Sales channels

With products below the $100 range and its focus on the mid market, direct selling can become an expensive undertaking. SaaS companies seek alternatives by selling through value-added resellers (VARs), Managed Service Providers (MSPs), Master Managed Service Providers (MMSPs) and similar alliance partners. But since SaaS is not only a different delivery mechanism but a different business model and different technology as well, selling through channels has its own challenges.


In addition to this, the availability of open-source applications, inexpensive hardware and low-cost bandwidth combine to offer compelling economic reasons for businesses to operate their own software applications, particularly as open-source solutions have increased in quality and become easier to install.


SaaS providers can offer a higher level of service and support than most open source solutions but the level of that service in any delivery model depends greatly on the orientation of the software vendor. For example, development-centric vendors who are highly technical tend to deliver the lowest level of user support whether in terms of technical support or implementation. Conversely, companies that are services-oriented tend to offer much more developed plans for technical support, user training, and even supporting services such as data capture which make the application more usable.


Users and purchasers of any SaaS application need to establish a strong confidence in the provider of the service, particularly if the application stores the user's data. This confidence can be enhanced and enforced by a balanced Service Agreement that gives the provider opportunities to correct issues but within limits that the client can accept. The provider needs to be trusted with both the intention and the ability to safeguard this information. Thus internet security procedures such as SSL or other encryption technologies should be required by all SaaS consumers.