Three Key Cloud Questions for ISVs

There are excellent examples of large successful ISVs making the most with the cloud, many of which are the next generation businesses that natively benefit from cloud availability and scale models.  Netflix, Zygna, Salesforce.com, and many other market making examples show how to leverage the power of the cloud, and in most cases are either designed for, or even built by the scale provided in cloud computing.

But what if your challenge is in taking an existing ISV business into the cloud?  What do you have to consider?  Where do you start?

A good starting point is with the basics:

 1. What is your value and how does it translate to the Cloud?

 2. How will you transact with your customers in the Cloud?

3. Where does this lead you and your customers?

At Red Hat we have (and continue) to go through this transformation to the cloud. I will use Red Hat as an example of the transformation that I am seeing with other ISVs, with the appropriate, and amplified, disclaimer that I work for Red Hat, and that these views are my own.

Red Hat is certainly building new solutions specifically for the cloud, but just as importantly we are molding our core businesses to both leverage and provide value in new cloud consumption models.  Under some definitions, Red Hat is as an ISV, having built a large enterprise business sold under a subscription model, metered via well defined metrics (sockets is our most prevalent example), through a large channel distribution relationship, with a large ecosystem of partners, backed by award winning support portals and services.

So how do you take a model like the above and translate it to the cloud? Following are some of the responses that we have conceptually made and how they might affect a typical ISV looking at the same situation:

1. What is your Value and how does it translate to the cloud?

  •  Red Hat’s response: One of the first determinations Red Hat made is that “consistency is king”, regardless of deployment method: public/private/hybrid, on-/off-premise, physical/virtual/cloud etc.   This consistency must permeate everything we do with our customers and even partners since business have been built on Red Hat being a trusted enterprise provider.
  • What does this mean to an ISV: If your value to a customer is helping them build solutions on top of your platform and the consistently of that platform is key, whether it is interfaces/APIs, service levels, availability, certifications, or even pricing, then you must strive to maintain that across all deployments.  This also means that you have to find ways to accommodate new models, such as hourly pricing, VM metrics, on-demand capacity, in a way that maintains this consistency.

2. How will you transact with your customers in the Cloud?

  • Red Hat Response: Don’t disturb the routes to market (see consistency above), but provide more flexible consumption models that are simple to acquire and permit customers to extend their relationship with you.  And above all: Keep It Simple.  Red Hat now offers many of our traditional products both through cloud providers, but also has made our traditional routes and offerings cloud consumable. Our sales teams, VARs, VADs, ISV partners are all part of many of our cloud transactions and many don’t even know that they are, it is business as usual for them.
  • What does this mean to and ISV: Find ways of simplifying the acquisition process.  Make the cloud part of the existing offerings that you have. Modify your business models such that customers who historically have transacted with you in a “traditional” model can take those relationships and move them to the cloud, but if they want new models, e.g. hourly, consider new ways of working with the cloud vendors, on-or off-premise, to enable new ways for customer to consume your models.

3. Where does this lead you and your Customers?

  • Red Hat Response: Red Hat now considers cloud models and offerings part of the product definitions. When we define a new offering, we evaluate how the newer models and consumption paradigms may alter or influence the design of the product.  Business, legal, and financial considerations and their cloud angles are key considerations when defining how we will work with customers and partners.  This in turn has led to new offerings.   Good examples include our OpenShift Platform as a Service and Red Hat Storage offerings which retain and build on many of the fundamental values of Red Hat (Security, Enterprise Quality, etc. ), but introduce both new business and transactional models with customers, extending their experience and value we can deliver to the customers.
  • What does this mean to an ISV:  Look to these transformations to Cloud as fundamental to your business, not as one-time migration. Just as ISVs (and all businesses) went from Mainframe, to Client-Server, to Web, the same will have to happen in the Cloud transformation.   New offerings will be built and became part of the daily conversations for product managers, engineers, marketing and sales. New business models may spawn new types offerings (PaaS in the case of Red Hat).

Ultimately, moving to the cloud requires that you rethink your Value as a business, what you mean to your customers, and how you want to be perceived going forward. It some ways this becomes an experience of really getting to know your own business in ways that you have not considered before.

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One Response to Three Key Cloud Questions for ISVs

  1. Pingback: Three Key Cloud Questions for ISV’s | The Cloud Evangelist

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