If you run a software company and are contemplating adding SaaS deployment model to your repertoire, welcome to the club. But before you jump in headfirst, it's important to understand the myriad differences between the on-premise and hosted models.

The key thing to remember when transitioning a software business from on-premise to the hosted, Software as a Service (SaaS) model is simple: think like a landlord. And just like a landlord who rents out that dazzling corner unit with the view, you need to be prepared to provide for the upkeep, deal with neighbors (read: applications) who are causing problems, and handle requests at odd hours in order to properly service this "rented" software.

Complications aside, SaaS is no longer considered just a wave of the future; it's here today and here to stay. Major players like Salesforce.com, WebEx, and NetSuite have already proven that the model is successful, while traditional providers of licensed software (e.g., Microsoft) are now announcing better-late-than-never forays into the world of hosted applications.

As a software provider, embracing SaaS is first and foremost a strategic business decision.

For licensed software providers that add hosted deployment to their portfolios, coexistence can be a smart strategy. Supporting both approaches recognizes the value of legacy relationships, the importance of offering choice to a diverse customer base, the varying needs of organizations and their discrete implementations — and the power of the future.

The marketing and technology implications can be significant, of course. Minimizing the impact to existing customers and staff while keeping the revenue stream at least intact (the ultimate goal is growth, of course) is crucial. Proper due diligence and market analysis, coupled with a broad understanding of the impact a new product delivery model will have on the organization, all factor into the decision about whether to go the SaaS route.

Depending on the industry sector or corporate culture, some of your clients may still prefer installed software for the control, customization, and/or security and privacy advantages it offers — making it essential that you do your homework first. Here are ten tips for planning and ensuring a successful transition to SaaS.

» 1. Be prepared to redesign your software architecture

As in designing a house, architecture and software function are tightly coupled. In an ideal world, SaaS architecture should be built from the ground up as a "multi-tenant" environment; this contrasts with the single-company orientation of most on-premise software.

Because entering the SaaS sphere could involve a substantial redesign of your software platform, it is wise to start by examining your customer base and the market forces affecting your business before taking the plunge.

» 2. Short-term, rethink how you can leverage your existing software

If you decide to make the transition to the hosted model, in whole or in part, you can do certain things in the interim to make the process a smooth one. Consider providing your services as a "managed hosted" platform. This approach places the existing installed software on your company's servers, hosted in a co-location environment.

By offering this service, you can begin to migrate larger clients and company infrastructure to the hosted model — without requiring the customer to make wholesale changes. As a short-term solution, the managed hosted alternative enables providers to leverage their core architecture and existing software code-base — and thereby generate multiple revenue streams while making the full transition to a SaaS-based architecture.

» 3. Decrease the number of operating systems your licensed platform will support

If you plan to offer both licensed and hosted software, consider limiting the number of licensed software operating systems and other environments your company supports. The gradual elimination of support and R&D for some licensed software operating systems, coupled with the concurrent development and growth of the customer base for the SaaS platform, make for a more gradual transition.

While dropping an operating system or two may cause some clients to fall away, this strategy may actually increase profit margins by reducing the level of engineering required to support multiple licensed platforms.

» 4. Designate a different engineering team for each software model

Ideally, you'll want to move toward separate and distinct engineering teams, with each assuming responsibility for design and development tasks relevant to the given platform.

Besides architectural differences, SaaS development tends to be faster and updates occur more frequently than with installed software. Likewise, the nature of the competitive space and interactions with customers are typically more intense. That being said, however, you may find it more practical to leverage the same team and development cycle across both platforms in the near term.

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