The Problem with SAAS

By Sara Driscoll  |  Posted 2008-04-04 Email Print this article Print


The SAAS market is ripe for the picking, but until vendors ensure their channel programs are up to scratch, the market could falter.

The problem with Software as a Service isn’t the fact that the technology isn’t ready, it isn’t the fact that end users aren’t ready, it is the fact that SAAS vendors are blinded by confusion as to how SAAS and the channel can work together.

One of the major problems in the past with SAAS has been a combination of end-user trust – many firms still want to host their software on site, and one of demand – many end users still were not sure about what SAAS was really about.  But the real problem now is that vendors need the channel as the conduit to get this new delivery method for software off the ground, but cannot work out the right way to utilize solution providers in the best way.

Having previously only had one true major player in the game,, the entrance of Microsoft and Google has helped to legitimize this market in the eyes of the end user, and therefore demand for SAAS is growing.

But the challenge is that vendors cannot work out how VARs should be recompensed for this type of software delivery; whether they should be paid a referral fee, paid for implementation and consulting, or paid in ways such as an agency model.  And until vendors can get their heads around this new type of rebate or compensation structure in the channel, the SAAS market could falter.

While large enterprises still have issues regarding holding their software off site, and realistically there are only 20,000 or so very large companies in the United States, it is the midmarket and below where technology battles are won. Hence the onslaught of vendors over the past several years to own this market segment. IBM, Cisco, Dell, Microsoft and HP – all have launched SMB initiatives in their hundreds within the past five years, and each has declared very publically how they need to win the SMB space.

And who are the guardians of SMB’s technology? The channel. The challenge comes because when SMBs start looking at SAAS and ask their trusted adviser – the solution provider – many VARs will either be ill-equipped to offer such a solution because of lack of vendor training, or they will know that they are unlikely to be compensated as well for on-demand software services and encourage the SMB to stick with the on-premise solution. 

So, if SAAS, which does represent a good incremental chunk of business for the channel, has any future, vendors must organize their channel programs, their training and their remuneration structure to give this sector any chance of taking off and help to boost channel coffers.

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


Submit a Comment

Loading Comments...

Thanks for your registration, follow us on our social networks to keep up-to-date