Part of the “IDC Future of ISVs” series
The cloud is now mainstream. In combination with mobile technology, social media, and Big Data, it’s been the driving force behind the digital transformation that’s enabled companies – from established players to digital startups – to rethink how business is done and disrupt almost every industry. Now it’s fueling the next wave of innovation as leading-edge companies take advantage of advanced technologies such as artificial intelligence, machine learning, blockchain, and connected devices through the Internet of Things (IoT) to make their applications more intelligent.
For an independent software vendor (ISV), this is a huge opportunity to maximize success by providing customers with transformative cloud-based products and services to enable the intelligent enterprise. But ISVs are also facing stiff competition, and they need to make the right choices to accelerate the speed of delivery and drive better business outcomes both for their customers and themselves.
To explore the opportunities in more detail and get a sense of what it takes to win in this highly competitive market, IDC conducted a series of in-depth interviews with 12 ISVs around the world. In the first of a series of blogs based on this research, we look at the crucial role that a platform-as-a-service (PaaS) plays in accelerating digital transformation.
Accelerated development, reduced costs
By 2021, IDC predicts that 70% of new enterprise applications will be developed as cloud-native. Spending on intelligent technologies like cognitive and artificial intelligence systems is forecast to reach US$57.6 billion in that same timeframe. As the pace of innovation quickens, speed and agility are essential for ISVs to stay relevant and compete effectively. PaaS environments are becoming the preferred foundation for many digital transformation projects as a result. It’s easy to see why: IDC studies show that using a PaaS environment can cut the application development cycle by 30% to 50%. In other words, you can double the number of applications or major features delivered annually.
What do the ISVs interviewed by IDC look for when choosing a PaaS provider? We’ll explore some of their key selection criteria in a future blog, but above all, partners want confidence and clarity. Two key considerations are therefore the strength and reputation of the software vendor, and whether its cloud platform is an integral part of a clear product development strategy or merely a bolt-on service. If the vendor checks these boxes, partners can confidently build complementary solutions on the platform that incorporate their own intellectual property to add new value and accelerate the adoption of the cloud for their customers.
Nearly all of the ISVs with on-premises solutions have been using a proven cloud platform to aggressively extend them to the cloud – whether creating new digital applications, modernizing existing applications, or embedding intelligent capabilities in their solutions. Newer ISVs typically bypass the on-premises stage and build on their cloud platform to move straight to cloud-based software-as-a-service (SaaS) versions and take full advantage of the cloud-based business model. That means shorter development cycles, lower deployment costs, and a pay-as-you-go financial model. The reasons are clear: IDC expects that by 2022, 53% of all software revenue will be purchased with a subscription model. Whatever route they’ve chosen, all the ISVs interviewed as part of this study are now able to tap into this massive growth potential by accessing new markets and customers.
The value is in the platform
In the next blog, we’ll examine this huge cloud potential in more detail. But one thing is already clear: PaaS has not only become the preferred route for ISVs around the world to drive cloud adoption; it could also be a matter of survival in a brutally competitive market. “The partnership with SAP and driving the platform is really an existential thing. Because you don’t need expensive consultants to configure the core ERP, that’s a race to the bottom,” says Darwin Deano, principal and [SAP] CTO at Deloitte, in his IDC interview. “The value differentiation is going to be in the platform.”
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To find out more, download “Partner Success with SAP Cloud Platform: Building for the Intelligent Enterprise,” an IDC e-book sponsored by SAP.