SaaS Channel

Just located an excellent whitepaper on SaaS channel strategy from the Software & Information Industry Association (SIIA) written by Axel Schultze.

CHANNELS FOR THE NEW SAAS INDUSTRY

The executive summary was the best explanation I’ve seen on why SaaS channel strategy needs to be different from installed software.

In SaaS, partners don’t take title to the product, there is no inventory or logistics, no contractual reselling activity, no repair service and no physical goods to install or connect.

The main focus for partners in the SaaS world is on business process alignment, optimizing the use of the information, solution deployment, application support and integration with existing systems.

While traditional IT products are sold in a “fire and forget” mode, SaaS solutions are sold with an opportunity for ongoing services. Successful SaaS companies not only think in terms of recurring revenue but in a “Recurring Services Model”.

As SaaS vendors host the application, they effectively become part of the IT organization of their customers. Hence, tech support is a vendor internal activity. That fact results in a very different channel structure.

Because of the different structure and services in the SaaS model, channels are no longer “resellers” or “Value Added Resellers” they are – CATALYSTS. Catalysts are companies or individuals that understand the various business needs in terms of organizational improvements in areas such as Sales, Marketing, HR, Operations, Logistics etc. and also understand the advantages of SaaS-based applications. They help small, medium and large firms transform their “Information Technology” into “Information Management”.

And that SaaS partners should value add …

Given there is nothing to resell, nothing to technically install and no opportunity to provide any kind of logistics, what can a successful SaaS partner contribute?

The most important value a partner can add is to provide business-process-relevant implementation and integration services to the customers. While an application may be generally easy to use, the more important question within an organization is “how are we all going to use it together”. SaaS partners are not “resellers” delivering software, but rather catalysts for this new industry, making it work long term. They help customers become quickly productive and ensure the service is fully embedded into organizational processes.

In order to do that successfully, a SaaS Catalyst needs to understand their customer’s business processes and have a good understanding of the respective verticals. A CRM, HR, Project Management or Marketing Application can be used in variety of ways, but the partner helps orchestrate the configuration and implementation to shorten the “time to value.”

SaaS enables even very small companies who don’t have IT departments or capabilities to leverage software to better run their business. SaaS Catalysts will play a very strategic role in the vendors’ success in reaching that market and retain customers long term.

I completely agree. Some other good material in the full document.

4 Comments

Ben Reid
December 12, 2008 at 10:38 am

On the same subject (although perhaps focussing more towards the enterprise end of the spectrum), take a look at the recent article on “Services 2.0″ by Prashanth Rai on CloudAve:

http://www.cloudave.com/link/services-the-very-critical-part-of-the-on-demand-ecosystem-appirio

The main point to note here is that the move from on-premise to cloud-based software will affect and remodel the IT services industry wrapped around implementing and integrating these solutions, and that this shift to “Services 2.0″ is likely to happen at the same rapid pace as the move to SaaS.

Exciting times…

Craig Klein
December 12, 2008 at 7:13 am

Great points!

Partners can contribute the face to face relationship that a SaaS provider won’t be delivering.

It represents a somewhat different segment of the market than typical SaaS customers…

Early adopters like the hands off simplicity of the SaaS model. Penetrating the great big middle of the market will take partners.

Falafulu Fisi
December 12, 2008 at 1:45 am

Rod, I think that SaaS is the way to go (ie, today and the future). Just curious about of how to go about SaaS that involves high performance computing, because the web app, that I am working on has to be high performance, due to the nature of the heavy numerical computation that involves (algorithmic-wise and data-wise). I have no experience in this but perhaps I will to find out more on it. What I am doing is very heavy (memory-wise) in terms of computation, so I think that I will do it and learn on the go. The only barrier that I can see is that if I don’t design it from the beginning to scale (as of high performance), I think that it will be doom. I haven’t seen or known about any high-performance SaaS out there. There might be as one cannot rule out, but I don’t know about it.

Any tips of where to look would be welcome.

Mark Rothfield
December 12, 2008 at 7:37 pm

@Falafulu

My company (Reveal Tools) runs a SaaS enterprise web app called work assist, which is a very data intensive application used to manage productivity, capacity and unit costing in service industry back office operations. It is built upon a grid computing platform, designed specifically with high performance in mind. For more info on the platform, visit http://www.majitek.com

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