The introduction of on-demand SaaS applications has fundamentally shifted the sales equation for the IT service provider community. Adoption of this model requires IT professionals to strengthen their selling skills and widen their target prospect base at each client site, essentially realigning their business models and tightening their focus on individual customers. In a way, SaaS is forcing providers to improve their engagement and forge stronger partnerships with clients. If that sounds like hard work, it usually is. But the pay off in higher sales and improved customer retention could be well worth the effort.
But the question on everyone's mind relates to the sales and profit potential. How can solution providers partner and compete (when necessary) with SaaS providers? At ChannelCon, a panel of industry experts, including moderator Craig Galbraith, Executive Editor of Channel Partners, suggests they can ‒with the right preparation and proper follow through.
SaaS is different than a standard channel offering, so "partners need to go beyond offering the things they normally do," suggested Stephanie Barton, Senior Manager of Partner Success at Concerto Cloud Services. "They need to figure out a differentiator, picking out and building on something they already have a real talent for." SaaS offers providers that opportunity, helping them dive deeper into certain verticals and fill gaps in their line cards. Its ease of deployment, lower Capex requirement, and scalability create an almost "plug and play" option for those looking to expand their solutions sets and better support their most profitable clients.
Orrin Klopper, CEO of Netsurit (Pty) Ltd pointed out the leverage SaaS brings to the channel. "If it creates value to customers, it becomes more important to providers. You just need to identify the opportunity and then figure out how it can help you achieve greater profitability. The customer must also be invested for it to work."
Proceed with Caution
It seems like solution providers and their customers are becoming more enamored with SaaS every day. As new applications come along and the integrations grow, that passion is sure to increase. Of course, IT firms still need to perform their due diligence to ensure each new offering is a viable option for their business.
The wild card in the equation is people: who is the actual buyer and who should be influencing the sale. Providers need to be sure they have the right team in place and ensure they all have the communications skills needed to connect with each decision maker. "They need to be able to talk to HR, the CFO, and other executives today," emphasized Paul Cronin, Facilitator of Excellence at Cronin Corporation. "For example, your engineers may be strong when talking about infrastructure and technical concerns, but not have enough business savvy to hold the conversation with those decision makers."
"Investing is soft skills is crucial," said Barton. "Sales and the technical staff need to march to the same drumbeat and talk with a variety of new people." With department heads and many others involved in the SaaS decision-making process today, providers need a team of capable communicators to listen, respond, and close deals.
The disconnect between IT providers and others in the SaaS supply chain may be a larger concern. "All vendors are not equal when it comes to the channel," suggested panelist Paul Arnautoff, Director of Business Development for AppDirect. "Many companies that moved to the on-demand model, or have their roots there, are more focused on direct. It's a different thought process, with some considering the channel a highly uncool place to be. Be sure hold the SaaS vendors you work with accountable, to give you the support your team needs to compete. And don't necessarily target the top names, they may not be the best option for you or your customers."
Other notable comments and suggestions from the expert panel include:
- "There are so many acronyms and terms, so many customers don't know where to go and what to look for. We lead our discussions with guidance based on our understanding of the customer's business," said Klopper
- "A subscribed user needs to be managed differently than a client with a perpetual license. You must engage and continually build value to keep them happy. If you can get them to extend to an annual or longer user use contract, it ensures they have skin in the game and will continue your relationship," suggested Arnautoff.
- "Consider all the variables it takes to bring a SaaS solution to market before pricing it. We brought in less experienced sales people on a lower commission to keep our pricing competitive," stressed Cronin.
- "A good churn rate is 5-7%, but if you can get a customer to buy a second and third service that integrates, they will get stickier to the original service. Sell it as a package whenever possible," added Arnautoff.
At the end of the day, "it's those value-added services you bring and your trusted advisor role that will help grow the most business," emphasized Barton. "You need to consider all the other opportunities a client brings to the table, and match it with your solutions stack."