Sometimes enterprise companies try to go cloudy for bad reasons with bad outcomes. I’m going to talk about those instead of well-planned initiatives with good outcomes because it’s more fun.
So you’ve got an enterprise product and you’re facing pressure to go to the Cloud… after all, that’s regular recurrent revenue instead of up-front tranches, and très chic as well! Unfortunately, there are more ways to fail than there are to succeed. Let’s review.
What is the real motivation? Is it to better serve existing customers or to capture new customers? Companies can rationalize an emotional desire to do something with anecdotal data from cherry-picked customers. It is sad to see reality reasserted by subsequent events.
Where is the data suggesting that existing customers need this, and are you really sure that you’ve captured what they want and planned a move that will help them? Have you all considered that you’re changing the compliance picture for both parties?
Maybe the answer is that you don’t care about existing customers and will leave them on existing product while pursuing new customers. Assuming that the product market fit of your current successful company can be recreated in a new market on a new platform shows some hubris.
If it’s for a new market, what is the plan to break into that market? Does your brand help you there at all? Do you have people who can do it? Is there a plan to avoid losing your existing market? Are you building a new team, or adding this job to your existing one?
Selling enterprise solutions into a market that doesn’t already use them is a very tough job, starting with explaining why there is a problem and ending with why you have a solution. Your enterprise company solves a problem. Does this cloud market have that problem too?
Are you planning to continue producing the on-prem variant or going cloud-only? The textbook answer is to build for one and back-port to the other, which is terrible. The resulting products are suboptimal for one or both environments.
Option: build for on-prem first. Your cloud product is customer one for a new set of features you’re adding to on-prem. Fully automated configurability via API (Application Programming Interface) and/or CLI (Command Line Interface) and/or conf files. Fully UX’ed (User Experience) configuration for admin CRUD (Create Read Update Delete) functions. Really solid RBAC (Role Based Access Control) and AAA (Authentication, Authorization, and Access).
The features required by a Cloud deployment are interesting to the largest enterprise customers, and not so important to anyone else. They want those features because they’re operating a service for internal teams to operate. You’re making your product ready for use by an MSP (Managed Service Provider).
In fact, you probably are one now. There’s a hosted variant of your product, and a team operating it, staffed with non-developers. It’s a services company inside of a products company. Welcome to the SHATTERDOME.
This sucks. Everything’s a ticket, ops hates your product, your customers hate ops, and the MSP is not as profitable as the pure software side. Worst, your best customers have jumped into it with both feet because you’re owning their ops problems now. Suboptimal.
Another option is to select partners to run this MSP business, but that produces so many weird problems. Loss of customer control, coopetition, revenue recognition, channel stuffing, product release planning, blame games at every step of customer acquisition and retention.
A service-partner MSP model also gives competitors and analysts a pain point to focus on and open weird new threat surfaces. But it keeps your software product company’s motivations and responsibilities crystal clear! That clarity may not be as obvious to the customer.
That option sucks, so let’s do cloud first and back-port to on-prem. Now you’re building a work-alike second version of your old product, new code with parallel functionality. Contractually you’ve got to keep the old product going, but the A Team has moved on. Hire accordingly.
Cloud first is great! There’s all this IaaS (Infrastructure as a Service) stuff you can use! Which doesn’t exist on-prem, and differs between platforms. That’s okay, there’s all these abstraction layers! Which add expense and hurt performance. Do this enough and you’re shipping the old product in a VM (Virtual Machine).
Wait a minute. The goals of cloudy micro-service engineering are to enable cost-optimization via component standardization, load-shifting, and multi-tenancy. So we’re not going to ship our Cloud product until it does those! Good plan.
Functions are costing money when they’re used, customers are getting what they need, done. There’s a lot more code and companies between your functionality and the hardware though, and that means more opportunities for failure. Say hi to Murphy.
Object-oriented programming versus functional programming comes to mind. Every micro-service is a black box with APIs describing how it fits into the larger system. Harder to troubleshoot, easier to scale, costly to design and maintain. The right tool for some jobs.
For instance, it’s brilliant for sharing resources between low utilization customers. It’s fabulous for ensuring that AAA and RBAC are designed correctly at the foundation. It’s just right for scaling dependent processes with uneven requirements.
Does that means it’s better for streaming or batching? YMMV (Your Mileage May Vary). What problems can it solve? Anything, given sufficient time and effort. Just like OOP vs FP, the engineering isn’t very important as long as it’s in service to a business need.
Multi-tenancy assumes large numbers of low-interaction customers. Someone who doesn’t use your product heavily and will self-service their own management needs is a perfect fit, and if you have lots of those someones you can make a profit.
If that isn’t what your business looks like, it’s silly to hope new customers will appear fast enough for the old business. If you customers are migrating to cloud for SaaS, then you do want this new Cloudy product so you can follow them. Otherwise, why would you do it.
36 person-months later… “The new product is misaligned with our customers!” “Fix sales and marketing?” “We could go back to the drawing board.” “If only we had the same architecture and customer base as a company with a different product market fit!”
Disrupting your own product before someone else does is fine, unless you’re doing it too early. It might make more sense to just invest in some one else’s company and revisit this idea later.