The SaaS-ification movement explained | InfoWorld

Let’s say you’re the owner of a tire manufacturing company that’s been in business for more than 70 years. You have some great proprietary logistics systems you’ve used for decades and systems that are famous for optimizing the supply chain that contributes to manufactured goods in your vertical market. It would be beneficial to your customers and even your competitors to use your logistics systems in their own internal systems. For your business, the new revenue streams would far outweigh any competitive disadvantages that might arise from monetizing this aspect of your company’s proprietary assets.

When this type of opportunity presents itself, many enterprises look at the competitive implications and take a hard pass. At the same time, they recognize that most businesses don’t want to recreate the wheel when a well-known wheel manufacturer can provide a key piece of the knowledge pie for a nominal fee. If all goes as planned, the well-known wheel manufacturer’s own systems improve because of expanded usage, its revenue stream diversifies, and the company gains as much or more competitive knowledge as it releases.

Monetize your in-house expertise

Today, more and more enterprises want to explore the opportunity to market their industry-specific knowledge as on-demand data services or software systems to other organizations via usage- or fee-based models. This model of selling data products and services is more commonly known as SaaS (software as a service) delivered via a SaaS cloud.

Most companies that consider this type of revenue stream know very little about how to create a SaaS cloud. They must also implement monitoring, billing, and other services required to run and monetize a SaaS cloud. Does this sound like a recipe for failure or a huge opportunity to increase the value of the business as well as enhance the multiple?

Although it might sound strange for a tire company to become a cloud company, it happens more often than you might think. When arrived on the scene more than 20 years ago, enterprises began to accept that valuable cloud-based services could exist outside of the enterprise. With the rise of industry clouds, off-premises IT systems became commonplace and even more desirable in many cases (i.e., pandemic work-from-home requirements).

Don’t forget about the other 1990s company that made this hybrid business model the norm. Amazon has been in the business of providing technology tools to other businesses almost from its start. Oh, and they also sell books. Does this idea still sound crazy?

Copyright © 2021 IDG Communications, Inc.

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