SaaS Ecosystems

2006-08-26T18:50:00Z

A key element in the success of nearly every provider of Business Technology products and services is their ability to build or participate in a strong and vibrant ecosystem of interacting and interdependent partners. Depending on the SaaS model (see Jeff Hagins Blog “What is SaaS”), the complexity of the solution, integration requirements, market segment from a size perspective, and the web centricity of the target customer (see Jeff Hagins Blog “The Web Centric Business”), this ecosystem will vary in complexity, and the type of partners required for success.

In this Blog, Edge Strategies will discuss selected SaaS Ecosystem models and some of the issues that technology and service providers need to consider in order to develop successful ecosystems for their target markets. Some of these models that that we are currently focusing on address the following market segments:

Small organizations who have the ability or resources to identify and implement SaaS solutions on their own.
Small organizations that rely on trusted advisors for IT advice, implementation and support.
Small and Mid-Sized organizations who use consultants for analysis and implementation.

The SaaS model is affecting nearly every type of traditional IT ecosystem participant and changing the roles and business models of existing participants. Two constants, however, at least as far back as I can remember (I was a VAR in 1984) are:

The roles that IT Solution Providers (VARs, Integrators, and Consultants, Web Solution Providers, etc. – most operate in mixed models) play in influencing customer decisions – regardless of how or where the purchase takes place.
The ability of Solution Providers to customize solutions for individual customers or niche market segments based on their vertical/niche market, or horizontal/ roles based knowledge.

With several hundred thousand such Solution Providers, addressing 30-40% of 9 million busineses in the US alone, its important to understand how and where these organizations can help technology solution and service providers extend, implement and/or sell their SaaS solutions. We know, for example that some activities are decreasing in value, but business process knowledge, and the ability to help organizations make better use of business technology continues to be of value, and is likely to become increasingly important as the need for productivity improvement continues to grow.

Of course, Service Providers (Telco’s. Hosting Service Providers) are themselves a part of the ecosystem for many technology providers. Vendors maintain multiple forms of relationships with these service providers including selling to them, selling with them and selling through them. In addition, these service providers also provide key components of the solution itself. Participating in complex ecosystems, managing partners and selling real business solutions, however are not core competencies of most service providers. These capabilities will need to be developed for the SaaS model to grow beyond the early adopter stage.

It appears then, that there’ a lot more to think about and understand around evolving ecosystems for Software – as- a Service. We don’t have all the answers, and never will, but we do spend a lot of time thinking about and researching these issues. We look forward to your input, comments and suggestions.