Channel Marker

Sep 10 2007   7:12AM GMT

SaaS players in shoving match for partner attention

badarrow Barbara Darrow Profile: badarrow

The next few weeks will be big for the Software-as-a-Service (SaaS) category.

Salesforce.com is about to host its DreamForce event. NetSuite’s IPO is on its way. SAP will unveil A1S on September 19 in New York.

As these events approach, and as Microsoft’s ‘Titan’ hosted CRM wends its way toward availability—I guess we can’t say it’ll hit the shelves soon—the channel questions around this delivery model loom bigger than ever. SaaS is still viewed by many in the channel as the ultimate in disintermediation.

Virtually all of these tech players still struggle with how partners—especially traditional software resellers—will play in this new world.

Salesforce.com has evolved from being downright disdainful of partners to courting at least a subset of them—systems integrators and ISVs. Its game plan seems to be to woo services partners and hope that software resellers will either evolve into services partners or just go away. Come to think of it, that’s pretty much everyone’s game plan.

NetSuite’s IPO, probably the most closely watched public offering since VMWare, has had its own share of partner woes although at least it offers a continuing piece of the margin action to reseller partners who meet its sales goals. That’s an improvement over Salesforce.com’s one-time ten percent referral fee but many NetSuite partners bark that the company’s vow of “30 percent now and forever” margins is more promise than reality.

It’ll be interesting to see what SAP comes up channel-wise at the September 19 global launch of its hosted A1S ERP offering. The German SAP giant has certainly won some friends in the U.S. with its Business One channel effort. Those partners say selling that product—aka B1—is very profitable. But the bulk of its big-iron business — My SAP — has a distinct direct-sales feel.

Microsoft, more than any company, must face the partner question head on if only because it has more partners than anyone else. Microsoft, after all, built its business on partner software sales and implementation much more so than the direct-focused SAP. Or Oracle. Or NetSuite. Or Salesforce.com for that matter.

The company has studied the issue. It has doubtless created matrices and foils and eight-by-ten glossies of its game plan here. It has long recruited and supported partners who want to host its ERP or CRM offerings on their own. Now it has to figure out how the partner ecosystem will fit in when Microsoft itself is the hosting partner.

That’s as tough a question as the technology quandary Microsoft faces. That quandary: Transforming its Windows know-how and history into the new multi-tenancy-required software-as-a-service infrastructure.

Where do software reseller partners fit into this SaaS mix? Let me know your thoughts.

Barbara Darrow, a Boston-area freelance journalist, can be reached at Badarrow@comcast.net.

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  • badarrow
    Barbara - I believe there are several paths SIs and VARs can take in the SaaS space (I just posted some thoughts on this on http://saas4russia.wordpress.com/2007/09/17/systems-integration-and-saas/, but it's in Russian only). 1) Focus on integration projects for the SaaS provider/hosting market. It will certainly grow in the coming years, especially given the investment climate around SaaS. Building long-term relationships will be tricky however, as most providers and hosters will want to develop their own competence in developing and servicing their platforms, as this is where their competitive advantage resides. 2) Become a hosting company. Many SIs have their own datacenters already, so for them it's a question of shifting emphasis. The competence to run a datacenter is there (normally in the tech support group). 3) Become a SaaS consultant (like Appirio etc). Just because there are no servers to set up and no software to install doesn't mean a SaaS implementation is labour-free. There are still things like customisation, business process reengineering and training, which somebody needs to do. 4)Become/remain a vertical consultant. Vertical competence is always in demand, and with the shift to SaaS vertically minded SIs can refocus on the (probably more profitable) business consulting instead of infrastructure projects. 5) Become a services integrator/aggregator. Right now the SaaS providers suffer from a mild form of solipsism - i.e. the assumption is that the customer is only using one SaaS service. Someone should provide a service which integrates between services so that this is transparent to the customer (enerprise mashup provider?) This someone could well be the SI.
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