Surviving A SaaS Shift

Solution providers that are sitting on the sidelines without a SaaS strategy are making a big mistake. One of the biggest stories in the channel in 2008 is going to be the continued market-share gains of SaaS vs. the on-premise hosted packaged apps business.

CMP Channel research shows that solution providers see customer interest in SaaS growing dramatically in 2008. The good news is that 44 percent of solution providers polled in our State of the Market Study are focusing more on delivering business-process consulting services to clients to play in the SaaS world. The bad news is that SaaS vendors ranging from the giants to new, emerging players are doing a poor job of bringing a full-fledged channel effort to the table.

STEVEN BURKE Can be reached via e-mail at sburke@cmp.com.

Shame on the vendors for failing to learn the proven economic adage that the channel is more efficient selling technology solutions to small and medium businesses than a direct-sales business is. Why do you think Dell is scrambling to try to reconcile its Dell Direct mantra with a new channel focus? What vendors have to realize is just because they aren't bringing viable programs to the table doesn't mean VARs are sitting on the sidelines. Many SaaS VARs have given up on vendors and are focusing on the high-margin business-process re-engineering end of the equation.

If old packaged app vendors want to survive the shift to SaaS they better get their channel house in order. And if new, emerging players think they can go it alone, they are going to find themselves in the same position as Dell. The time for both vendors and VARs to make the SaaS move is now. Your survival depends on it.

Are you prepared to survive the SaaS shift?
Let me know at sburke@cmp.com.

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