The SaaS Business – A View From ITA Fall Collaborative 2010

The SaaS session at the Fall Collaborative for the IT Alliance in Salt Lake City Utah has just wrapped up.

Channel representatives from Netsuite (Craig West) , SAP (Geoffrey Ashley) and Intacct (Taylor Macdonald) made an impressive case for VARS to begin offering Software As A Service.

This was one of the most heavily attended sessions at the conference. It also provoked a good level of discussion and the presentations were top notch.

After the vendors were done three VARS (Christopher Goguen of RSM McGladrey, Robert Gaby of Arxis Technology Inc and Steve Jones of Explore Consulting) took the stage to answer questions and make a presentation about how their SaaS based practices. What follows are my notes – and initial impressions.

Live from the IT Alliance in Salt Lake City Utah.

So far the hottest session that I’ve seen has been in SaaS — there was an entire day yesterday devoted to it and the room seemed to have about 50 to 60 people (most other sessions I’ve been in were well under 20).

The three represented – SAP, Netsuite and Intacct.

I am still of the opinion that most SaaS models for VARS involve also offering services in addition to SaaS. In other words the days of just rolling a vanilla ERP offering (in this case SaaS) and providing only service and support are probably gone.

The three VARS who they selected to speak each had (as they have in the past) some service that they also offered in addition to pure ERP.

One VAR was McGladry – obviously offering CPA / Audit type work. They were doing Intacct. Suggested that one reason for selecting Intacct was the AICPA endorsement and their confidence that the AICPA researched “the best” (I guess these guys never looked into the CPA2BIZ debacle or the early days of ATB).

One VAR was Arxis and Bob Gaby of Arxis. These guys haven’t sold a deal and it will be interesting to hear from them next year. They formerly did Netsuite (not a peep on why they left) and now have picked SAP. From Bob Gaby’s description it sounds as if they’re going to make a very traditional run at ERP using the model that we are all most familiar with.

One VAR was Explore Consulting – Steve Jones – they were Netsuite and based on his description it sounded like much of their work involved web integration. He described 90% of the work as being off-site which didn’t strike me as a pure ERP type offering but rather that they probably did more integration to web (or other apps) and maybe used Netsuite as the common repository for the ERP data.

A couple things that stand out:

– In terms of VARS who are getting into SaaS — don’t expect to migrate your existing base. Most of the new deals mentioned seemed to fall into the startup category or the moving off QuickBooks category.

– In the future most companies are going to demand a self-install (either for upgrades or new installs) . Whether you stay with on-premise or go with SaaS – the trend is for self install and configure and “wishing it weren’t so” is probably not an effective long term plan for growing an ERP business. Geoffrey Ashley of SAP quipped that for on-premise publishers to react to this trend they’ll probably have to re-architect their product  – further suggesting that most publishers would opt to re-architect for multi-tenant (another MAS upgrade anyone?).

This was probably the single biggest “ah ha” moment of the entire ITA conference because I also feel it’s the strongest and most compelling argument for a VAR to become involve in offering SaaS – change or the world is going to change without you.

It still is not clear to me that there’s a pure VAR opportunity in the SaaS market. By pure VAR I mean the traditional model where a consulting firm sells only the software and support without any add-on products or customizations that they’ve also developed. The SaaS products remain expensive and won’t be a migration path for most of our existing clients.

SaaS likes to point out the rapid growth and the tons of new leads (3 a week according to Taylor Macdonald) while also ignoring that the growth is largely because they’re starting from a low number and the leads are high because there aren’t many VARS.

During the presentation Taylor asked the 50-60 in attendance (all top tier VARS) how many were getting 3 leads a month from their publisher. Not a single hand went up. He then went on to say that for some VARS Intacct is providing 3 leads a week.

Another interesting tidbit on leads that I picked up is all the SaaS folks talked a lot about how quickly you have to qualify and get into the sales process. I read between the lines to take that to mean (perhaps incorrectly) that not everyone who is a lead has a $20,000+ per year budget and that you must quickly qualify out those who don’t have the financial means. I’m just wondering what percent get qualified out due to no budget – -my guess is that it’s relatively high.

An exciting area — I think it is the wave of the future. Just not sure how we ride that wave using the current model we’re all used to.

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Comments

  1. There are much talks but nothing happening much in Asia yet. With the exception of Netsuite which has an office in Singapore, Intacct & SAP has none. Sorry SAP do have an office but for their B1, A1, R3 product.I will be watching closely in my market. With the launch of Sage Accpac 6>, it will be trully web based. (don’t need Citrix or TS)

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