Question
Mini-case: Should we move to the cloud? At XYZ, were finding new ways to deliver the software to our customers and support them with innovative
Mini-case: Should we move to the cloud?
At XYZ, were finding new ways to deliver the software to our customers and support them with innovative pricing strategies. One of the changes were evaluating is to move from being an on-prem term licensing model to a cloud-based SaaS subscription.
Would you recommend the move FROM: Term License TO: Cloud based SaaS subscription model? Please explain why or why not?
As you think about your answer, consider the impact of moving to cloud based SaaS model on items below: a) Total Revenue / Gross Margin; b) Recurring Revenue c) Customer Satisfaction
d) Company Growth Rate (e) Company Valuation
Table 1: Different pricing models
| A | B | C |
Name | Perpetual License | Term License | Cloud Subscription |
Unit of Measure | GB of data ingested per day | ||
Deployment | On-Prem | On-Prem | Cloud |
License Term | Perpetual | One-year | One-year |
Cost of license: $ for 1 GB of data ingested per day | $300 | $100 | $150 |
Gross Margin | 90% | 85% | 70% |
Estimated Volume Sold (GB ingested per day) | Yr 1: 1000 GB Yr 2: 1300 GB Yr 3: 1600 GB Yr 4: 1900 GB | Yr 1: 1000 GB Yr 2: 1400 GB Yr 3: 1800 GB Yr 4: 2000 GB | Yr 1: 1000 GB Yr 2: 1500 GB Yr 3: 1900 GB Yr 4: 2200 GB |
Note: You may ignore the cost of software maintenance when thinking about your answer. If you dont know what that is, dont worry - it wont impact your answer.
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