Important Aspects when Taking Software as a Service to Market : A multi-case study in the ICT industry

Abstract: The information and communication technology industry is constantly affected by rapid changes and new development in technology. During the recent years there is an emerging trend within IT outsourcing where scalable and flexible IT enabled capabilities are delivered as a service over the Internet, called cloud computing. Software as a Service (SaaS) is one of the most adopted cloud service models, which is a software distribution model where applications are hosted by a SaaS provider and made available to the customer over a network. Tieto is present in this fast changing industry and has recognized a need to move into the cloud in order to stay competitive and meet their customers’ requests. Tieto’s department Energy Utilities wants to transform their broad portfolio of different software solutions to a SaaS delivery model. This transition will affect Tieto’s sales strategies, both in terms of pricing and marketing, and they will face challenges when changing to a SaaS delivery model. Hence, this master thesis aimed to determine important aspects when a company is changing software to a SaaS delivery model, where focus was on pricing and marketing strategies for SaaS. The objective was accomplished by conducting a case study that involved a qualitative data  ollecting method. Interviews were conducted from three different perspectives: from external SaaS providers, internally at Tieto as well as from a customer point of view. Conclusions from this thesis, was that important aspects when marketing SaaS involved:  managing the customers’ preconceptions, handling the impact of irrational factors,  nderstanding customer need and have the capability to guide and advise customers when purchasing a SaaS solution. The empirical findings showed that a value-based pricing approach was the most common strategy, using a user-based charging method and a model with different levels of subscriptions. The customers expressed that the price level was not the determining factor; instead the difference between the price level and the potential revenue generated from the SaaS solution was of importance. Furthermore, transparency and clearness are desirable conditions in a SaaS pricing model. Several challenges have been identified when transforming software to a SaaS delivery model, where multi-tenancy, security, pricing and standardization were the most common ones.