February 19, 2015
Axcient is looking to change the notion that software as a service (SaaS) is not a viable option for traditional VARs with a new upfront channel compensation model.
The program, called Software as a Service: Front Loaded Option (or SaaS:FLO, for those of you who love acronyms) is expected to encourage traditional VARs to sell SaaS solutions by providing them with upfront profit margins for the sale, delivery and support of the company’s Business Recovery Cloud solution.
Axcient said the SaaS:FLO program will provide VARs with the first five months of revenue on day one of their cloud service sale, so resellers won’t have to wait to receive their full profit margin. The new model promises to compensate resellers for up to two years of margin, with all partners required to sign at least a one-year contract to be eligible for the program, according to MSPmentor.
The program was developed to help traditional VARs break into the cloud services business that couldn’t normally afford to deal with the rigors of a recurring revenue model.
“What SaaS:FLO does is it basically compensates value-added resellers on a SaaS or cloud-based solution as if they were selling software or hardware,” said Justin Moore, CEO of Axcient, in an interview with The VAR Guy. “We believe that the value-added resellers play a very important role in the cloud and that to date SaaS and cloud vendors have not made it economical for traditional resellers to participate in the revenue stream that you get from a SaaS or cloud-based solution.”
Axcient created the program because it felt all vendors were utilizing the same compensation model, which just didn’t apply to many traditional VARs that need immediate profits for their businesses. So instead of trying to force VARs to become managed service providers and change their entire business model, Axcient felt it would be easier to change its own method of doing business to fit its resellers’ needs, Moore said.
Axcient received $25 million in Series E funding to back its new program, which also will be put toward raising the company’s growth debt facility. Potential VAR partners will need to pass a strict vetting process to qualify for SaaS:FLO so Axcient can offer the program to as many resellers as possible. The company has already signed on several resellers as part of SaaS:FLO’s soft launch last month and expects partner demand to grow rapidly, Moore said.
“What we’re trying to do is capitalize on this $5.7 billion market, which frankly is the largest opportunity for partners in cloud and for resellers,” he said. “We want to leverage the traditional value-added reseller community to expand our market share and to ensure that our customers have seamless deployment.”
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