Checklist: Software as a Service revenue opportunities

Service provider takeaway: Value-added resellers are worried that Software as a Service (SaaS) will cut into their bottom line. But by accepting that SaaS is here to stay, VARs can adapt to the trend and provide important services. Need a downloadable version? Go here.

The advent of Software as a Service (SaaS) has created plenty of apprehension among value-added resellers (VARs), who are concerned about being "disintermediated" by this new generation of Web-based services that can be delivered directly by software vendors.

For many years, VARs made a lucrative living deploying and maintaining complex applications and the system infrastructures that support them. In fact, many VARs generated fees that far exceeded the original software price over the lifetime of the application.

But that dynamic is changing. THINKstrategies' research and consulting engagements have shown that customers are increasingly interested in and are rapidly adopting SaaS solutions to meet their business needs. Our survey, in conjunction with Cutter Consortium, of over 100 IT professionals worldwide found approximately one-third are already using SaaS solutions and another 40% are considering SaaS alternatives. Of those companies that are using SaaS solutions, more than 80% are happy with these Web

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-based applications, plan to increase use of SaaS, and would recommend SaaS to others.

So it's not surprising that VARs are afraid that SaaS will undercut their traditional business model. And while there is no question that SaaS poses a threat, there are still plenty of opportunities for VARs to play a useful and profitable role in this brave new world.

A growing number of new and established VARs are responding to these opportunities. These VARs recognize that the SaaS movement is not a fad but rather a real trend that is fundamentally changing the way software is packaged and delivered by vendors and acquired and absorbed by customers.

While SaaS is disrupting the traditional role of VARs, it will not eliminate the need for trusted third parties to help software vendors distribute and customers adopt software solutions.

For more information on Software as a Service, be sure to check out our SaaS Prep Guide.

About the author:
Jeffrey M. Kaplan is the managing director of THINKstrategies, a strategic consulting company based in Wellesley, Mass., and the founder of the SaaS Showplace, a vendor-independent online directory of SaaS solutions and best practice information.