Gartner Research

Independent Software Vendors Must Prepare for Different Sales Strategies as SaaS Cannibalizes License and Support Revenue

Published: 08 August 2014

ID: G00265349

Analyst(s): Bob Igou

Summary

By 2018, software-as-a-service cannibalization creates a 40% reduction in maintenance and support as a percentage of total ISV revenue. ISVs without a clear sales strategy for delivering and managing the transition to cloud services will see support revenue and margin erosion.

Table Of Contents
  • Impacts

Analysis

  • Software Maintenance and Support Services Revenue Is at Risk
  • Market Trends

Impacts and Recommendations

  • Traditional software providers without cloud solutions (Type 1) that collect spending from ongoing maintenance and support for traditional software licenses will see revenue and margin erosion as the market shifts to cloud subscription
    • Recommendations
  • As software transitions to cloud subscription (SaaS) models, traditional software providers with cloud solutions (Type 2) will be unable to sustain profitability without a strategic plan for hybrid IT delivery
    • Implications for Providers
    • Recommendations for Support Services
    • Recommendations for Selling Services

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