Microsoft’s competitors are ridiculing what they claim is Redmond’s half-hearted entry into the world of SaaS (software as
a service) with CRM 3.0. In numerous conversations I’ve been told, “It shouldn’t even be called SaaS. They’re not even hosting
it. They are just reselling their solution to VARs.”
As if “VARs” was a dirty word.
Well, I have news for those competitors. For the SMB market, Microsoft has the right idea.
The SMB market has always been about value-added resellers, says Josh Greenbaum, principal at Enterprise Applications Consulting.
“Not one of the big players has figured out how to crack it other than through VARs.”
SMBs use VARs because VARs understand businesses such as plumbing and heating, bakeries, and restaurants -- both large and
small -- and are able to use their domain knowledge to package a set of services into a one-stop-shop solution. That’s why
in 2006 SaaS will morph from a technology play into a channel play, used by VARs and BPO (business process outsourcing) vendors
as well, to capture this and larger markets.
Two high-profile players took the first step in 2005: Salesforce.com offered AppExchange, and IBM formed its SaaS Partner
Council. These are SaaS bazaars that allow users to pick and choose among various solutions. AppExchange allows third parties
to integrate only with Salesforce, but IBM is building a standard model for the integration of hundreds of different SaaS
solutions with one another. Neither offers SSO (single sign-on) or billing, however, which account for a good part of the
VAR appeal. But others are offering them.
The trouble is, if the SaaS model goes to the channel, then the VAR becomes the trusted adviser. It owns the customer and
it gets to decide which solutions to offer. That won’t sit well with the big guys.
Meanwhile, new companies such as Jamcracker are selling VARs the tools to offer their customers an SaaS one-stop shop. The Jamcracker Service Delivery Network provides
an array of IT and business services. If a VAR wants to offer Intacct as an SaaS ERP solution and use SalesNet for CRM, Jamcracker
can supply it with everything from SSO to provisioning, billing, and support.
This is operational integration. Working with the individual SaaS providers, the VARs deliver process integration and domain
expertise as their value add.
Hewitt Associates , a major human resources BPO company, is rolling up contingent workforce software from IQNavigator with permanent labor software
from Deploy Solutions to offer both as a one-stop SaaS solution for the hospitality industry.
Accenture is also building an SaaS practice. A “VAR on steroids,” Accenture will aggregate and integrate best-of-breed SaaS
solutions, and it has the wherewithal to extend this model into the enterprise.
Until now the only one-stop shop for a CTO was an Oracle or an SAP. But for SMBs, working with them is a daunting task, says
Robert Jurkowski, CEO of Intacct. Intacct works with industry-specific market-makers, such as Achieve Healthcare Technologies
in managed health care and RealPage in property management, to offer packaged SaaS solutions.
Companies such as Intacct, IQNavigator, and Jamcracker will help the VARs create packages they can “just slam through their
channel,” Brent Arslaner, vice president of marketing at Jamcracker, says with great relish. If anyone thought Oracle and
SAP were going to dominate the kingdom of business software, they had better guess again. The coming SaaS channel will redraw
the map.
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