Feature: secrets of selling SaaS

By Sholto Macpherson on Nov 8, 2011 7:32 AM
Filed under Services
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Resellers need to understand the value proposition of SaaS is helping little guys do big things, writes Sholto Macpherson

It used to be that the first step an accountant took when setting up a practice was to spend about $25,000 on MYOB’s practice management software, a server to run it on and terminals for staff to access it. “That’s well before they’ve even got their first client,” says Paul Meissner [inset], chartered accountant at Five Ways Chartered. “It was blowing my mind.”

Instead Meissner turned to the cloud for a cheap, easy solution. He didn’t call someone for IT advice – all it took was to jump online and start watching feature videos on vendor websites, sign up for trial accounts and put each application through its paces.

There was no reason to trust anyone else to make the decision for him when he could evaluate solutions firsthand. “It was the amount of choice, the sheer quantity of solutions out there, and that you could choose the one that best suited your business,” he says.

The accountant ended up going with Box.net for document management, an ISP for email service and a custom CRM hosted by a local developer. Now he is considering moving his email to Google Apps. Meissner says he appreciates the ability to work from any location or on the move through his smartphone and iPad. He didn’t bother renting an office for the first couple of months until he had started generating cash flow.

This snapshot of the birth of a small business ought to give pause to resellers selling servers. Several years ago cloud technology passed the point at which it was considered stable and reliable enough to be used as the primary option for business.

These days it is getting harder to make the case for on-premises servers for a new company. Increasingly, established companies will start to question the return on investment from a $5000 server every four years instead of receiving the equivalent in software-as-a- service (SaaS), which delivers the application without the headache of owning the hardware.

In response to the take-up of SaaS, some resellers are transitioning to selling cloud services through an annuity-based business model while growing number of new resellers are popping up to meet the demand. Craig Deveson was one of the first to sell SaaS in Australia when he launched Google enterprise reseller Devnet. Deveson sold Devnet last month to Cloud Sherpas, one of the largest global cloud integrators, for an undisclosed sum.

He says the Australian SaaS market has changed since June 28 with the launch of Microsoft Office 365. “The Australian SaaS market has been validated by people like Microsoft formally entering with Office 365,” Deveson says.

He notes that sensitivities among Australian companies to issues such as data jurisdiction and privacy have resulted in slower adoption of SaaS services locally compared with the US.

It is difficult to know how widespread SaaS is in Australia because vendors are silent on customer numbers. Analyst Cloud Sherpas believes adoption is behind the US but that is based on the paucity of SaaS by enterprises, which may not be a fair measure given some of the largest companies such as the miners might not be well suited to cloud computing, Deveson says.

The trend towards SaaS shows Australian companies are coming to accept that almost all key providers of cloud services are using offshore data centres, he says.

There are rumours SalesForce.com will release a hybrid solution that will allow Australian data to be hosted here while using the SalesForce code in its offshore centres. On these pages, CRN spoke to three cloud resellers – PRM Consulting, DMS BT and OneSaaS – to find out how they run businesses to sell SaaS rather than servers.

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Issue: 331 | September 2014

CRN Magazine looks in-depth at the emerging issues and developments for the channel, and provides insight, analysis and strategic information to help resellers better run their businesses.