What are the challenges and strategies for converting your customer base to XaaS?

LauraFay Member | Guru ✭✭✭✭✭
edited February 2023 in Technology & Services Strategy

Migrating your existing customer licenses to XaaS can be challenging enough. Migrating their deployment to the cloud adds to the challenge. All sorts of questions emerge including how to handle objections, costs, value propositions, "baggage", and more.

What have been the biggest challenges?

What strategies and tactics (carrots & sticks) have delivered the best results for you?

+ Weigh-in on the poll below.


  • StevenForth
    StevenForth Founding Partner | Expert ✭✭✭

    The main obstacle has been requirements on data hosting. We currently have servers in the US, Canada and Germany. We have a potential customer in the Middle East, so yes we are investigating that as well. Part of the power of our platform comes from inferences we can make from our data. We are working out the deeper implications of having our data segregated like this.

  • LauraFay
    LauraFay Member | Guru ✭✭✭✭✭

    Are you challenged with migrating your customer base from legacy on-prem offers to the consumption- based cloud solutions? If so, we'd love to see you at TSIA Interact on Wed Oct 21 where my colleague @Steve Frost and I will take on this meaty topic in a limited attendance interactive session, Migrating Your Customers to XaaS: What Could be Easier, Right?.

    In the session we will share our findings from multiple recent Customer Migration to XaaS survey data and in hands-on workshop style breakouts, participants will discover the specific capabilities necessary to execute on an effective customer migration plan to ensure safe customer transition with minimum churn and maximized revenue. Participants will align on the KPIs, practices, skills, incentives, tools, roles & responsibilities across the product, sales and service teams necessary to succeed.

    Book your seat at the time of registration. Steve and I look forward to seeing you there.

    Whether you can make this session or not, let us know how this is going at your company in this second-in-a-series real-time-results Poll - Customer Migration to XaaS

  • Karen Chiang
    Karen Chiang Member | Enthusiast ✭

    There are indeed many factors which vendors face in moving the legacy on-prem to cloud. A key challenge is being able to manage the financial impact and shape the predictability of this. Also, in the scenario posed, the vendor seems to envision a clear transition from on-prem to cloud. Often times, this is not the case. Vendors often have a entrenched on-prem user base and have led innovations through their on-prem offering. The market landscape is shifting such that customers are demanding a cloud transition. In fact, this may be fueled by niche competitors who are positioning their offer with cloud as the differentiator. The on-prem vendor has to play catch up and find ways to protect its market share and may find itself offering less feature/functionality in the new cloud solution. Cloud is a different business model with different capability and expertise needed to execute. Also, the vendor also needs to protect/manage against cannibalization against its own on-prem solution. So the key challenge is rooted in how does the vendor ensure we continue to provide the value to our on-prem customers that they are accustomed to while also ensuring to drive ongoing value in the cloud scenario. Layer on the strategic choice of with the new cloud offer is there a new segment we should prioritize given their unique view on how they value the new cloud offer.

  • StevenForth
    StevenForth Founding Partner | Expert ✭✭✭

    In my experience one of the real obstacles is alignment by the management team on the long-term business goals of the move to XaaS. At Ibbaka we have seen several reasons for the transition.

    • Investors and stock market analysts are demanding a cloud story
    • Cloud solutions can iterate faster and they are afraid of being left behind by cloud-native competitors
    • There is a desire for more predictable revenue and subscriptions are seen as a path to this
    • Customers are demanding a cloud alternative

    Sometimes there is more than one reason at work, and these lead to different goals.

    • Move all customers to SaaS as quickly as possible and retire the legacy solution
    • Maintain the legacy solution for as long as possible with the SaaS platform as lower priority alternative
    • Milk the legacy solution and use it to fund the SaaS offer
    • Use the SaaS offer to lift the share price
    • Use the SaaS offer to enter new markets
    • Use the SaaS offer to test new innovations that will later be added to the legacy platform
    • Develop a balanced strategy where the legacy solution and the SaaS offer have clearly defined roles to play

    Obviously one cannot achieve all of these goals at once, but different parts of the company may have differing, sometimes conflicting, goals. Conflicting goals makes it very difficult to execute on the transformation.