Answered step by step
Verified Expert Solution
Link Copied!

Question

1 Approved Answer

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.

Step by Step Solution

There are 3 Steps involved in it

Step: 1

blur-text-image

Get Instant Access to Expert-Tailored Solutions

See step-by-step solutions with expert insights and AI powered tools for academic success

Step: 2

blur-text-image

Step: 3

blur-text-image

Ace Your Homework with AI

Get the answers you need in no time with our AI-driven, step-by-step assistance

Get Started

Recommended Textbook for

Fundamental Managerial Accounting Concepts

Authors: Thomas Edmonds, Christopher Edmonds, Bor Yi Tsay, Philip Old

7th edition

978-0077632427, 77632427, 78025656, 978-0078025655

More Books

Students also viewed these Accounting questions