Demand Generators

Will Value Added Resellers (VARs) embrace the Software-as-a-Service (Saas) movement or treat it as a disintermediating threat? According to VARBusiness' 2005 State of Software survey, VARs (or solution providers) are actually prepared to capitalize on SaaS.

Will Value Added Resellers (VARs) embrace the Software-as-a-Service (Saas) movement or treat it as a disintermediating threat?

According to VARBusiness' 2005 State of Software survey, VARs (or solution providers) are actually prepared to capitalize on SaaS. In fact, 45% of survey respondents claimed that they will sell software on a subscription basis within the next 12 months. That's more than double the 21% that do so presently.

VARBusiness points to the emergence of new SaaS-enabling technologies from small companies such as Jamcracker and Intacct as well as larger ones like IBM ("on-demand") and Oracle ("grid computing"). "These are the solutions that reside behind the scenes, providing the building blocks on which VARs, ISVs and service providers can construct ever more powerful and seamless services that help their clients streamline their businesses," the magazine contends.

Research firm IDC forecasts the worldwide spending on SaaS will grow from $4.2 billion in 2004 to $10.7 billion in 2009 -- an average of 21 percent a year.


If VARs are to survive and succeed in this new environment, they will need specialized or vertical-focused capabilities. "The services concept sometimes makes it hard to create an intermediate layer that relies upon the expertise of a channel provider," says Todd Johnson, president of Jamcracker. "The result is that VARs who don't have a specific value-add functionality struggle to create useful roles for themselves in SaaS implementations."

Indeed, the term "reseller" may no longer even be appropriate in this new environment. The challenge in the SaaS arena no longer revolves around just reselling and implementing hardware or software. Rather, it is about identifying and diagnosing business problems, and then defining unrecognized business value in a credible way. The VARs of old must become SDGs: "specialized demand generators."