If you’re an established company with existing lines of business, you need to "ring fence" the existing business while growing an as-a-service business.
Many companies have healthy, successful existing lines of business. So how can they grow a new as-a-service business in preparation for the future? Phil Fersht recommends they "ring fence" the existing business and he gives some examples.
There’s a lot of self-cannibalization that needs to go on to get ahead of the curve intended. You might have to write off some short-term revenues, but you need to find a way to kind of ring fence existing businesses to grow the new business.
I’ve got a great example of this actually is when actually Oracle, when Larry Ellison decided investing in NetSuite. He was investing in a business that was completely countered of his existing business at the time, because he knew in maybe five or 10 years that you know he would have a business that was completely SaaS enabled and ahead of the curve, while protecting his existing business. That is a good example of what I think other providers need to do who may have had a very effective model in the old world and they need to get into the new world. You can see SAP doing it with their SuccessFactors evolution, which is working very well for them for example.
We are starting to see some of the service providers making big acquisitions as well as a very as a service centering. Incognizant bought a $2.7 billion acquisition recently of TriZetto, just so they could build an as of service model in healthcare. You can go through these examples piece by piece, but it is happening, it’s just a question of is it happening at the right pace with the right constituents coming together.
Published Date: Jul 08, 2015
Author: Michael Krigsman
Episode ID: 175