Booming SaaS Market Beckons IT Channel: Study


A wealth of new business opportunities in the fast-growing software-as-a-service (SaaS) market are available to information technology (IT) channel companies willing to adjust their business operations, according to a new report from CompTIA.

Nearly three-quarters of channel partners surveyed said they sold SaaS solutions in the past 12 months as part of their cloud-based service portfolio, noted the study named “Why Software as a Service? Benefits & Advantages of SaaS.”

But with SaaS poised to remain a dominant cloud solution for the foreseeable future, there is even more business to be had by both traditional channel players who cut their teeth in hardware sales and integration, and new market entrants who prioritize software sales, states the study.

“The SaaS market is ripe with opportunities that have appeal for channel partners,” said Carolyn April, senior director, industry analysis, CompTIA. “Recurring revenue, faster time to deployment, more service dollars, and inroads to vertical market customers are outcomes many channel partners strive for.”

A net two-thirds of channel partners expect to see increases in the revenue they earn from SaaS-related customization and integration services in the next year. A slightly smaller percentage are counting on revenue boosts from managing SaaS-based solutions for customers.

But before any of these outcomes become reality, channel partners need to make a concerted effort to adjust the way they do business, highlights the study.

The survey reveals that staff training is the primary step that companies are taking to ready their business for the SaaS market. More than half have retrained existing technical staff, while nearly half have retrained existing sales staff.

“From a technical training perspective, we’re talking about building cloud-based skills, such as the ability to integrate SaaS applications located in different public clouds or to on-premises software,” April said. “Security skills pertaining to cloud-based tools are another area that warrants retraining.”

Sales team retraining is necessary because selling SaaS requires different conversations and relationships with customers than are employed when selling hardware components.

In addition to retraining existing staff, 36 percent of channel partners have hired new staff with SaaS sales experience; 34 percent have created new positions to work with SaaS distributors and exchanges; and 31 percent have reoriented their marketing strategies to appeal to potential SaaS customers.

Altering business practices isn’t limited to channel partners. Independent software vendors looking to grow their business via a partner model must also make adjustments.

“Many vendors in the SaaS space are unfamiliar with the traditional channel sales model and may lack formal partner programs and indirect sales strategies,” April said. “One challenge is designing the right compensation models to account for sales brought in by partners.”

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