If You Can’t Beat ’Em, Join ’Em … VARs Consider Benefits of SaaS

Whether you're drinking the Kool-Aid or shrugging off software-as-a-service (SaaS) as the latest fad, it doesn't appear to be going away anytime soon. In fact, according to an estimate from the leading industry analyst firm Gartner, SaaS (also known as cloud computing) will jump from $46.4 billion in 2008 to $150.1 billion in 2013.

As more and more companies begin to adopt SaaS, value-added resellers (VARs) must also consider the switch. But the decision is a little more challenging for VARs. First, SaaS requires VARs to completely change their business models, which is no easy feat. Some VARs also feel that SaaS threatens control of their customer relationships. And finally, the SaaS model takes longer to realize profitability, taking VARs from low-volume, high-margin products and services to high-volume, lower-margin sales.

On the upside, however, the quality of earnings with the SaaS model is higher with more predictable, recurring revenues. In addition, although the types of professional services VARs offer may also require some changes with SaaS, there is still a great deal of opportunity to provide value. Data conversions, project management, change management, training, system integration and software customization are still high-demand needs that offer tremendous business value. It's also important to recognize that VARs have a big opportunity to add value to up-and-coming hybrid approaches, for example, LiveOffice's partnership with Mimosa and Microsoft's software-plus-services model.

In the end, VARs need to be flexible and provide solutions their customers want and need. SaaS is a big player, especially in a down economy, and it's getting easier to sell as more and more customers begin to understand it and adopt it. So take notice, VARs, and decide where you see the future of your business. But as Francis Bacon said of innovation, "He that will not apply new remedies must expect new evils; for time is the greatest innovator."