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30.03.22

Digital Transformation 'As A Service!'

@Jeremy Morgan asks - Is SDaaS (Software Development as a Service) the sustainable answer to delivering and maintaining system-led competitive advantage?

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We are all very familiar with the terminology ‘SaaS’ (Software as a Service) describing how software is typically purchased now. The previous upfront license and annual maintenance fee has given way to a monthly cost model, aligning spend with usage like other operating costs. By removing this upfront cost, the barriers to new software adoption have greatly reduced, fuelling a large wave of digital transformation, with Covid’s impact on working practices also playing its part.

But not all Digital Transformation can be delivered by ‘out of the box’ software. Competitive advantage is often secured and maintained by focused, proprietary software development which has increasingly become a business-as-usual activity rather than a ‘once in five years refresh’. So how best to deliver this continual improvement from a software context?

Some companies maintain their own internal development expertise to ensure availability, control and proactivity. However, the problem here is that it’s costly to maintain (and increasing rapidly) and you are also unlikely to be able to harness the right balance of continually evolving technical skill sets. The ‘Great Resignation’ is another topical challenge to overcome, with no short-term fix foreseen to the technical labour shortages in the UK.

So, what might be the solution? At Sovereign, we believe that ‘SDaaS’ (Software Development as a Service) is the answer, hence our investment in nearshore SDaaS provider Zenitech. But what specifically do we mean by SDaaS? Quite simply it is the provision of a dedicated software engineering resource (defined by headcount and skill set), made available for a client on a term contract basis. Such a relationship often starts via small projects that morph into larger programmes of work. Once the client views the software development supplier as a genuine strategic partner, owning and delivering quality solutions, then they often seek the comfort of a term contract with the SDaaS provider. Eventually, the internal software resource can be managed down reducing fixed costs.

We see this as a significant market trend with contract terms now starting to move from initial 12 month periods to 2 years+, as clients seek to secure quality provision to service their known, and sometimes unknown, technology development demands. To deliver such a service, the SDaaS provider needs scale and a comparable time-zone (to enable client collaboration) and so we believe the biggest winners in this market will be the organisations that can leverage near-shore talent (produced by some fantastic European technical universities), combined with an on-shore Sales and Customer Service capability.

I am not sure we needed another ‘As a Service’ acronym, but SDaaS is certainly one to look out for if your organisation is serious about digital transformation!

FURTHER INFORMATION

 

Julie Sieger, +44 (0)20 7340 8800 or email: juliesieger@sovereigncapital.co.uk