Software Executive Magazine

OCTOBER/NOVEMBER 2017

Software Executive magazine helps software executives grow their businesses by showcasing the business best practices of our readers, executives from established and innovative software companies.

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What's Driving SaaS Emergence In The Channel? Inside CompTIA's latest research examining the burgeoning channel ecosystem building around the SaaS community. C A R O L Y N A P R I L Senior Director, Industry Analysis, CompTIA Software as a Service: Opportunities & Challenges: Of all channel firms selling cloud solutions today, 74 percent say SaaS is part of the mix. And of that 74 percent, a quarter say their businesses started as a "born in the cloud" SaaS startup versus a traditional channel firm that added a new practice. In the vendor space, a company such as Salesforce reaches millions of customers with its CRM software, while simultaneously playing host to thousands of SaaS ISVs in its AppExchange business applications market- place. And then there is Microsoft, which today touts a total of 100 million monthly active commercial users of its cloud-based productivity suite, Office 365, which has been a major play for its thousands of channel partners. Mind you, that 100 million figure pertains to active us- ers only. There are also countless numbers of Office 365 seats that have been sold but sit dormant to date. Get- ting these inactive users to start tapping into their Office 365 applications is an obvious opportunity for channel partners and other third parties who can upsell and cross-sell additional capabilities and services involving lucrative integration and customization services. From a pure channel perspective, SaaS is ripe with opportunities: recurring revenue, inroads to vertical in- dustry business, faster time to deployment, and more. That said, there are also plenty of challenges for tradi- tional channel firms, mostly pertaining to the business t's no secret that the IT industry has been steadily evolving from a hardware-centric to a software-centric world. Myriad reasons ac- count for this development, but reality is that software is defining the future – especially in the cloud. Perhaps the most notable software activity today is happening in the area of cloud-based Software-as- a-Service (SaaS) applications. Gartner is forecasting the global cloud applications services market to grow 20.1 percent in 2017 to reach $46.3 billion. The analyst further asserts that more than half of new 2017 appli- cation adoptions by North American enterprise-size organizations will be comprised of SaaS and/or other forms of cloud-based solutions. For its part, IDC pre- dicts that SaaS will remain the dominant cloud solu- tions type, "capturing nearly two-thirds of all public cloud spending in 2017 and roughly 60 percent in 2020." Many constituencies are finding opportunity in SaaS. Thousands of small to large ISVs are cropping up to de- liver application-specific solutions on a subscription basis to their customers. And many of them are work- ing with nontraditional, go-to-market sources such as digital marketing agencies. Still others are tapping the resources of traditional channel firms, which are add- ing SaaS to their portfolios in large numbers. Consider the following findings from my recent CompTIA study, I CompTIA's recent research study, "Software as a Service: Opportunities & Challeng- es," collected data from 400 U.S.-based IT channel firms. The survey helped identify who these SaaS partners are, what drew them to this niche, what drivers led SaaS vendors to build an indirect channel, and what compensation models and partner program elements SaaS vendors have in place. CHANNEL STRATEGIES Framework By C. April WHAT'S DRIVING SaaS EMERGENCE IN THE CHANNEL? SOFTWAREEXECUTIVEMAG.COM OCTOBER/NOVEMBER 2017 32

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