Counter Trend: Software Companies Leave SaaS to Partners

Counter Trend: Software Companies Leave SaaS to Partners

saaS_counter_trendA  counter-trend is emerging in the applications market. Over and over again, I'm hearing about application companies downplaying their own SaaS (software as a service) efforts -- and instead delegating SaaS opportunities to VARs and managed service providers. Here's a look at the counter-trend, which involves everyone from Oracle to a range of software upstarts.

I realize SaaS application providers like and NetSuite continue to grow like weeds. And in the managed services market, many VARs and MSPs depend on hosted or SaaS versions of RMM (remote monitoring and management) and PSA (professional services automation) software. Plus, our own SaaS 20 Stock Index -- which tracks SaaS-centric companies -- jumped more than 65 percent in 2009.

VARs and MSPs Lead the Way

But there is a counter-trend emerging: Business application providers that downplay or abandon their own SaaS efforts, which opens the door for VARs and MSPs to fill the void.

A few prime examples:
  • Oracle has outlined six cloud and SaaS plays for its channel partners. The effort follows plenty of SaaS talk during Oracle OpenWorld in October 2009. In every conversation I've heard, Oracle says it wants to leave the SaaS and cloud efforts to its channel partners.
  • Open Xchange, an open source alternative to Microsoft Exchange, expects 26 million people to use its software in 2010, up from 15 million in 2009. Hosting partners are central to that growth strategy.
  • Jaspersoft, the small but fast-growing open source business intelligence company, says 50 percent of its 2010 customer deployments will likely involve SaaS. Channel partners -- rather than Jaspersoft -- will host the applications for customers.
  • Zimbra, the open source email provider owned by Yahoo, has lined up 450 hosting partners -- many of whom are VARs and MSPs serving the higher education market. VMware appears interested in the strategy, and may be looking to buy Zimbra from Yahoo.
I could lengthen the list but I'm pressed for time. Ultimately, you get the picture: There's more than one way to tackle the SaaS market.
  • Some software companies will host the offering for you -- a potential option if you don't have the time or money to build out your own SaaS data center.
  • Other software companies are bowing to your market and end-customer knowledge, letting you pursue the opportunity on your own.
Customer choice is alive and well.
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