For those of you unable to attend, I will summarize some of the content that I presented on SAP’s overall growth and innovation strategy. SAP has a double-barreled product strategy focused on Growth and Innovation.
The Growth strategy rests heavily on the current Business Suite, which includes the core ERP product that is used by approximately 30,000 companies worldwide. SAP claims that it touches 60 percent of the world’s business transactions, which is hard to validate but not all that hard to believe. The main revenue source today is Support, which comprises 50% of the total revenues of the company at more than 5 billion Euros annually, and it grew by 15% in 2009. Other growth engines include:
NetSuite, a leading SaaS ERP/CRM provider, recently announced that it is revamping its channel partner comp model: 100% on Y1 subscription revenue, and 10% thereafter. VARs have been remiss in taking up the SaaS torch, largely because most SaaS vendors haven’t provided a financial model conducive to VARs’ cash flow requirements. Per the on-premise license model, channel partners make a big portion of their nut on initial product margin, i.e., up front. But vendor SaaS economics minimize up-front remuneration and spread revenue out over a long period of time. Though it sacrifices year-one revenue, NetSuite’s 100/10 model more closely mirrors VARs’ accounting practices.
NetSuite’s model will be the first of many SaaS channel model “experiments” that will ultimately be a shot in the arm for the SMB market in particular. Contrary to popular belief, SMBs have been slow on the uptake of SaaS (application hosting outpaces SaaS adoption by SMBs by a factor of 3-4x) ...
... due to the fact that VARs, in ownership of the customer trust asset, haven’t been pushing SaaS. But the financial barriers to channel partners’ SaaS advocacy are being broken down.
Now that the path for VARs to play in the cloud is being forged, and their play along with software vendors, aggregators, and ISPs being validated, distributors and DMRs, long wedded to on-premise license models, are going to have to figure out their place in the new cloud channel order.
What do you think? Is this one of many experiments? What is the role for distributors and DMRs in cloud computing?
Software-as-a-Service (SaaS) is rapidly becoming “Everything-as-a-Service” (or, as a client said to me last week, “All-as-a-Service”).I’ve been reporting the impact of SaaS on IT management software for nearly two years now and I keep saying that SaaS is really a phenomenon of new market entrants with compelling arguments against incumbent suppliers. Operators like ServiceNow.com, ManageEngine, Splunk, and SpiceWorks are leading a charge to replace HP, BMC Software, and CA installations. So it’s NOT really a trend impacting small and medium businesses only: many enterprises, even large ones, now also prefer a SaaS solution for their systems monitoring, IT asset management, service desk, or even discovery and CMDB management.
In the last weeks there has been a series of SaaS announcements by the megavendors. But the inquiries coming in from Forrester clients imply that things are not all that clear on these announcements. So here is a quick summary. As you will see, while riding the SaaS wave, they each interpret it differently.
CA now has a Service Desk On Demand offering based on their Service Desk r12 product. It’s run on dedicated installation in their data center or as a multi-tenant instance in one of CA’s partners installations also hosted there. CA clearly wants to limit the service to their target enterprise market. They will control this by requiring a minimum 1 year contract (with financial incentives for signing for 2 or even 3 years), a minimum of 50 service desk analysts (you pay per analyst per month) and, most importantly, you cannot just sign up for the service on the web, you have to be approved by CA first.