Microsoft Working To Quell Partners' SaaS Fears

But in Lee's opinion, in order for SaaS to really take off, the whole SaaS ecosystem, from resellers and vendors that rent their offerings to end users, needs to be modified. And because the end user can log in and access applications without interacting with the VAR, the channel will have to develop new strategies for engaging with customers, Lee said.

"The challenges exist around who's going to get control and profitability. In the traditional channel model, vendors go as much as possible through the VAR. But with Microsoft's CRM Live, what is the balance of control there? Who's the first person to call?" Lee said.

Partners that have based their businesses on large upfront software license sales will likely encounter difficulties as they transition to the annuity model on which SaaS is based, and disagreements over which party 'owns' the customer are also likely to create some friction.

ConnectWise's Bellini advocates a strategy that recalls the old football adage, 'The best defense is a strong offense.' ConnectWise has its own data center and has been hosting entire networks for its clients for the past two years, but Bellini isn't worried that this part of his business will be usurped by Microsoft with software + services.

"Will we be competing with Microsoft? Sure. But I think it'll be a while before Microsoft becomes the complete outsourced answer," said Bellini. "As a VAR, I think this is just one of those changes that you have to deal with. Here's another big change coming at you, and the question is, how will you survive?"

Another reassuring aspect of software + services is that many end users rely on solution providers to customize Microsoft applications for their particular environments, said George Brown, CEO of Database Solutions, a Cherry Hill, N.J.-based Microsoft partner.

"That hasn't been an area that Microsoft has focused on, and that's where opportunities exist for partners," said Brown. "The majority of Microsoft partners make their money from services, and that's not likely to change."

Workopia's Lee agrees that the services part of software + services will remain under the control of Microsoft's channel partners. "Microsoft isn't in the business of services. They've built their partner channel to deliver the necessary services, and I feel comfortable with Microsoft because resellers are woven into its business model," Lee said.

Mitch Cannady, president of Spinnaker Network Solutions, Irvine, Calif., says Microsoft has a proven history of learning what's going on around them and reacting in ways that end up changing the market -- and that benefit the channel.

For example, Microsoft's decision to sell its CRM products through distributors was a "huge development" that affected how quickly partners were paid, said Cannady. "We get paid on our software purchases faster today than we ever have in 11 years of doing business with Microsoft," he said.

"They're constantly studying and looking at what the effects are going to be from any strategy. That's why I think Microsoft has the best shot at providing a channel environment that's effective for software + services," said Cannady.