Finding Success with Hybrid Models

Software vendors should deploy a hybrid model in order to ensure a successful transition to on-demand pricing.

By Timothy Campbell, Steelwedge Software

Venture capitalists and pundits are bullish about the potential of the on-demand model; in fact, many VCs now require that a company have an on-demand model before they consider making any investment in the company. As a result, CEOs are scrambling to develop an on demand model strategy to complement their traditional license model.

A pure on-demand model can be extraordinarily taxing, particularly during the first three to four years of a software company’s go-to-market phase. This is because time-to-cash is significantly longer in the on demand model, leading to higher cash burn rate issues. With the size of investment rounds from VCs getting smaller, such models become very difficult to sustain.

As a result, it is almost an imperative that software companies pursue a hybrid strategy, going to market with both on demand and license models, which provide the broader market access and appeal of the on demand model, while also delivering on the operational benefits of the license model.

After having been CEO or general manager of three on demand companies, I have learned something about what it takes to drive the hybrid strategy until a company reaches critical mass.

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Taking Aim at India’s Success

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Back to the B2B Basics

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Parting Thought

"Never walk into a room without knowing how you're going to get out."
— CIA Manual

Courtesy of Malcolm Kusher, The Kushner Group