Companies have time and time again fallen apart trying to manage high administrative costs and the complexities of controlling customer and channel partner relations without a management system or with one developed “in house”. SaaS has therefore, proven to be a big leap forward for both providers and consumers.
Providers: Companies are increasingly taking advantage of the benefits of cloud computing, such as the reduction of infrastructural costs, scalability and adaptability, a better quality of service in less time and the security of data being stored in a safe environment. Following the “as a Service” model guarantees the flexibility and efficiency that companies need, offering a strong competitive advantage.
Consumers: SaaS has effectively commoditized IT functions which used to be really complex and expensive, making them accessible at a lower cost. Website analytics are a good example of advanced capabilities which have been democratized. To put it simply, SaaS simplifies, reducing cost, time and resources for the consumer.
There is however, a widely circulated myth is in the midst of the great SaaS boom: that Software as a Service has almost eradicated the need for channel partners and channel partner programs.
SaaS vendors are not using channel partners (SIs) or Value Added Resellers (VARs) very much. In fact they account for only 35-45% of SaaS provider revenue which is significantly less than the percentage for on-premises software. Only 23% of B2B SaaS vendors have a channel program, while 80% of on-premises software vendors do.
The main reasons for the shift away from channel partners are:
- configurations tend to be made by customers, when in the past, because of their complexity, they would have been made by channel partners
- development, installation and upgrades used to be performed by VARs but are now done centrally by the service provider
- SaaS companies are only beginning to take their first steps, so haven’t gotten round to implementing a channel program
- Channel programs are much more necessary when it comes to international sales and as most SaaS companies are quite young, they’ve rarely expanded into the global market
The as-a-service model has essentially changed the role and value-added status of channel partners, meaning they now need to work more strategically than ever before. To find out exactly how partners can adapt to SaaS, what has been making them reluctant, and the ins and outs of what the revolution entails, download our Guide now!