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Avoiding cannibalisation in a SaaS-y market

22 Dec 2014

Choosing your partners wisely has become even more important in the shifting value chain that is ‘as-a-service’, says Vince Randall, NetSuite general manager.

It is well documented that New Zealand businesses are increasingly adopting cloud-based software-as-a-service (SaaS), along with an increasing number of ‘as a service’ solutions. 

No longer the new disruptive kid on the block, cloud-based services are moving into the mainstream, driving an increasing number of business processes that were traditionally driven by on-premise IT.

Channel partners must, if they have not already done so, evolve their own businesses to maintain their relevance.

When cloud was a more nascent technology, channel partners were naturally wary. But initial resistance due to security and market-readiness has been swept away by market evolution. 

From talking to channel partners in New Zealand, the primary challenge they face is how to maintain their revenues, along with their value to customers, when as-a-service solutions inevitably create a direct relationship between service provider and client. 

Choose wisely So how do channel partners avoid being cannibalised within this shifting value chain? 

The answer is one of the oldest in the channel partner play book: choose your partners wisely. Sounds simple, but as technology and revenue models have shifted, it is imperative to partner with technology solution providers who are committed to investing in your success.

Outside of seeking leading edge, flexible, innovative and scalable technology that is a good fit for your client base (which one assumes is a given selection criteria), the three most important things to look for in a partner are as follows:

Get a fair share SaaS and its companion ‘as a service’ solutions have not only transformed the options available to customers,  but also the revenue models of channel partners. 

Yes, it is a paradigm shift from low volume, high margin to long-term, low margin, but if you work with partners committed to long-term relationships and industry leading margins, then secure, long-term reliable revenues are highly achievable. NetSuite, for example, offers a minimum of 30% share of software whilst assuming all partner program admin costs and risk.

Education, education, education Ensure the technology partner provides comprehensive, regular and intensive training. Just as cloud technology is revolutionising businesses; it is also transforming sales strategies as channel partners need to provide more of a business consultancy approach to sales in order to leverage the true potential of cloud-based as-a-service solutions.

Friends with benefits The number of services migrating to the cloud is set to increase. Frost & Sullivan’s State of Cloud Computing New Zealand 2013 study, reported that at least 25% of organisations not currently accessing desktop office productivity applications (eg Google Docs) via the cloud are likely to do so over the next 12 months.

The channel should therefore seek out technology partners who in turn partner and/or integrate with best-in-market cloud developers and applications to offer an extended cloud ecosystem to clients. This enables them to add and create value for their customers by helping them transition numerous business processes to the cloud.

Smart channel partners know the cloud is transforming both their clients and their own businesses; smarter channel partners are choosing cloud partners that allow them to maintain and create value while doing so.