This article was originally posted on the Tech North website.
RedBlack Software helps companies like Marks & Spencer make sure they don’t bake more bread and pastries than they need to at any given time. The York-based tech company is led by Jane Tyler, who began developing code in the 80s. At the time, the entrepreneur didn’t think that a small package she wrote for the bakery industry would shape her future career.
“I honestly thought it would be a four-to-five-week, fun little project while I was on maternity leave,” she told delegates at Futurelabs’ monthly Founders’ Friday meetup in Leeds. “It has ended up dominating my career ever since!”
Tyler, a speaker on Tech North’s Northern Voices programme, now oversees 15 staff (of which eight are developers) and has 150 clients, most of which are based in the UK and consist of SME craft bakeries in addition to the aforementioned M&S.
According to Tyler, the company has experienced one “big nightmare” in recent years: rewriting the “endlessly hacked” legacy software code, which has been evolving for 20 years, to run on cloud infrastructure as a software-as-a-service (or SaaS) product.
The task, which is ongoing, has raised a number of challenges related to cost, how the company’s customers pay for it, and overcoming lingering perceptions relating to data security in the cloud.
In Tyler’s own words, here are the five biggest challenges RedBlack have faced while taking it on.
1. Knowing how much it will cost
“The first challenge is the massive cost of taking a big legacy system and moving it to the cloud, or SaaS. It’s not just the cost itself – it’s that you don’t know what the cost is going to be.
“You can’t get a proper estimate because the goalposts are changing all the time, so we ended up taking the route of moving the code one chunk at a time. Everything we move, we try get some revenue out of that chunk before moving onto the next bit. It’s a huge cost, so that’s the biggest problem.”
2. How your customers will pay for it
“The second problem is how to fund a SaaS revenue model, because we were used to selling software for anywhere from £5k to £50k for the license, support revenue and all of the rest. Moving from that to a getting a few hundred quid a month is quite painful.
“We haven’t taken any external investment and have coped by taking a mixed bag of solutions. Some clients (but not many) pay us directly on a monthly basis, and others have ended up getting a finance agreement with in effect a lease rental company, allowing us to get the money upfront while they get the befit of paying monthly.
“If you want to do it properly, get a load of money in and fund SaaS that way. For the first time ever we’re looking at taking an external assessment in order to achieve that.”
3. Resistance to the market
“With our traditional craft bakers over on the SME side, a lot of resistance lies in moving to the cloud. They’re scared about it, as it’s business-critical to them and they don’t want their data up in the cloud. Having said that, attitudes are changing very rapidly now.
“On the corporate side we’re talking to some really big retailers. There’s one in Germany who I won’t mention, but they will not consider moving to a cloud package. They won’t do it, so they want our software but they want it on-premise, so it means rewriting all the service bus layer and all sorts of other stuff. I don’t know yet if we’ll get the deal due to that challenge.”
4. How to make the most of the cloud
“When we first started moving to the cloud we were using it as a sort of virtual machine. We needed some help from Microsoft and there was a lot of hard work in moving to a micro-services architecture. It took a long time to get there – it was painful and a steep learning curve for us.”
5. The cost of running a SaaS system
“I didn’t realise how expensive running a SaaS system was. Microsoft take money out of our account every month and we don’t know how much it’s going to be. You can control it but at the moment we don’t have that control – however we always spend time and effort reviewing costs to get them under control.”
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