SAAS: Channel Friend or Foe?

By Sara Driscoll  |  Posted 2007-10-24 Email Print this article Print
 
 
 
 
 
 
 

Gartner predicts that the market could be tough going for solution providers.

The software-as-a-service model is likely to be tough terrain for solution providers to navigate, according to Gartner.

At the market research company's IT ChannelVision event in Palm Springs, Calif., Oct. 20-24, Ben Pring, research vice president of IT services, said, "The underlying principals of what is going on in the software market are not favorable for the channel."

The model is about making things simple, losing the management pain and headaches that technology can bring, he said.

"It is in this pain that suppliers make their money. The dysfunction of technology is a channel opportunity," he added.

While he admitted that SAAS does not solve all technology problems, he said it is likely to dilute some of the channel opportunity in the software market.

"It is a tricky issue for solution providers; there is no easy answer," he said. "Vendors and the channel are caught in a dilemma. They are all trying to be positive about it, but at the end of the day they would all rather it went away."

However, he said there are underlying opportunities for the channel in SAAS, too.

"Ultimately it is still a Barbara Streisand model. People need people, and the channel will find its new value add in SAAS," he said. "The market is going through an impasse right now while this change happens and trying to find out what the next wave of value-add is, and there is opportunity in that."

One VAR already running a SAAS model is ZSL.

"Our customers were driven by the underutilization of their software," said Shiv Kumar, executive vice president of the Edison, N.J.-based company. "We go in, do some asset management for them and then host the software they need as a service. Our focus is the SMB [small and midsize business] market and there has been a positive reaction to SAAS from heads of certain departments, such as procurement."

Egan Christensen, senior director of professional services at asset management provider Everdream, of Fremont, Calif., said his VARs are also adopting a SAAS approach and driving revenue thought it.

"Solution providers are reselling our SAAS service and earning 20 to 30 percent margin on it," he said. "Most organizations do not know what they have, so asset management via a SAAS model tells them what they need, and solution providers get the up-sell opportunities.

"The channel is absolutely ready for SAAS. CIOs cannot bear infrastructure costs anymore so over the next few years, now that the technology is available, this market will increase," he added.

Gartner is forecasting the SAAS market to grow at a compound annual rate of 22.1 percent through 2011 for the aggregate enterprise application software markets, more than double the growth rate of total enterprise software.

 
 
 
 
Sara Driscoll began her journalism career at 16 years old on her local newspaper, The Watford Observer. Working part time, she covered a range of beats. Leaving to complete her Journalism Degree at Bournemouth University, UK, Sara then went on to graduate and work for Emap. She began as a reporter on APR, Emap's construction title, being promoted to senior reporter with a year.Sara then joined VNU Business Publications as Deputy News Editor on CRN, the weekly trade title for channel players. She covered industry/business news from vendors, distributors and resellers, product announcements, partner announcements as well as market and trend analysis, research and in depth articles to predict up and coming trends in the sector. She was promoted within a year to News Editor, a year later to Deputy Editor and the following year became Editor. Sara remained editor of CRN for three years, launching the magazine on new platforms including CRN TV and eBooks, as well as several magazine and web site redesigns. She was called on for expert industry comment from various publications including appearing on live BBC news programs. Sara joined Ziff Davis Enterprise as Editor of eWeek Channel Insider. She runs the title in all formats – online up to the minute news, newsletters, emails alerts and events. She also manages the brand of Channel Insider in all formats - events, shows, awards, panel debates and roundtables.Sara can be reached at:sara.driscoll@ziffdavisenterprise.com
 
 
 
 
 
 

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