In a traditional ISV (independent software vendor) relationship model, the ISVs develop the products. Then many ISVs, including Bynari, depend heavily on their partner channel to cost effectively sell, implement, and support their customers. For their efforts, partners are compensated based on the initial sale. The after-implementation support and relationship with the customers are mainly managed by the ISV vendor.

With a SaaS model, the ISVs compensate partners on the whole solution from the software to services. Partners shift their focus from the initial sale to working with customers in a longer-term relationship. The partners think about the whole life cycle of the customer and offer complementary services and solutions.

To have an effective SaaS model sold by partners, ISVs and partners need to define their working relationship and clearly define what components of services belong to the ISV versus the partner. Partners will own specific parts of the customer relationship so that they can grow and retain their customers. Communication with the customers will also need to be coordinated as well as what is to be communicated to the customers and by whom. These issues will be a challenge for the traditional ISVs. They will need to adapt their culture, business processes, infrastructure and skills to manage a new business model that include a very close relationship with their partners.

Another component of services is compensation. The compensation for the services is small relative to selling a software package. The initial upfront costs to engage in a SaaS model are high so expect to lose money at the beginning. The compensation comes from the long-term relationship with the customers; this creates a predictable recurring revenue stream for the partner. Of course, this is another aspect of the partnership that will need to be negotiated with the ISV or the provider.

What partners would benefit from the SaaS model?

Partners who have established a long-term relationship with their customers will fit well with the SaaS model. Partners who can assist ISVs in delivering and supporting services efficiently will be in great demand.

Hyun Kim

Bynari Inc.

This entry was posted on Friday, May 15th, 2009 at 1:33 pm and is filed under Email SaaS. You can follow any responses to this entry through the RSS 2.0 feed. Both comments and pings are currently closed.