SaaS Vendors – Are 'Channels' Important

Last week I had an interesting conversation with someone who works with SaaS start-ups.  One of the statements he said to me was there was no place for channels in the SaaS business model, which surprised me since I know of many very successful SaaS vendors who make a substantial amount of their sales with partners.    Now this debate has gone back and forth many times, but the fact that he was so adamant and was coaching SaaS startups I feel it’s important to revisit this discussion.  

I would agree that your classic VAR reselling a low ARR/customer is not going to succeed but the definition of ‘Channel’ in the SaaS model needs to be viewed from the end-customer perspective.   Channels are intermediaries involved in making a product available for consumption to end-user, some examples could be cloud marketplaces, SIs, trusted advisers.

Knowledge of how your target customer/market makes purchasing decisions: are there internal and external trusted advisers or systems integrator's involved, unique industry requirements/3rd party agencies require approval?.  

For the SaaS vendor to succeed they need to identify which intermediaries are in their target market value chain and develop relationship/programs/tools to support them ensuring successful e2e customer engagement.   The added difficulty for the vendor is there are likely many intermediaries, you need to focus and identify the top critical players otherwise the effort to support will become overwhelming.

The key is looking at if from your end-customers perspective, understanding how do they make and execute purchasing decisions. Yes, channels and partners can be very important for SaaS vendors.