Making Channels Work to
Grow your SaaS / Cloud Business
              Presented for OpSource Cloud
                   Febr...
Agenda

                        • Setting the Stage
                        • The Channel is Dead?
                       ...
Legacy Software Business
Structure

                                                 Intellectual
                        ...
Legacy Software



                             Customers              Developers




                                    ...
Software-as-a-Service (SaaS)



                             Customers              Developers




                       ...
Software-as-a-Service (SaaS)



                          Producers               Consumers




                          ...
Software-as-a-Service (SaaS)



                          Producers               Consumers


                            ...
Software-as-a-Service (SaaS)



                          Producers               Consumers


                            ...
SaaS Business Architecture


                                                      Intellectual
                          ...
Agenda

                        • Setting the Stage
                        • The Channel is Dead?
                       ...
SaaS Distribution - Channels are Dead?




                                Traditional
     SaaS Vendor                   ...
SaaS Distribution - Channels are Dead?




                                 Traditional
      SaaS Vendor                 ...
SaaS Distribution - Myth




      SaaS Vendor                Cloud          End Customer




The common fantasy is since ...
SaaS Distribution - Myth




     SaaS Vendor                Cloud          End Customer




   http://sixteenventures.com...
SaaS Distribution - Channels aren’t Dead,
they are Just Different
                                                  You mi...
SaaS Distribution - Non-Technical Intermediary


       SaaS
     Company                    Intermediary               En...
SaaS Distribution – App Stores


       SaaS
     Company                     Intermediary                End-customer


 ...
SaaS Channel Strategy Equation for Success




                                +                    =
                    ...
Agenda

                        • Setting the Stage
                        • The Channel is Dead?
                       ...
Business Architecture Issues



   Revenue                   Intellectual
    Model                     Property      Prod...
SaaS Distribution - Linear Value Chain
view is too limited
                                                               ...
SaaS Distribution - Value Network

       Trusted Advisors                                                            Anal...
SaaS Distribution - Value Network

                                                     Stand-alone
                      ...
Multi-Tenancy in SaaS - Technical Deep Dive




                       This page intentionally left blank




    http://s...
Agenda

                        • Setting the Stage
                        • The Channel is Dead?
                       ...
Multi-Tenancy in SaaS - Single Instance for all Customers


                   Customer         Customer       Customer


...
Multi-Tenancy in SaaS - Its not just Customers!


                  Customer        Partner    Developer



              ...
SaaS Distribution - Value Network Reality

                                                     Stand-alone
              ...
4 Questions to Change your Business!

             1) What is your Target Market? What ancillary or
             adjacent ...
Agenda

                        • Setting the Stage
                        • The Channel is Dead?
                       ...
Historical Methods of Channel Motivation


                                •Discounts

 $$$                            •Re...
Difficulties with Historical Methods of Channel
Motivation


     •Hard to motivate channels with revenue-share for low-pri...
Historical Methods of Channel Motivation


        •Existing methods aren't bad, they just might not be
        as powerfu...
Example of Deal Scale Misalignment

         •Software that aggregates data from building
         management systems for ...
Agenda

                        • Setting the Stage
                        • The Channel is Dead?
                       ...
Tools for Channel Empowerment

       • Add something else to the deal, like the ability for
       the channel partner to...
Add Layers of Stickiness

          •Get as deep into their business as you are in the
          end-customers

          ...
Agenda

                        • Setting the Stage
                        • The Channel is Dead?
                       ...
Software-as-a-Service (SaaS)



                             Producers               Consumers


                         ...
Leveraged properly, you can turn apples to
apples comparisons...




                                          vs.



    ...
Into bowling ball to apple comparisons, in
your favor...




                                              vs.



        ...
Change the focus to things legacy vendors
cannot deliver!



                                                   S
        ...
Agenda

                        • Setting the Stage
                        • The Channel is Dead?
                       ...
Dealing with Pushback as a SaaS / Cloud Vendor


        •Legacy vendors will spread FUD
        •Trust is a big deal in S...
Transparency & Trust

            •You can give the intermediary the access and
            tools they need

            •...
Agenda

                        • Setting the Stage
                        • The Channel is Dead?
                       ...
Customer Ownership



                 •This is between you and your channel partners
                 •Existing relations...
SaaS Revenue Modeling &
       Business Architecture


(972) 200-9317
lincoln@sixteenventures.com
http://sixteenventures.c...
Upcoming SlideShare
Loading in...5
×

Making Channels Work to Grow Your SaaS / Cloud Business

5,507

Published on

Presented this for OpSource on February 10, 2010.

The notion of channels in the distribution of SaaS & Cloud is a topic with very little consensus in the industry. Many people seem to think: "if it's on the Web then the Web is the channel." This view can significantly stagnate growth. There are industries and market segments where the people making the purchasing decisions do not spend their time searching the Web for the best solution. In these cases they turn to trusted advisors for recommendations.

While traditional channels like VARs and SIs might be having trouble with SaaS, new and exciting channels have opened up and savvy vendors are taking advantage of these opportunities. Thriving SaaS vendors have realized that there can be a significant benefit to leveraging intermediaries.

Published in: Business, Technology
0 Comments
3 Likes
Statistics
Notes
  • Be the first to comment

No Downloads
Views
Total Views
5,507
On Slideshare
0
From Embeds
0
Number of Embeds
6
Actions
Shares
0
Downloads
223
Comments
0
Likes
3
Embeds 0
No embeds

No notes for slide

Making Channels Work to Grow Your SaaS / Cloud Business

  1. 1. Making Channels Work to Grow your SaaS / Cloud Business Presented for OpSource Cloud February 10, 2010 Copyright© 2010 Sixteen Ventures. All rights reserved.
  2. 2. Agenda • Setting the Stage • The Channel is Dead? • Business Architecture Issues • Opportunity Recognition • Channel Motivation • Partner Empowerment • Legacy Disruption • Transparency & Trust • Customer Ownership http://sixteenventures.com Copyright© 2010 Sixteen Ventures. All Rights Reserved
  3. 3. Legacy Software Business Structure Intellectual Marketing Property Technology Revenue Model Loosely-coupled, at best http://sixteenventures.com Copyright© 2010 Sixteen Ventures. All Rights Reserved
  4. 4. Legacy Software Customers Developers Channels Three basic elements http://sixteenventures.com Copyright© 2010 Sixteen Ventures. All Rights Reserved
  5. 5. Software-as-a-Service (SaaS) Customers Developers Channels Same elements http://sixteenventures.com Copyright© 2010 Sixteen Ventures. All Rights Reserved
  6. 6. Software-as-a-Service (SaaS) Producers Consumers Ecosystem Different approach http://sixteenventures.com Copyright© 2010 Sixteen Ventures. All Rights Reserved
  7. 7. Software-as-a-Service (SaaS) Producers Consumers Network Effect Ecosystem Very different approach http://sixteenventures.com Copyright© 2010 Sixteen Ventures. All Rights Reserved
  8. 8. Software-as-a-Service (SaaS) Producers Consumers Network Effect Key differentiators Ecosystem http://sixteenventures.com Copyright© 2010 Sixteen Ventures. All Rights Reserved
  9. 9. SaaS Business Architecture Intellectual Marketing Property Network Centricity Revenue Technology Model All aspects are tightly coupled http://sixteenventures.com Copyright© 2010 Sixteen Ventures. All Rights Reserved
  10. 10. Agenda • Setting the Stage • The Channel is Dead? • Business Architecture Issues • Opportunity Recognition • Channel Motivation • Partner Empowerment • Legacy Disruption • Transparency & Trust • Customer Ownership http://sixteenventures.com Copyright© 2010 Sixteen Ventures. All Rights Reserved
  11. 11. SaaS Distribution - Channels are Dead? Traditional SaaS Vendor End Customer Channels Value-added Resellers, System Integrators, etc. http://sixteenventures.com Copyright© 2010 Sixteen Ventures. All Rights Reserved
  12. 12. SaaS Distribution - Channels are Dead? Traditional SaaS Vendor End Customer Channels Traditional technology channels are having the hardest time with SaaS – no technology to manage and fundamentaly mis-alinged business models http://sixteenventures.com Copyright© 2010 Sixteen Ventures. All Rights Reserved
  13. 13. SaaS Distribution - Myth SaaS Vendor Cloud End Customer The common fantasy is since its “in the cloud” that the web is the distribution channel. Maybe, but you might want to explore that further; just to be sure. http://sixteenventures.com Copyright© 2010 Sixteen Ventures. All Rights Reserved
  14. 14. SaaS Distribution - Myth SaaS Vendor Cloud End Customer http://sixteenventures.com Copyright© 2010 Sixteen Ventures. All Rights Reserved
  15. 15. SaaS Distribution - Channels aren’t Dead, they are Just Different You might not know about them! Intermediary / Trusted SaaS Vendor End Customer Advisor / App Store What if you don’t have to use an intermediary? Can you? Its called leverage, but the key is to remember that rarely will you compel 3rd parties with only revenue share agreements for SaaS. The vendor should dig deeper and find out what they can solve for them. http://sixteenventures.com Copyright© 2010 Sixteen Ventures. All Rights Reserved
  16. 16. SaaS Distribution - Non-Technical Intermediary SaaS Company Intermediary End-customer Consumer Manufacturers EDI Vendor Rep Packaged Goods Manufacturer Marketing Create value-pull by marketing directly to the End-Customer http://sixteenventures.com Copyright© 2010 Sixteen Ventures. All Rights Reserved
  17. 17. SaaS Distribution – App Stores SaaS Company Intermediary End-customer Document United States apps.gov Management Governement Marketing The end-customer cannot buy directly from you! http://sixteenventures.com Copyright© 2010 Sixteen Ventures. All Rights Reserved
  18. 18. SaaS Channel Strategy Equation for Success + = Channel Dev/ Successful Inbuilt channel Management SaaS Channel support best practices Strategy http://sixteenventures.com Copyright© 2010 Sixteen Ventures. All Rights Reserved
  19. 19. Agenda • Setting the Stage • The Channel is Dead? • Business Architecture Issues • Opportunity Recognition • Channel Motivation • Partner Empowerment • Legacy Disruption • Transparency & Trust • Customer Ownership http://sixteenventures.com Copyright© 2010 Sixteen Ventures. All Rights Reserved
  20. 20. Business Architecture Issues Revenue Intellectual Model Property Product Price Network Centricity Marketing Mix Technology Marketing Place Promotion Distribution / Channels are part of Place & Promotion http://sixteenventures.com Copyright© 2010 Sixteen Ventures. All Rights Reserved
  21. 21. SaaS Distribution - Linear Value Chain view is too limited Industry Association Intermediary Intermediary Intermediary Intermediary SaaS Vendor Intermediary Intermediary End Customer Intermediary Intermediary Intermediary Independent Developers http://sixteenventures.com Copyright© 2010 Sixteen Ventures. All Rights Reserved
  22. 22. SaaS Distribution - Value Network Trusted Advisors Analyst Firms Traditional Channels Stand-alone Industry Associations Intermediaries Consumers SaaS Vendor Individuals Independent Developers Application Enterprises Other Software Vendors Platform Customer SaaS Vendor sits in the middle of everything! http://sixteenventures.com Copyright© 2010 Sixteen Ventures. All Rights Reserved
  23. 23. SaaS Distribution - Value Network Stand-alone Intermediaries Consumers SaaS Vendor Application Platform Customer The possibilities are endless! http://sixteenventures.com Copyright© 2010 Sixteen Ventures. All Rights Reserved
  24. 24. Multi-Tenancy in SaaS - Technical Deep Dive This page intentionally left blank http://sixteenventures.com Copyright© 2010 Sixteen Ventures. All Rights Reserved
  25. 25. Agenda • Setting the Stage • The Channel is Dead? • Business Architecture Issues • Opportunity Recognition • Channel Motivation • Partner Empowerment • Legacy Disruption • Transparency & Trust • Customer Ownership http://sixteenventures.com Copyright© 2010 Sixteen Ventures. All Rights Reserved
  26. 26. Multi-Tenancy in SaaS - Single Instance for all Customers Customer Customer Customer Customer Customer Customer Customer Customer Customer Network Effect! http://sixteenventures.com Copyright© 2010 Sixteen Ventures. All Rights Reserved
  27. 27. Multi-Tenancy in SaaS - Its not just Customers! Customer Partner Developer Industry Customer Partner Customer Developer Customer Ecosystem! http://sixteenventures.com Copyright© 2010 Sixteen Ventures. All Rights Reserved
  28. 28. SaaS Distribution - Value Network Reality Stand-alone Intermediaries Consumers SaaS Vendor Application Platform Customer The possibilities are endless! http://sixteenventures.com Copyright© 2010 Sixteen Ventures. All Rights Reserved
  29. 29. 4 Questions to Change your Business! 1) What is your Target Market? What ancillary or adjacent markets might also have a problem that your product solves? 2) What companies or types of companies also have customers in those markets? 3) Who are the trusted advisors to those companies and the end-customers in the target and adjacent markets? 4) Who is interested in the behavior of all of those companies you've identified? http://sixteenventures.com Copyright© 2010 Sixteen Ventures. All Rights Reserved
  30. 30. Agenda • Setting the Stage • The Channel is Dead? • Business Architecture Issues • Opportunity Recognition • Channel Motivation • Partner Empowerment • Legacy Disruption • Transparency & Trust • Customer Ownership http://sixteenventures.com Copyright© 2010 Sixteen Ventures. All Rights Reserved
  31. 31. Historical Methods of Channel Motivation •Discounts $$$ •Revenue Share •Spiffs $$$ •Co-marketing funds •Etc. Are these enough? http://sixteenventures.com Copyright© 2010 Sixteen Ventures. All Rights Reserved
  32. 32. Difficulties with Historical Methods of Channel Motivation •Hard to motivate channels with revenue-share for low-price or recurring-revenue products •Many SaaS vendors have problems motivating internal sales teams let alone channels •Spiffs and other motivators can be costly for the SaaS vendor; especially early-stage companies •Often the SaaS vendor's business model is completely out of scale and alignment with the intermediary http://sixteenventures.com Copyright© 2010 Sixteen Ventures. All Rights Reserved
  33. 33. Historical Methods of Channel Motivation •Existing methods aren't bad, they just might not be as powerful as they need to be to change behavior •Some SaaS/Cloud vendors won't offer much direct monetary benefit to intermediaries •Some could offer huge benefit to the core business of the intermediary •What can you do to change your unique value proposition to intermediaries? http://sixteenventures.com Copyright© 2010 Sixteen Ventures. All Rights Reserved
  34. 34. Example of Deal Scale Misalignment •Software that aggregates data from building management systems for Carbon Accounting •Target market – Fortune 1000 companies, commercial real estate; owners, managers, etc. •Intermediary - BMS installers and consultants •Average deal size for them? $25M w/ 10 year contract •Software company's price? $150k over 10 years •Traditional rev-share? even at 25%, $37.5k over 10 years or just shy of $4k/yr http://sixteenventures.com Copyright© 2010 Sixteen Ventures. All Rights Reserved
  35. 35. Agenda • Setting the Stage • The Channel is Dead? • Business Architecture Issues • Opportunity Recognition • Channel Motivation • Partner Empowerment • Legacy Disruption • Transparency & Trust • Customer Ownership http://sixteenventures.com Copyright© 2010 Sixteen Ventures. All Rights Reserved
  36. 36. Tools for Channel Empowerment • Add something else to the deal, like the ability for the channel partner to: •Benchmark against others in the industry •Have visibility into activities of end-customers •Anonymous aggregate data •Customer management tools •Integration with CRM, Accounting, etc. http://sixteenventures.com Copyright© 2010 Sixteen Ventures. All Rights Reserved
  37. 37. Add Layers of Stickiness •Get as deep into their business as you are in the end-customers •Done properly, this helps reduce churn of the end-customer even more •You have a champion in the value network that will encourage the end-customer’s use of the product •They might let the end-customer switch for a 10% cut but will work hard to keep them if there is additional benefits to them http://sixteenventures.com Copyright© 2010 Sixteen Ventures. All Rights Reserved
  38. 38. Agenda • Setting the Stage • The Channel is Dead? • Business Architecture Issues • Opportunity Recognition • Channel Motivation • Partner Empowerment • Legacy Disruption • Transparency & Trust • Customer Ownership http://sixteenventures.com Copyright© 2010 Sixteen Ventures. All Rights Reserved
  39. 39. Software-as-a-Service (SaaS) Producers Consumers Network Effect Key differentiators Ecosystem SaaS vs. Legacy Software http://sixteenventures.com Copyright© 2010 Sixteen Ventures. All Rights Reserved
  40. 40. Leveraged properly, you can turn apples to apples comparisons... vs. SaaS vs. Legacy Software Photo via martinlabar http://sixteenventures.com Copyright© 2010 Sixteen Ventures. All Rights Reserved
  41. 41. Into bowling ball to apple comparisons, in your favor... vs. SaaS vs. Legacy Software Bowling Ball Photo via definetheline Apple Photo via martinlabar http://sixteenventures.com Copyright© 2010 Sixteen Ventures. All Rights Reserved
  42. 42. Change the focus to things legacy vendors cannot deliver! S M A S H SaaS vs. Legacy Software Bowling Ball Photo via definetheline Apple Photo via martinlabar http://sixteenventures.com Copyright© 2010 Sixteen Ventures. All Rights Reserved
  43. 43. Agenda • Setting the Stage • The Channel is Dead? • Business Architecture Issues • Opportunity Recognition • Channel Motivation • Partner Empowerment • Legacy Disruption • Transparency & Trust • Customer Ownership http://sixteenventures.com Copyright© 2010 Sixteen Ventures. All Rights Reserved
  44. 44. Dealing with Pushback as a SaaS / Cloud Vendor •Legacy vendors will spread FUD •Trust is a big deal in SaaS / Cloud •Intermediaries might not want to do business with you since they don't control what is ultimately being used by their customers •Understanding your position vis-a-vi the competition is critical http://sixteenventures.com Copyright© 2010 Sixteen Ventures. All Rights Reserved
  45. 45. Transparency & Trust •You can give the intermediary the access and tools they need •Tools to help them manage and understand usage of the system by members of their team as well as their customers can help overcome objections •Give the end-customer visibility, too, such as customer-facing status dashboard, etc. •This can be the difference between getting a deal with a channel partner and not http://sixteenventures.com Copyright© 2010 Sixteen Ventures. All Rights Reserved
  46. 46. Agenda • Setting the Stage • The Channel is Dead? • Business Architecture Issues • Opportunity Recognition • Channel Motivation • Partner Empowerment • Legacy Disruption • Transparency & Trust • Customer Ownership http://sixteenventures.com Copyright© 2010 Sixteen Ventures. All Rights Reserved
  47. 47. Customer Ownership •This is between you and your channel partners •Existing relationships might need to be revisited •Anonymous Data ownership should be maintained even after clients and partners leave •Ensure your Terms of Service & Privacy Policies cover these things •Talk to your legal team; I am not a lawyer http://sixteenventures.com Copyright© 2010 Sixteen Ventures. All Rights Reserved
  48. 48. SaaS Revenue Modeling & Business Architecture (972) 200-9317 lincoln@sixteenventures.com http://sixteenventures.com @lincolnmurphy
  1. A particular slide catching your eye?

    Clipping is a handy way to collect important slides you want to go back to later.

×