SaaS Consulting: It’s Almost Like A Menu Thing

ZD Net has an interesting article on Netsuite’s latest channel offer. Essentially it looks like they’ve extended and improved their “you keep all the money for the first year” offer for VARS.

What I found most interesting was actually buried mid-way through the story — and it was this quote from Craig West:

My sense from participating in extensive threads on this topic is that the VAR channel remains wary of SaaS/cloud solution selling. It requires a fundamentally different mindset to selling on-premise solutions where the raft of available add on services is extensive. Craig agreed with my assessment that the vast majority don’t ‘get it’ or remain reluctant to give up their ancillary service support deals: “I think what’s more interesting is this burgeoning whole cloud consultancy thing where they are building whole portfolios that are not just ERP or CRM but collaboration, email, security and telephony. It’s almost like a menu thing.”

I’ve said for a while that SaaS is coming. I don’t know how quickly our customers will demand it. For now it seems mostly to be companies who fit the SaaS model (need strong accounting, revenue recognition, professional services) and have many remote locations where there is true cost savings in using SaaS versus having multiple remote offices wired to a central server.

However the quote from Craig about VARS offering a “menu thing” is where the meat of the challenge for traditional VARS lays.

With SaaS – the days of VARS like us making money from initial consultations, upgrades, setup, training, configuration and break-fix are gone.

Most of these services are either provided by the publisher or no longer required (aka customers don’t think they should pay for them).

What Craig alludes to is the new VAR model which he says is to offer SaaS ERP as a compliment to a collection of services and not just the sole service.

The main question is how quickly demand will grow from our customers for SaaS ERP. I have not seen anywhere that pricing is coming down and most prices I’ve seen for SaaS seems to be in the $15,000 to $20,000 per year (this seems to be the minimum fee level – prices rise quickly based on configuration and they are recurring) which I believe is more than the majority of our typical ERP customers will want to pay.

If and when demand grows it seems likely that to play in the SaaS marketplace as VARS our menu of complimentary services will have to grow significantly and our bread and butter consulting (upgrade, troubleshooting, installation) shrink considerably.

SaaS Consulting: It’s Almost Like A Menu Thing

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Comments

  1. I think you are right, as SaaS demands increase the VAR model will go away because there is no more need for specialized hardware in the cloud. And with the mobility attached more can be accomplished with less hardware. I think the only real issue is security. How do we keep those that are set on creating chaos from accomplishing that goal? Thanks for the post.

  2. You mentioned that VARs need to find complementary services. Some complementary software services available via Saas (like Fisiononline) fit the Consultant/VAR revenue model of requiring significant up front consulting, on-boarding configuration, training, managed services and, finally, integration services. Consultants/VARs need to maintain and grow revenue by carefully selecting and adding software services that meet the requirements of their revenue model.

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