I’m just going to jump right in here and get my feet wet on
some hot topics. If you’re a Value Added
Reseller (VAR) or a Service Partner with particular software company this post
is for you. You see, I think I have
found a real flaw in the emerging SaaS (Software as a Service) model. Over the next couple of weeks I will write a
series of posts breaking down this topic. Part
one: I’m going to explain the issue for VAR’s and Services Partners in the
SaaS world. Part two: I will discuss
what is going on in the Industry today. Part
three: I will discuss what VAR’s and Service Partners should do to protect
and grow their business and in the fourth
and last installment, I will discuss and make recommendations to the software
makers on what they should do to build a healthy infrastructure of partners
that will grow the opportunity for everyone.
Part One:
Ten years ago being a VAR and or service partner with a
software company was relatively straight forward. You signed up for a program,
fulfilled the qualification criteria, including paying a fee for the privilege
of the relationship, then you went to market selling products and service. If
you were big enough or good enough you might even get assigned a specific
geography, industry or market segment that could be more or less your turf.
Those were the simple days...
The main reasons this model worked is that the VARS and
Service Partners were increasing the sales, service and support reach of the
software maker. There are still examples of the traditional model working for
companies like Cisco who have hardware and software solutions that are
installed on customer premises. However, this does not really exist in the SaaS
world for companies like SFDC and other SaaS pure plays. Why do you think SFDC
has never had a VAR program to begin with?
Then why do so many SaaS companies still try to emulate the old model
with disastrous results?
With SaaS the software maker can reach, sell, deliver and
support their solution to all of their prospects and customers all on-line and
therefore, the need for physical presence is minimized. The more simple and stand-alone the SaaS
application is, the greater the opportunity for virtual presence vs.
physical. In turn, a lot of the value of
local sales and support is gone. So what are VAR and Service Partner’s supposed
to do to sustain and grow their business? I will outline these strategies in
part three of this series but it has a lot to do with creating new business
models and SaaS ecosystems to put the “Value Add” back in VAR.
Today it is both extremely challenging and frustrating
working with SaaS providers as a VAR or a Service Partner. The opportunity as a VAR is significantly
diminished. Most of the programs I’m familiar with have a major flaw and that
is the customer could have been sourced by the VAR somewhere in the buying
cycle, but end up contracting directly with the Software maker when they are
ready to buy. Since all of the software capability comes from the same source,
the end customer finds very little value in transacting for that piece of the
service, the SaaS piece, thru the VAR. In
this model, the concept of value added reseller is null and void because of not
being able to resell in a traditional sense (i.e. taking the contract on VAR’s
own paper). However, that is not the end of this story. Maybe what should exist
in place of the traditional VAR model is a network of Value Added Influencers
because that is exactly what the channel is doing. You see, for most industries
and most businesses they turn to trusted sources for information, strategy and
guidance during their buying journey. In almost every case the highest value
influencer in their decision process are not the software makers themselves.
Therein lays the opportunity to redefine the VAR and Service Partner
relationships from one about channel “transaction” value to one about channel
“market value” and influence revenue.
Stay Tuned:
Next time I will discuss what is going on in the SaaS industry
today that makes it so challenging for VAR’s and Service Partners and why
things need to change.
Bruce Culbert is the Chief Services Officer of the Pedowitz
Group and Managing Director of BPT partners. He is a globally recognized expert
on IT Services and CRM. With 25 years of experience and over 5,000 projects under his belt, Bruce has seen it all. The
Chief Service Officer Blog is a contemporary dialogue around the issues and
opportunities in IT Software and Services.
