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With SAAS, Sales and Support Are the Same


By Jennifer deJong
September 1, 2005 —  (Page 1 of 3)
In the traditional software market, sales and support are two separate functions.

Companies license their commercial offerings, then typically look to local channel partners to deliver support.

But that’s not so in the emerging market for delivering software as a service (SAAS), where sales and support are tightly intertwined. Because customers pay on a per-user, per-month basis, delivering first-rate support is central to getting customers to renew. To date, that has left resellers largely out of the game.

“Most SAAS providers are selling direct, so support is provided directly, too,” said IDC analyst Amy Konary. The established reseller channel isn’t really set up to handle the subscription-based model. “They are used to being compensated upfront for Great Plains [Microsoft’s accounting software], which could cost US$250,000—not getting $400 a month for a service,” she said. But if the SAAS market is to realize predictions for growth, that has to change. “Direct sales force and telesales can only scale so far,” she said.

Fewer Cries for Help
To keep customers renewing, you have to show them as much support as possible, said Rosie Hausler, vice president of marketing for Pleasanton, Calif.-based Nsite, which delivers its workflow automation software as a service. “The recurring model behooves us to be responsive.”

One thing that has helped that effort is that hosted applications are inherently easier to support than software that is sold upfront. Companies that opt for the traditional sales model are forced to support several versions simultaneously, but at any given time SAAS providers support only one release, said Susan St. Ledger, senior vice president of global services at San Francisco-based Salesforce.com, which sells customer relationship management software by subscription. “There are deep support costs associated with older versions,” she said. Another advantage: Because customers aren’t running the software on their own servers, they don’t call as often. In the traditional software model, a large percentage of support calls arise from problems associated with operating software on the server side, St. Ledger explained.


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