Check Out Our Forbes Article
Willingness to Pay: It's More Complicated Than You Think

On-Premise to Cloud Transition

Published: July 9, 2017 | By Chris Mele |

On-Premise to Cloud Transition

Transitioning a software product from on-prem to cloud-based can be like letting go of the life raft in the middle of the ocean.

A lot can go wrong on your swim to SaaS Island.

Instead of killer sharks, a successful transition to the cloud requires the software company to avoid customer defections and revenue drops that can sink even the best products. And that requires a real understanding of legacy customer needs and a carefully orchestrated plan to protect them.

From our experience on the front line of many transitions, we’ve identified several elements that can smooth the on-prem-to-cloud waters. 

Four critical things to think about when switching to cloud-based software

Here are four of the most critical:

  1. Educate customers on the differences: Keep a running list of the new cloud product’s capabilities compared to the old legacy on-prem solution. This enables your largest clients (who have also invested the most into custom interfaces to other systems) to very clearly see what they are getting in the form of new capabilities and what they are giving up. This is of huge interest to many legacy customers, as critical capabilities in your software may be wired into their business processes. If those capabilities are going to change, they need to know about them.
  2. Communicate the roadmap clearly: Maintain and share a very clear product roadmap for the cloud solution. This enables customers to begin planning and to peg a potential conversion date. Legacy customers tend to watch this product roadmap very carefully to gauge your ability to meet dates in the new world, particularly those who lived with your bugs and patches in the early years.
  3. Take a white-gloves approach with larger customersCustomize conversion strategies for your largest clients, including pricing scalability. This is important because customers can easily be triggered to defect when they don’t understand how your new cloud pricing will scale. If scalability isn’t addressed early on, they may conclude that they cannot afford to move to the cloud with you.
  4. Pick a sunset date for the old codebase: Pick a sunset date for the on-prem solution that is far enough away that it doesn’t create panic, but lets the customers know that there is indeed an end date by which they need to decide. As sunset gets closer, this will also serve as a powerful lever to get the laggards to convert.

Yet, it is important not to force customers’ hands. Companies with the most successful transitions work with customers who are willing to move to the cloud but need extra time and help to make the conversion.

A lot of goodwill and loyalty can be gained by really looking out for the customer’s best interest, being flexible and providing excellent care.

Despite all efforts, some customers, including very large ones, may prefer to stay on the on-prem solution in perpetuity.  We’ve seen the most success when the software company recognizes that transitioning is ultimately the customer’s choice and, if necessary, works out a way to help, such as packaging a buyout and limited time maintenance offer for them. 

Most customers want to believe you—that the move to the cloud is in their best interest too. But there is sure to be skepticism.  Successful transitions recognize this and work carefully with their legacy customers to address those feelings. Good communication, flexibility and ensuring that they will be treated with white gloves does wonders to protect the all-important legacy revenue stream. 

Share This Article:

Chris Mele

About The Author Chris Mele

Chris is Managing Partner for Software Pricing Partners, where he and his team have launched some of the software industry’s most transformative monetization strategies. As a former software company founder and leader, Chris focuses on the impact effective licensing, packaging and pricing strategies can make on the most essential software company metrics: revenue, profit and valuation. Under his leadership, Software Pricing Partners has become an influential voice for growth-oriented software companies both large and small.


Want To Learn How To Increase Your Profits?

It's easy! We can show you how.


Newsletter Signup Join Now For Free Tips On Optimizing Your Pricing

Learn The Secrets To Profitable Growth We've Been Doing This For Decades

Check out our free pricing guides with expert tips and strategies!