SaaS channel models morph into shape

Mark down today's announcement of SuiteCloud Connect for Salesforce.com as a victory for the cloud over individual vendors. It signals that intermediaries are going to have more power in the cloud and we're not going to end up having to choose between just a handful of mega-vendors.

Mark down NetSuite's announcement today of SuiteCloud Connect for Salesforce.com (all Techmeme coverage) as a victory for the cloud over individual vendors. Sure, this is still about who owns the biggest slice of the cloud (did you notice the resemblance between NetSuite's SuiteCloud diagram and a pie-chart? Guess who got the lion's share). But it represents a blow for Salesforce.com's own-the-whole-ecosystem AppExchange model, just as much as it's a step back from NetSuite's former rhetoric about standardizing on a single vendor's suite for all your needs. [Disclosure: NetSuite is a current client and I've also done work recently for Salesforce.com and Intacct].

It signals that intermediaries are going to have more power in the cloud and we're not going to end up having to choose between just a handful of mega-vendors. Instead, interoperability (dictated by the cloud, not a self-appointed elite) is going to be the dominant meme and vendors will have to empower third parties to link their application platforms wherever customers can find the most value. The open cloud wins the day.

There's a strong message emerging too about the importance of channels in delivering cloud and SaaS solutions to customers. While NetSuite is clearly motivated by being able to market its ERP and ecommerce platform to Salesforce.com's SaaS-savvy customer base (and who in this market doesn't covet a slice of that action?), it's increasingly relying on a number of different kinds of channel partners to reach the market. At first glance, the partner ecosystem for SaaS doesn't look that much different from the channel partners that traditional software vendors have worked with. But the detail of how they execute is much changed.

In particular, I think the SaaS model is creating a new category of ISV that takes a cloud platform like NetSuite or Force.com and adds feature extensions — the SuiteCloud Connect partners are examples of these — or vertical processes — as typified by the very interesting companies now starting to emerge from NetSuite's recently announced SuiteCloud Developer Network.

A new kind of solution provider is starting to emerge too, with some very interesting examples in the Google Apps Reseller network as well as among partners of the larger SaaS pureplay vendors. There's still a lot of evolution still to take place there, because the business model is a big change for those used to the conventional solution provider way of doing things. The emphasis among these cloud solution makers is much more around stitching together multiple cloud services to enable business change for their customers, and I think we're going to see some very interesting companies bubbling up on the back of the opportunities for very innovative cloud integration that are appearing thanks to announcements like today's.

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