SaaS for MSPs: It’s About Effeciency, Not Big Profits
I concede: I often blog about the fact that many SaaS applications like Microsoft BPOS (Business Productivity Online Suite) don’t offer VARs and MSPs enough profit margin opportunity. But I had a rather enlightening conversation yesterday with Next Level Cafe, a managed services provider based in Minnesota. CEO Richard Anderson offered some timely perspective on the true SaaS opportunity. Here it is.
Anderson described how Next Level Cafe made the switch to managed services back in 2002 or so. Then about three years ago, the company started making more and more SaaS moves — including a relationship with Intronis, the online backup specialist.
Anderson’s key learning: SaaS (software as a service) isn’t about generating big profits or massive margins — at least not in the near-term. Instead, it’s about efficiency and automation. You gain some valuable recurring revenue. But more importantly, you’re freed up to work on strategic projects for your customers.
Apparently, SaaS and managed services are treating Next Level Cafe well. Roughly 85 percent of the company’s sales involve recurring revenue (SaaS and managed services) engagements. Anderson will share more details during The VAR Guy’s April 7 Webcast, Getting Started with SaaS.
If you’ve got questions for Anderson, feel free to post a comment or email me (joe [at] NineLivesMediaInc.com). We’ll cover dozens of attendee questions during the webcast.