Software as a service has a number of agents scratching their heads. Abounding hype at the outset led some partners to believe these whiz-bang platforms were hot-hot-hot and their customers would be chomping at the bit to buy-buy-buy. However, some members of the indirect channel admit facing challenges when it comes to successfully selling SaaS, and have discovered it’s a different kind of animal with its own unique characteristics. But even though SaaS might not be as plug-and-play as it originally seemed, a modified approach to selling this technology can help close deals and might even lead to additional revenue streams.
One agent’s distinctive approach to software as a service has helped it grow its SaaS sales to account for 25 to 30 percent of the company’s total sales in third quarter 2008. “It certainly was not at that level when we started out [in October 2007],” said Tom Turpin, president of Lightwave Consulting Group. “But I expect it to continue on roughly at that level for the next quarter or so.” Lightwave is a subagent for Venture Group Enterprises, which is the exclusive master agent for SaaS provider nGenX Corp.
Turpin said his company takes a more holistic view of the SaaS market, morphing the term into “software on demand,” which combines traditional software as a service and applications management. The former, SaaS, is a software solution that is hosted and managed by a provider and is accessed by the end user via the Internet. The latter, applications management, is management of infrastructure and applications already owned by the customer.
“It’s been interesting because we’re tending to sell, these days, much larger customers; and by that, I mean we’re really doing full outsourcing of an entire suite of applications, taking sometimes as many as 14 different applications out of a customer and managing their entire environment as opposed to just one particular application,” said Turpin. “That’s driven our average MRC of our recent deals closer to $10,000 per month.”
However, Turpin acknowledges that with the sheer number of opportunities, there will still be a lot more play in the lower end of the market, i.e. companies that just want Microsoft Exchange, SharePoint or CRM. He suggests asking questions around human resources, which he has found businesses to be open to moving, and avoid very complex systems like enterprise resource planning applications. “Focus on certain core applications and pain points early and then just be open to other things that pop up once you’ve built the relationship,” he said.
Similarly, John Krzykowski, general manager of SaaS aggregator 19Marketplace, thinks going with a few of the commonly used SaaS applications is a good place for agents to start if just entering the market. “[Agents] need to look at what they’re good at and what they understand before they take on SaaS applications,” said Krzykowski. “If agents don’t understand a service well enough and don’t know the alternatives, they will be a little leery to bring it up,” he said, adding that knowing the cost of initiating an application in-house becomes a key factor and selling point in a SaaS sale.