Saas Crm Threatens Traditional Partner Roles

The pioneer and market leader in software-as-a-service (SaaS) CRM, salesforce.com, continues to gain momentum, combining a strong product with a shrewd partnering strategy to lengthen its lead over competitors. However, the market is about to change dramatically as the large business application vendors weigh in. Oracle, Microsoft and SAP are all poised to substantially increase their commitment to SaaS, starting with CRM, but over time SaaS-enabling a variety of business management functions.

Even as they expand their own offerings, however, the major vendors know they must tread carefully. Despite customers' growing acceptance of SaaS, it's not clear that subscription-based services will yield as much in revenues as the traditional packaged solutions they replace - partly because they may disrupt the finely tuned channel programs that support major portions of the big independent software vendors' (ISVs) businesses. Traditional, packaged solutions won't disappear overnight, and neither will existing channels. However, as SaaS options proliferate, vendors' success may depend in large measure on how well they can adapt and articulate their value propositions to the channel partners that are critical to their success.