What’s stopping you from distributing your application to customer-managed environments?

Nikki Rouda
Sep 12, 2023

Last time we discussed the upside of selling applications into customer-managed environments (vs. a SaaS-only business model), now let’s look at the perceived challenges that may be holding some people back. Clearly the concerns aren’t stopping everyone. 39% of software companies who don’t currently offer self-managed or on-premises versions of their products say they plan to open up these new addressable markets within the next year. Hint: Replicated can help!


Each year, Replicated commissions an independent research firm to study the market for commercial software deployed into any customer-managed environment. We define customer-managed environments to include public cloud infrastructure-as-a-service (IaaS), public cloud platform-as-a-service (PaaS), private cloud, hybrid cloud, virtual private cloud (VPC), and on-premises data center) – pretty much anything but a pure Software-as-a-Service (SaaS) offering. 

You can see highlights of last year’s report here: Customer Demand Drives On-premises Software Growth.

Reasonable concerns about customer-managed environments, but with answers

A chart showing reasons companies are SaaS-only

Research finding: SaaS software companies considering non-SaaS offerings are concerned about support (28%), release management (27%), effort to build (23%), developer priorities (22%), and profitability (21%).

Let’s set aside the 54% who say they are committed to a SaaS-only model – every company has to make choices about where to focus their resources. For those who DO want to open up new markets and meet customers where they are, the next three considerations are really about building, releasing, and supporting software for diverse operating environments. The next two issues of busy developers and profitability are really just symptoms of the previous concerns: if you think it’s going to take a lot of time, then by default you’d say your teams are too busy and think it might be less profitable.

What if it was NOT too much effort to build for or support software for customers to run themselves? There are a ton of efficiencies to be gained with the right platform. Replicated has built solutions specifically aimed to help you Build Better and Support Efficiently. Check out how we tackle these concerns head on.

How to approach development and testing for different installation options

A chart showing challenges for software in customer environments

Research finding: The top concern when it comes to building software offerings is “development and testing for different installation options” (67%). Additional challenges include security requirements (59%), installer and management tooling (47%), and getting useful metrics (44%).

These findings act as a drill-down on the previous chart, adding more depth to help us better understand the issues. The good news is that again these are all addressable worries. Let’s say you agree that testing for diverse operating environments is an issue. Why? Usually it comes down to difficulty in provisioning customer-representative environments for compatibility testing. We’ve blogged about this many times before.

What about all those other issues in the findings?

Are you worried about security? Replicated can help secure your app delivery. We can also show how to build a custom-branded installer for your app, set up an ideal Kubernetes environment, and manage releases and customers. We can even provide you actionable insights so you have as much (or more!) visibility as you might for your SaaS instances.

We aren’t being dismissive of these research results. It’s totally fair for ISVs to have concerns and make tough decisions about where to focus their efforts. If anything, these problems illustrate the foundation and justification for our business. We’re hopeful you’ll start to see that we’re tackling this market pain and creating a better way to distribute software to customer-managed environments, with less developer effort and accordingly more revenue AND profitability for you.

Bookmark our blog for when we dive deeper into the research findings around installation issues and support effort….

About This Study

Research goal: The primary research goal was to capture and document current trends for software installed in customer-managed environments (CME). The research sought to understand market demand, customer needs, support challenges, revenue growth, and future software development plans. POCs, installation challenges, upgrade habits, the impact on company personnel requirements to build and support CME solutions. investigated.  

Methodology: Executives, business, and technology professionals at all seniority levels representing software companies of all sizes were invited to participate in a survey on their company’s customer-managed environment software development, delivery, and strategy. The survey was administered electronically, and participants were offered a token compensation for their participation.

Participants: A total of 695 qualified participants completed the survey. 505 participants were recruited by Dimensional Research while 190 were Replicated customers.  All participants had direct software responsibilities. Participants were from 5 continents representing a global view.

View the full report here.