SaaS: Why the Channel Does (and Doesn't) Buy It
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The document discusses challenges and opportunities for channel partners in adopting and selling software-as-a-service (SaaS) solutions. It outlines channel partners' concerns about the reliability of SaaS, changing compensation models, and vendors potentially bypassing partners for large deals. The document also provides recommendations for vendors to address these concerns and help win over the channel, such as establishing advisory boards and compensation plans that incentivize long-term customer relationships.
SaaS: Why the Channel Does (and Doesn't) Buy It
- 1. Three Ways Belgium is… Like The Channel…
- 2. 400 Beers, 400 Glasses
- 5. Why The Channel Does (and doesn’t) Buy SaaS Bob Snyder Editor-in-Chief The Distribution Channel Ltd.
- 6. Oracle will release a suite of 43 Web-based software modules in 2010 to help corporations manage tasks from accounting and human resources to sales and procurement. What’s A Nice Guy Like You Doing in A SaaS-y Place Like This?
- 7. Gartner Research expects 2009 SaaS sales to surge 22% to a record $8 billion. They expect average annual rates of 19% through 2013 vs. 5% growth in business management software market.
- 8. The Opportunity SaaS Growth 33% PA Emaill, Sharepoint , CRM lead the way 1/3 of the world population on web by 2011 4 Billion Mobile Subscribers by end of 2008 15 PB of data generated everyday (more than all the books in all the US libraries 64 Billion credit card transactions per annum 52% of Europe’s IT Spend is in-direct i.e vendors are not trusted advisors to 52%
- 9. Software-as-a-Service moving to the mainstream Zealots want us to believe that on-premise enterprise software will be as extinct as the dinosaurs in 10 years Detractors call it “fad”’ and point to the minuscule market share of SaaS in the enterprise.
- 10. The Disparity ..there is enormous disparity in the performance of SaaS businesses - from rapidly growing startups to embarrassingly unprofitable public companies Only a handful of true success stories like Salesforce.com and Taleo where growth, profitability and ROI have gone hand-in-hand.
- 11. If SaaS is to exceed in a mainstream way, it must win the hearts and minds of channel partners.
- 12. Why We Need Channel To specialize in the deployment, management and billing of enterprise services for the SME Vendors will provide vast cost savings to the SME by using the multi-tenanted architecture approach and will deliver profitable partnerships Vendors business will NOT scale without the channel Flexibility and responsiveness to assist with adoption of SaaS within business in terms of consulting and migration from on-premise – the channel will need to drive this for vendors
- 13. SaaS – Shifts in Responsibility Model Package Applications Model Software as a Service Model Delivery Customer pays on delivery of software and responsible for deployment Customer pays for delivery of business function Performance Customer responsible for software performance Provider responsible for software performance Business Requirements Customer responsible to customize software to business requirements Customer responsible to configure software to business requirements Maintenance Customer pays for maintenance to fix software Provider fixes software (or pays penalty) and delivers to all Currency Customer buys upgrades to keep current Provider ensures currency of solution
- 14. Channel Partners are Mugwumps To SaaS or Not? “ You first.” “ No, you first!”
- 15. Yes, We Like SaaS It sounds like another Gold Rush… It helps us to sell more solutions to our clients It compensates for lower hardware margins It offers steady income It can give partners new name brands that add to reputation and line card impact
- 16. No, We Don’t Like SaaS… Re-training staff – new skills and knowledge will be required Re-purposing staff – customer services will be pro-active account management Changing compensation plans to drive the new required behaviours Investing in new technology to bill customers Risking revenues today for revenues tomorrow Changing role in vendor sales cycle
- 17. No, We Don’t… False promise that Big Companies Make to Smaller Ones… We’ve seen this before…
- 18. No, We Don’t… Lack of clear compensation agreements… How can we make some money, too?
- 19. No, We Don’t… The multiple year revenue stream increases Risk of Exposure
- 20. No, We Don’t… The vendors will keep all the Big Deals, even if we initiate the sales
- 21. The Vendor Says…. “’ I can’t trust anyone that’s not my direct sales force…” + Actual quote from vendor to reseller at this year’s IT CHANNEL VISION …
- 22. The Channel Response… Just because you don’t own your wife, doesn’t mean you can’t trust her… “ We thought this was supposed to be like a marriage?”
- 23. No, We Don’t… The vendors will SUCK US IN, and then cut better deals with other channel… Microsoft BPOS in Holland: “ A miscommunication. We were just trying to open the market up for all of us…”
- 24. No, We Don’t… It brings up all the old arguments but center on the core issue of yore: WHO REALLY OWNS THE CUSTOMER?
- 25. No, We Don’t… Weapon of SaaS Destruction: The Security Issue
- 26. No, We Don’t… But even beyond “The Security Issue”… The channel still questions the current RELIABILITY for Software as Utility… and IT as Utility
- 27. Recent High Profile Cases Sidekick data disruptions, T-Mobile dropped this bomb: "Regrettably, based on Microsoft/Danger's latest recovery assessment of their systems , we must now inform you that personal information stored on your device — such as contacts, calendar entries, to-do lists or photos — that is no longer on your Sidekick almost certainly has been lost as a result of a server failure at Microsoft/Danger. …”
- 28. The Reliability of Utility A power outage Sunday morning at an IBM data center took down the mainframe equipment handling Air New Zealand's check-in services, online booking system and call center, affecting more than 10,000 passengers…the passenger backlog didn't start to let up until the self check-in kiosks came back online 6 hours after the crash. IBM expressed its regrets and said the likely cause was a failed oil pressure sensor on a backup generator during a scheduled maintenance session.
- 29. And, says the client… Air New Zealand CEO Rob Fyfe "In my 30-year working career, I am struggling to recall a time where I have seen a supplier so slow to react to a catastrophic system failure such as this and so unwilling to accept responsibility and apologize to its client and its client's customers." "We were left high and dry and this is simply unacceptable. My expectations of IBM were far higher than the amateur results that were delivered yesterday, and I have been left with no option but to ask the IT team to review the full range of options available to us …"
- 30. “ Vendor: We Are As Safe As A Bank… Channel: Yes, that’s exactly what we are afraid of…
- 31. Rainbow of Solutions Ways to Win over The Channel
- 32. Channel Challenges Understanding the monthly cash flow and working capital requirements of your channel business. How will moving to an annuity model impact these? Should the reseller invest in your own billing and management platform or use that of the distributor or vendor? Which can provide flexibility and granularity in customer reports? Best practise SaaS or annuity resellers will have two types of sales people active in the account: "hunters" to acquire the customer and "farmers" to ensure the customer keeps billing or renewing. Churn is the enemy of annuity models
- 33. Channel Challenges Review and/or redesign the appropriate sales compensation scheme to encourage annuity sales and customer longevity Work to a plan and gradually start to build an annuity base. It will generally take approximately 12-18 months of steady work to build a customer base to a sufficient level Recognize the reseller’s risk and try to add balance (and fairness!)
- 34. Get the Channel Using SaaS Familiarity makes better sales people You sell best what you know best
- 35. Solve the Sales Compensation Plan Get an advisory group before pricing
- 36. Make Partners, Not Channel Slaves
- 37. TRUST YOUR CHANNEL TO FIND THE WAY One way or another… Channel Mentality Hey, if you can’t make money selling VISTA, just sell the uninstalling of VISTA…
- 38. OUR CHANNEL E-NEWSLETTERS in EMEA esP– for IT Solution Providers in Europe Consumer IT – for retail and etail channels rAVe Europe – for Pro Video integrators DSNE – for digital signage integrators On CE – for consumer electronics channels ECI – for home networking channels www.it-sp.eu
Editor's Notes
- #3: Not just the fact that they have 400 beers but the fact that they insist on each with a different glass…
- #4: Every country values something. In USA, you need a license to sell alcohol. In Belgium… you can open a Thai restaurant even if you are not Thai…you can open a steak joint…but open a frituur and you better have the required license. Don’t mess with the FRIES.
- #5: In the world we see a Coke machine like this. Some countries adapt to their culture. Look carefully at the Belgium Coke machine and see why some tourists are more afraid of Coke in Belgium than the water!
- #7: Oracle places big bet on Web-based software Thu Oct 15, 2009 6:25pm EDT * Oracle to launch array of Web-based software in 2010 * Widest array of such programs of any major vendor * Will cover 43 types of software programs SAN FRANCISCO, Oct 15 (Reuters) - Software giant Oracle Corp ( ORCL.O ) is making a big bet on Web-based computer programs, a fast-growing segment of the tech sector that it has been slow to enter. Senior company executives said on Thursday that the world's No. 2 maker of business software will release a suite of 43 Web-based software modules to help corporations manage tasks from accounting and human resources to sales and procurement. That will give Oracle the broadest selection of so-called cloud-based business management applications for large corporations of any major technology company. Rivals such as Salesforce.com Inc ( CRM.N ) and SAP AG ( SAPG.DE ) currently offer a limited selection of such products focused on software for managing sales activities. Senior Vice President Anthony Lye said in an interview that the products will be released next year as part of Oracle's highly anticipated new line of Fusion Apps software. Customers will have the option of buying programs to run in their own data centers or purchasing Web-hosted services from Oracle, he said. He spoke to Reuters on the sidelines of an investor conference in San Francisco. Oracle is embracing cloud-based software as researchers forecast brisk sales growth for the sector, even as the overall tech market slumps. Such products are also known as Software as a Service, or SaaS. Gartner Research expects that 2009 SaaS sales to surge 22 percent to a record $8 billion. The firm expects the market to grow at average annual rates of 19 percent through 2013, far above the 5 percent growth for the overall business management software market. Fusion Apps is one of the most closely watched in Oracle's 32-year history. Chief Executive Larry Ellison has staked his reputation on the success of the product, investing five years and billions of dollars on its development. (Reporting by Jim Finkle ; Editing by Steve Orlofsky) ( [email_address] )
- #8: Oracle places big bet on Web-based software Thu Oct 15, 2009 6:25pm EDT Email | Print | Share | Reprints | Single Page [-] Text [+] * Oracle to launch array of Web-based software in 2010 * Widest array of such programs of any major vendor * Will cover 43 types of software programs SAN FRANCISCO, Oct 15 (Reuters) - Software giant Oracle Corp ( ORCL.O ) is making a big bet on Web-based computer programs, a fast-growing segment of the tech sector that it has been slow to enter. Senior company executives said on Thursday that the world's No. 2 maker of business software will release a suite of 43 Web-based software modules to help corporations manage tasks from accounting and human resources to sales and procurement. That will give Oracle the broadest selection of so-called cloud-based business management applications for large corporations of any major technology company. Rivals such as Salesforce.com Inc ( CRM.N ) and SAP AG ( SAPG.DE ) currently offer a limited selection of such products focused on software for managing sales activities. Senior Vice President Anthony Lye said in an interview that the products will be released next year as part of Oracle's highly anticipated new line of Fusion Apps software. Customers will have the option of buying programs to run in their own data centers or purchasing Web-hosted services from Oracle, he said. He spoke to Reuters on the sidelines of an investor conference in San Francisco. Oracle is embracing cloud-based software as researchers forecast brisk sales growth for the sector, even as the overall tech market slumps. Such products are also known as Software as a Service, or SaaS. Gartner Research expects that 2009 SaaS sales to surge 22 percent to a record $8 billion. The firm expects the market to grow at average annual rates of 19 percent through 2013, far above the 5 percent growth for the overall business management software market. Fusion Apps is one of the most closely watched in Oracle's 32-year history. Chief Executive Larry Ellison has staked his reputation on the success of the product, investing five years and billions of dollars on its development. (Reporting by Jim Finkle ; Editing by Steve Orlofsky) ( [email_address] )
- #15: MUGWUMPS an American term for fence-sitters, people that can’t seem to make up their minds (especially in Politics)
- #26: Sidekick data disruptions, T-Mobile dropped this bomb : "Regrettably, based on Microsoft/Danger's latest recovery assessment of their systems, we must now inform you that personal information stored on your device — such as contacts, calendar entries, to-do lists or photos — that is no longer on your Sidekick almost certainly has been lost as a result of a server failure at Microsoft/Danger. That said, our teams continue to work around-the-clock in hopes of discovering some way to recover this information. However, the likelihood of a successful outcome is extremely low. ... We recognize the magnitude of this inconvenience. Our primary efforts have been focused on restoring our customers' personal content. We also are considering additional measures for those of you who have lost your content to help reinforce how valuable you are as a T-Mobile customer. We continue to advise customers to NOT reset their device by removing the battery or letting their battery drain completely, as any personal content that currently resides on your device will be lost."
- #27: Sidekick data disruptions, T-Mobile dropped this bomb : "Regrettably, based on Microsoft/Danger's latest recovery assessment of their systems, we must now inform you that personal information stored on your device — such as contacts, calendar entries, to-do lists or photos — that is no longer on your Sidekick almost certainly has been lost as a result of a server failure at Microsoft/Danger. That said, our teams continue to work around-the-clock in hopes of discovering some way to recover this information. However, the likelihood of a successful outcome is extremely low. ... We recognize the magnitude of this inconvenience. Our primary efforts have been focused on restoring our customers' personal content. We also are considering additional measures for those of you who have lost your content to help reinforce how valuable you are as a T-Mobile customer. We continue to advise customers to NOT reset their device by removing the battery or letting their battery drain completely, as any personal content that currently resides on your device will be lost."
- #28: That said, our teams continue to work around-the-clock in hopes of discovering some way to recover this information. However, the likelihood of a successful outcome is extremely low. ... We recognize the magnitude of this inconvenience. …We continue to advise customers to NOT reset their device by removing the battery or letting their battery drain completely, as any personal content that currently resides on your device will be lost."
- #29: That said, our teams continue to work around-the-clock in hopes of discovering some way to recover this information. However, the likelihood of a successful outcome is extremely low. ... We recognize the magnitude of this inconvenience. …We continue to advise customers to NOT reset their device by removing the battery or letting their battery drain completely, as any personal content that currently resides on your device will be lost."
- #33: Review and/or redesign the appropriate sales compensation scheme to encourage annuity sales and customer longevity Work to a plan and gradually start to build an annuity base. It will generally take approximately 12-18 months of steady annuity type
- #38: I can prove that the Channel are creative enough to find the WAY….Hey, if you cant sell VISTA, just sell uninstalling VISTA