I recently read an article by a keen observer of the software industry advising SaaS vendors to sell direct and avoid traditional VAR channels and partners. His premise was that building channels is difficult and that SaaS limits the value proposition for the SI and ISV community.
Given our own experience with SaaS channels, I did a little research on SaaS providers and found lots of evidence that channels and partners are alive and well in the SaaS world. There are many examples, but Intacct, (www.Intacct.com) in particular struck me as having a strong partner program as explained in a series of announcements on their website. I also attended an OpSource/Softletter webinar that provided a sneak preview of their 2008 SaaS Survey (download at www.saasuniversity.com under their resources tab). The survey indicates that 53% of the SaaS companies responding either use VAR's today (35%) or plan to use them (18%).
I've talked to a couple of software vendors that have the view that SaaS provides a limited value proposition to VAR's. One company has consciously avoided the SaaS model altogether for fear of alienating their current plentiful VAR relationships. Only time will tell if they're right, but the downside to being wrong is nasty.
Looking from a VAR point of view, VAR's understand that customers want choices, and in fact part of their role is providing just that. As more enterprises choose on-demand over on-premise solutions, incumbent VAR's will have to respond or lose their position. While large implementation-training-maintenance contracts are attractive, VAR's will grow to appreciate the value of a recurring revenue stream of their own.
The 2008 SaaS Survey also indicates that VAR's can expect to earn around 20% of the ongoing services revenue, a handsome reward for their efforts. So, it's better to arm a VAR with your on-demand product then have them go out and find competitive products to fill that need. After all, while the SaaS paradigm emphasizes ease of use, risk-averse enterprise customers still demand on-site training, integration with other systems and other services provided by VAR's. A VAR's professional services and domain knowledge extend a SaaS providers reach and credibility with enterprise buyers; it's a win-win relationship.
So I believe that most successful SaaS businesses will need and want partners. It's only a matter of time, so plan for them from the start.
Even if you don't agree now, you can increase your options and lower your risk if the systems you use to manage your SaaS business give you the flexibility to include channels and partners in your sales eco-system if you make that decision down the road.
There are a myriad of things to plan for to ensure that the systems you select to manage your SaaS business elevate your ability to sell instead of weighing you down with restrictions.
If you want help thinking this through I invite you to download our complimentary capabilities matrix. There you will find a thought inspiring list of important features regarding channels and partners and everything else you are likely to need as you grow your SaaS business.