From on-Premises to on-demand: Learning from Two Cases of Transformation of Software Companies

The software industry is facing a fundamental change from On-premises to On-demand software. To survive, well-established companies have to adjust strategies and governance. One of the most difficult challenges is to shift the focus from the (still) profitable On-premises market to an, as yet unprofitable, On-demand market. This requires a major rethink for managers as well as for company structuring. Based on our case studies and Christensen’s theory for managing disruptive innovations, we wish to learn from software companies and their transformation strategies to discover to what extent the theory’s recommendations are applicable for software companies. We have seen that a company needs an effective strategy in order to survive market changes. From our two cases we learned that a successful transformation strategy consists of the combination of Christensen’s recommendations, its individual adjustments as well as some additional strategies. We were able to develop seven propositions for software providers to give ideas in order to better cope with the transformation process.