In 1999 David Code was still running a traditional VAR helping customers with the implementation of procurement processes. After doing a J.D. Edwards implementation for his own company he decided there must be a better way to deploy business applications and started to look into ASP offerings. The challenge back then was to build a complete portfolio of applications that would a low to build an entire business on it. The key to his success David stated, was the fact that they did no longer sell a piece of software but helped people to reengineer their business processes. Suggesting an ondemand application was a result of the consulting work. Today AppsOnTap is selling SaaS applications from Salesnet (now RightNow), Vtrenz, Openair, Bridgeworks, Netsuite, QuoteASP, Ketera and Employease (now ADP). As Frank Brown stated, the industry goes like any other industry through those waves of disintermediation to reintermediation. The profitable and self funded AppsOnTap is one of the early leaders in indirect SaaS channels and a great example for a profitable SaaS implementer.
Salesforce.com is a very effective channel from big to small companies. For instance Vertical Response offers their solutions via the AppExchange to 400-500 customers. The AppExchange model is to help developers reduce their burden on integration and also reduce sales and marketing cost. Vertical Response is one of the examples who provide their solutions through AppExchange with an up to 40% lead closure rate in accordance to Salesforce.com’s Matt Holleran (VP Alliances). Also interviews with other partners confirm that Salesforce.com made it very easy to integrate their respective solutions without the need to get engaged with salesforce employees and be dependent on their resource allocation. For instance Salesforce.com provides ways to test drive not only the salesforce.com application but also their partners application. Some of their partners develop exclusively on the salesforce.com platform and can reduce cost of the development environment. The salesforce.com partnerships are highly integrated into the salesforce.com solution architecture which makes the salesforce.com channel a highly efficient group for all kinds of solution developers.
Matt’s advice: Companies need to design the buying process into their product. The easier it is to explore, try and buy a product the higher the chance to win the customer.
Jamcracker is providing a channel ecosystem through their webservices integration business. Partners can access the Jamcracker site and find and select those services. There are new success stories around the channel to be found on their website. JSDN is Jamcrackers On Demand Market Place. On a way similar to the AppExchange from Salesforce.com it was built to help partners buy, consume or market webservices.
Brent’s advice: Large percentage of traditional IT VARs aren’t there yet. Even so Microsoft is now pushing the SaaS business. A new breed of partners with no baggage is probably what it takes to build channels for SaaS. His channel began to grow substantially this year.
Infopia tried to develop a partner channel early on but faced great challenges. Even so the product is zero touch and easy to onramp a customer, channels wasn’t ready. In more complex projects they actually pulled in some VARs who helped to integrate Infopia’s ecommerce products into the customers on-premise IT world.
Now in a very recently new attempt to collaborate with partners they had more success. In a large project Infopia collaborated with a new partner and actually demonstrated great success for all participating parties.
Infopias sales organization is structured so that all business below $50k goes through inside sales and above through field sales. If partners are involved in a business Infopia provides both contract option: Customer signs partners paper or Infopias paper.
Bjorns advice: Since the partner model is so different due to the recurring revenue model, partners and vendors do need to fully understand the value chain in that business.
Today 7-26 I interviewed Bulldog Solutions CEO Rob Solomon
Bulldog Solutions is a Lead Generation Company, working as an enabler for the SaaS industry. Some of the underlying infrastructure to the lead generation business are conferencing solutions from Webex and Placeware. Bulldog seams to be one of the larger Webex and Placeware customers, using their services to provide webconferences to the customers of Bulldog Solutions. Even so for the web conference vendors this might be a channel, Rob Solomon (CEO) how ever views this just as infrastructure he is using. Bulldog Solution makes primarily money off of the services they provide, while the margin they get from the vendors are not substantial to their business.
Channel or not – it is one of the cases where a company such as Bulldog is an important catalyst to vendors like Webex and placeware. It is one of many examples how channels appear to be very different in the SaaS industry relative to the traditional IT industry.
Channels are the most complex business model – simply because of its integrated involvement of legally independent parties in one of the most critical business processes: Sales. Therefore channel business has many facets and view points. There is an executive view point, one from investors, customers, service organization, product development and marketing.
Often Times channels get inherited by a new executive who is forced to understand that channel and the implications of any changes in a matter of weeks.
But complexity doesn’t need to mean complicated. Structuring and completely understanding channels is the usual way to manage complexity. The book Channel Excellence shall help all constituencies to better understand, structure and manage those relationships for a better, faster and more profitable business.
After all I decided to write this book and invite everybody to comment, contribute, express your thoughts and may be help to make this a helpful guide to everybody facing challanges with indirect channels. The plan is to publish the book in the next 12 weeks.