Friday, February 1, 2008

Software as a Service

Value-added resellers are worried that Software as a Service (SaaS) will cut into their bottom line. But by accepting that SaaS is here to stay, VARs can adapt to the trend and provide important services.

The advent of Software as a Service (SaaS) has created plenty of apprehension among value-added resellers, who are concerned about being "disintermediated" by this new generation of Web-based services that can be delivered directly by software vendors. For many years, VARs made a lucrative living deploying and maintaining complex applications and the system infrastructures that support them. In fact, many VARs generated fees that far exceeded the original software price over the lifetime of the application.

But that dynamic is changing. Research has shown that customers are increasingly interested in and are rapidly adopting SaaS solutions to meet their business needs. A survey of over 100 IT professionals worldwide found approximately one-third are already using SaaS solutions and another 40% are considering SaaS alternatives. Of those companies that are using SaaS solutions, more than 80% are happy with these Web-based applications, plan to increase use of SaaS, and would recommend SaaS to others.

So it's not surprising that VARs are afraid that SaaS will undercut their traditional business model. And while there is no question that SaaS poses a threat, there are still plenty of opportunities for VARs to play a useful and profitable role in this brave new world.


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