This post has been brewing in my mind for awhile now. In the press, I’ve read about how the channel is threatened by SaaS. In meetings and discussions with service providers, I hear the pains of growing into such a “new” approach to technology and quite frankly, a new business model. Most have misplaced suspicion about SaaS and think way too hard about how it’s supposed to fit in their business. So I wanted to explain why the channel needs – or more appropriately – must embrace SaaS in their business.

Reduce Costs

Leveraging SaaS enables you to reduce operational overhead and improve efficiencies without the need to invest in costly technology, and (potentially niche) expertise necessary for deployment, maintenance and support. And you don’t have to worry about recouping the capital outlay – because you didn’t have any. Which sounds better to you: Making healthy margins? Or trying to recoup your investment within 12 months?

Predicable Revenue Streams

Do you really know where next months’ revenue is coming from? Worried that deal you have on the table won’t close next week? Discounting to get orders in? It’s not like you have to make payroll or overhead payments or anything, right? The Monthy Recurring Revenue (MRR) model of SaaS enables you to diversify your business and generate a predictable monthly annuity that you can count on from month to month. It sure is nice to have that extra padding when you’re waiting for that next deal to close.

Create a Competitive Offering

Ever had this happen to you? You’re in a deal and you helped the customer through the entire process of purchasing – from initial consultation through final selection and specification. Now the purchasing department puts it out to bid. Suddenly, you’re discounting to keep the business and hopefully not see your entire cost of sale eat your lunch. You have a window of opportunity right now to differentiate yourself from your competitors by adopting SaaS. When the bid goes out, you’ll have less of those pesky competitors bidding on your business. As with any technology, that’s not to say it won’t change with time, but it’s a real edge you can have right now.

Focus on Your Business

Where reselling a SaaS solution can expand your business and diversify your portfolio, it also enables you to keep focused on your core competencies. Why did you start your business in the first place? Are you really an expert on [insert SaaS-capable technology here]? Are you willing to invest in yourself and your staff to become experts? How much time do you have to do so? Go back to the fun of building your business around the things you know best and let the experts make you look good.

Drive Additional Services

Contrary to popular belief, SaaS can help drive more service opportunities – it doesn’t have to kill them. The customer still needs training and local hand-holding as they go through the learning curve. Depending on the technology, the data can be leveraged to drive additional services. Taking a shameless example from us, our solution gives our partners get great insight into their customer’s networks and bring further opportunities to light that may not have been otherwise noticed. For example, vulnerability scans show our partners where their customer’s network may need attention (patching, anyone?). Or perhaps there is a threat detected where the customer requires on-site assistance. There are services that can make up for and provide well beyond any perceived loss with an old-school technology sale.

Fast Go To Market

SaaS enables a significantly faster roll out than traditional technology. Think about how long it takes to implement any given technology and then think about the work that goes into it – from the initial sales call to the finished implementation. Customer specs, days on site, project roll out plans, customer training, etc.). Now think about rolling it out in your business, what it took you to even get to the point of offering it – product management: pricing, marketing, internal training (maybe some certs), initial sales calls, a few botched deals as part of the learning process, etc. etc. You’re still going to have a few of those hurdles, but it’s not going to be nearly as long and as painful with SaaS.

Increase Customer Retention

Having an active subscription with your customers tends to build loyalty almost on its’ own. I can tell you that we enjoy a very high customer loyalty factor in our customer base – they don’t want to give up a service they end up depending so heavily on. It’s hard to give up a technology that makes your job easier and doesn’t cost an arm and a leg and an FTE. Happy customers are loyal customers. Loyal customers not only pay the bills, they grow your business through referrals, additional projects, and (hopefully) growth of their own.

All added up, SaaS is a no-brainer for the channel. The future of the service provider is here. The ones who will blossom will be those who understand how to leverage SaaS in their business. In the same sense, the SaaS providers who do well will be those who understand and embrace the channel. A final word of advice: Don’t think about this too hard – your head might indeed explode.