NetSuite to crack the cloud channel?
In what otherwise might be regarded as an innocuous announcement, NetSuite has entered into a partnership with Hein & Associates. It means Hein's "professional consultants will deliver sophisticated, vertically focused solutions for needs ranging from tax and financial reporting to growth plan development." So what you might think?
Channel announcements are ten a penny but what makes this important is that NetSuite appears to be getting closer to cracking the channel code for SaaS vendors. Traditionally, SaaS has been viewed as channel unfriendly. A lack of big margins compared to traditional on-premise solution vendors combined with incumbent inertia play into that. Instead, we've seen the rise of so-called 'platform as a service' or PaaS as an alternative way to reach the market with a direct appeal to developers rather than distributors. Examples include Intuit and Salesforce.com.
Earlier in the day I was in conversation with Intacct executives where distribution was one of the agenda items. Their marquee relationship is with AICPA where they say there are more than 1,000 inquiries in the pipeline and that keeping up with demand is hard work. And we're in a recession?
The fact is that despite the recession, most SaaS companies I speak with are growing nicely, albeit from relatively small installed bases. Most are going it alone rather than investing in traditional channel activities. However, it seems to me that if they are to safeguard their future, then capturing the hearts and minds of the many thousands of channel VARs is going to be critical.
Intacct talks about the vast opportunity to hit the 'white space' between QuickBooks and whatever the next solution might be preferred. I see that as a common aspiration among vendors. The perception is that the market is so large there is enough to fuel growth for years to come. I agree. But it won't come without making channel investments of the kind NetSuite announced today. It is bound to lead to channel disruption but it will be end users who benefit from cloud economics, agility and a new focus on vertical market requirements. The question remains whether it will also lead to consolidation among channel players in the volume land grab required to compensate for declining revenue and thinner margins. Or maybe the channel erodes and PaaS becomes the dominant distribution model? Thoughts?