Just under a year ago we started the process of overhauling our business in an effort to have 75% of our total revenue be recurring. It is very difficult to transition a traditional, enterprise software model to that of a SaaS type model. Our particular niche in the market was not suited to charging an annual per user fee for installed software (although some vendors in other B2B markets have made it work). We decided on a two pronged approach:
- Offer a hosted version of our installed software, with a monthly per user fee
- Build a new system from the ground up with a multi-tenant architecture
We started with 25% of our revenue as recurring and I predict we’re 1/3 of the way of a three year process.
David Cummings on Startups 