I retired from personal blogging in July 2008 but you can find me over at blog.xero.com
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The channel conflict noted in this article reveals one of the big challenges/opportunities for new SaaS vendors
Microsoft sets hosted-services pricing, irks partners
Under an online model, there are often issues with your existing ‘real world’ channel.
- Does the old world channel add value in an online world? Does it get you sales?
- How do you pay a sales channel if there is no up front license fee? Often SaaS pricing is sharp because they have eliminated some of the channel and distribution costs.
- Ongoing commissions for sales is a very expensive sales cost for SaaS vendors. The real cost of SaaS is driving more innovation and outstanding customer care, so a recurring fee model just for a sale is to much cost.
Flipping it around, existing real world channel needs to think about how they share in this new online world as the inventories of products they earn margin on will erode.
In the business software space this creates a huge opportunity for buyer aggregation points. The retail browsing shop of the 21st century.
In the New Zealand small business SaaS market this is where MED and NZTE can really help out. Providing a location where NZ small business owners can discover great products that can make their businesses better.
This what small businesses have asked for. (Don’t worry, I’m onto it.)
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Rod - I agree with you in terms of aggregation - creating a locale to purchase SaaS offerings from different vendors.
I don’t agree n any way that this is a space where MED or NZTE should be
1) because they don’t understand software let alone SaaS
2) because they are very reluctant to “sell” anything
If all they’re doing is providing a marketing property you’ve just removed most of the efficiency that an aggregative locale can give. The whole point of aggregation is to aggregate the use, not just the marketing
Now a real winning play is an aggregative platform where customers can mix and match SaaS offerings from individual vendors - APEX but a little less SFDC centric
Wasn’t Telecom looking to do something in this space, that could have possibly included Xero?
@John - Rod will have to advise on the Xero part but I believe that yes Telecom is in the process of doing something along these lines
What has foodstuff labelling and childcare got to do with small businesses? The more you ask the government to help you the more they want to tell you what to do.
Ben, in my opinion NZTE are pretty good at understanding software. They have a number of ICT specialists both in NZ and at overseas offices. And in my conversations with some of these people they have more understanding in marketing than many of the companies they talk to. And this is one of the big issues with NZ software companies, while they can come up with great ideas, many of them have no marketing experience. This is the missing component in the NZ software industry and personally I have come to the conclusion we need these people at the moment more than developers (we need developers but smart marketers are need more now).
There is a much better comment on the MS MOS announcement by Paul Thurrott on the Windows IT Pro perspectives website. Under MOS MS expects most of the signups they expect will be from non MS customers - Lotus Notes to Office Online.
Rod, good opportunity for you to signup to MOSS colaboration services and solve the Google Apps issue.
Ben, had a meeting at NZTE in Milan today and all I will say is that NZTE in Milan really do understand IT and seem to be doing a great job.
@dermott - I’m taking from the first sentence of your first comment that you agree that government has no real place at the coalface of software sales.
When I said that the government doesn’t understand IT, I wasn’t saying that NZTE can’t help IT businesses - of course they can and they have significant experience at doing so. My point was that if a small business is looking for some advice or help in deploying a software app, my contention is that NZTE or MED are sub optimal places to find that advice.
Picking up on Dermott’s comment. Would agree that a lot of software companies struggle with their marketing…one of the reasons why we set up Sway.tech. In reality there needs to be quantum shift in thinking around marketing. It has to be seen as an investment not a cost and an essential part of the business.
Ben, my first statement was on childcare and foodstuff labelling as this was mentioned on the Xero article and I was thinking what has this got to do with small business. Being out of NZ at the moment I may have missed significant reasons for it. So that comment had nothing to do with software sales.
I think what Bob says is true and at the risk of a blatant plug we have used Swaytech’s services and found them to be quick, professional and very good at their jobs. What they offer and NZTE in an export marketplace is needed. And for any sized software company building products or services online, they need to fish in the biggest ponds available. And unfortunately that is not NZ or Australia.
The last thing we need is some bureaucrat picking winners for inclusion in their SaaS listing or whatever that is. It’s a free market. Let’s keep it that way.
[...] their budgets. Another challenge comes up in terms of traditional sales model, as talked about here by Rod Drury, the New Zealand dynamo. It’s short, and worth a quick read if you are curious [...]