored SaaS as the predominant technology business model.

When these software companies think about building their new SaaS offerings on AWS, they are required to think through this experience more holistically, especially around innovation. This inevitably brings them to crafting the ideal product with the appropriate AWS and partner services and where they can stand apart successful SaaS offerings.

Building SaaS can be challenging, and through the years the AWS SaaS Factory has helped hundreds of software companies such as Nasdaq, IBM, Cohesity, Carrier, HashiCorp, Trellix, F5, and many others reimagine and launch differentiated cloud-based SaaS offerings. F5 was an early customer of AWS SaaS Factory, and during the recent 10-year anniversary of the AWS Partner Network here is what F5 shared:

“We worked with AWS SaaS Factory experts to follow best practices for SaaS go-to-market that helped shorten our time to launch by 12 months. The program’s expertise helped us develop a strong SaaS offering to better support our customers.” ~ Dave Morrissey, AWS Global Alliance Director at F5

Building is Not Enough

Building and launching a new SaaS offering is not enough. In fact, it’s the beginning of a journey with many new growth opportunities that lead to eventually scaling adoption of your new solution with global customers in various industries and use cases.

With a differentiated SaaS solution on AWS, software companies unlock new growth opportunities, find new channels and channel partners through the global reach of AWS Marketplace, which allows a 4-5x increase in deal size, up to 50% faster time to deal closure, private offers growing 133%+ year over year with 40% coming from net-new business, and 234% return on investment (ROI) when selling in AWS Marketplace.

AWS Marketplace offers many different ways to offer your solutions to your customers. Explore how you could leverage various models to meet your customers needs in A Total Economic Impact Partner Opportunity Analysis for Channel Partners Selling in AWS Marketplace.

You Are Now Ready to Migrate

Delivering the right product with a differentiated value proposition can be a competitive advantage with customers you’ve had years of relationships with. In fact, existing on-premises customers would prefer to maintain this relationship because you have demonstrated you understand their business. However, migrating on-premises customers is hard and expensive for both your customer and the software provider.

AWS understands this, and in order to help such software companies succeed we have invested to support hundreds of software companies migrate thousands of on-premises customers to their SaaS solutions by leveraging the AWS ISV Workload Migration Program (WMP). These include Teradata, Sage, Seeq, Alvaria, Druva, and others.

“WMP has been front and center to our nearly 50% year-over-year growth with AWS. We’ve seen a big increase in the size of our deals and the global nature of our deals.” ~ Mike Hutchinson, Chief Customer Officer at Teradata

Software providers who have leveraged this program also understand there’s an investment needed to make migrations successful. When we look at these software companies, we find the most common and uncompromised top five best practices success are as follows:

1.It starts with leadership alignment: It’s imperative to begin with the C-Suite and have a clear strategy for acquiring new customers and migrating existing customers to the cloud. Transparently communicate to customers what and why you’re investing in innovation and SaaS, and be clear about the value proposition for existing and new customers.

With this, shift the organization to a SaaS growth mindset across both technical and business teams, addressing sales compensation, product roadmaps, organization models, customer success, pricing and packaging, and other key areas. The most successful companies are bold and visionary in their approach.

“SaaS is an investment we made to deliver the best customer experience across technology and business in partnership with AWS and AWS SaaS Factory.” ~ Anthony Goonetilleke, Group President – Media, Network & Technology at Amdocs

2. Start with SaaS product differentiation: Many SaaS companies struggle to migrate customers because their SaaS solution is not differentiated from their on-premises offering. Beyond feature parity, you must push for true differentiation of your SaaS solution to provide value to your customers.

What are customers looking for and can they unlock these benefits by migrating to SaaS? Whether cost savings, increased efficiency, reduced risk, better customer experience, increased performance, or something else, make sure your SaaS product is differentiated. Create a total cost of ownership (TCO) or ROI calculator and demonstrate how future innovation unlocks new opportunities together.

“AWS helped open our eyes to the process, the go-to market, the technical merits of the architecture, and many other aspects of delivering a SaaS offering to the market” ~ Tim Eusterman, AVP Solutions Marketing at BMC Software

3. Dedicated teams drives scale: Successful SaaS companies understand new customer acquisition is different from migrating existing customers. Let one team focus on messaging and onboarding new customers, while building the second team to be focused on customer challenges and making migrations to SaaS easy.

Create a migration pattern that includes discovery/assessment of the on-premises workload and third-party application dependencies, prescriptive migration plan (mobilization plan), and epics for the migration of the actual workload. Leverage tools such as AWS Database Migration Service (AWS DMS) or AWS Application Migration Service to add automation and simplify the migration. When in place, this can drive scale.

“With AWS, it has given us the opportunity to do co-sell together leading to over 1,400 migrations already. And it’s helped lower our overall cost by nearly 30%.” ~ Marc Monday, VP Partner Strategy and Sales at Sage

4. Growth comes with incentives and new GTM offerings: Go-to-market approaches that worked for on-premises sales may or may not work for SaaS sales. The move to SaaS brings new challenges and opportunities in your growth strategy.

For example, AWS Marketplace provides a route-to-market to make purchasing your software simple and easy for your customers. If you relied on the channel for sales of your software on-premises, you can take advantage of Channel Partner Private Offers to allow partners to maintain the financial and contractual relationship with customers in AWS Marketplace. Channel partners can even list their own migration services as an offering for customers. Incentivize both customers and GTM teams to drive behaviour that drives value.

“WMP is another testament to AWS’ genuine interest in helping its ISV partners transition to a predictable op-ex model and it has played an integral part in our GTM motion with AWS.” ~ Jonathan Lisak, Senior Director of Global Alliances at Alvaria

5. Accepting a hard reality: Do you really want to migrate all of your on-premises customers? They may have unique demands and a view of what worked well on your existing on-premises solution, but sometimes your SaaS strategy may not be a right fit for your existing customers or the vision of what your future company is innovating to become.

Alternately, your SaaS solution still has a way to go before customers realize value. Understanding the difference between on-premises and SaaS ideal customer profiles (ICP) is important for the company and your offer. When you do find the right customers and those that are ready, you’re able to drive new experiences.

“Once we get a customer in the cloud, we have the ability to innovate from there. The most significant example of the innovation we’re doing is working with customers on GenAI. GenAI today is the subject of every POC that we’re doing with customers in AWS. These POCs are leading to some significant business outcomes as customers adopt these programs into production.” ~ Mike Hutchinson, Chief Customer Officer at Teradata

Don’t stop at these best practices. Here are some more examples of how successful SaaS providers have used other best practices and how they found success with WMP.

Conclusion

A successful SaaS transformation is not single-threaded. Leadership alignment, focusing on the right strategy, clear communication, and measuring the right goals can drive overall company growth and value to customers.

AWS invests in the success of software partners with programs such as AWS SaaS Factory for building new SaaS solutions, ISV Workload Migration Program (WMP) for migrating existing on-premises workloads, ISV Accelerate for co-selling, digital innovation and executive briefings for building leadership vision, and alignment and go-to-market with AWS Marketplace.

About AWS SaaS Factory

AWS SaaS Factory helps organizations at any stage of the SaaS journey. Whether looking to build new products, migrate existing applications, or optimize SaaS solutions on AWS, we can help. Visit the AWS SaaS Factory Insights Hub to discover more technical and business content and best practices.

SaaS builders are encouraged to reach out to their account representative to inquire about engagement models and to work with the AWS SaaS Factory team.

Explore today resources for any stage of your SaaS journey from design and build, to launch and optimization.