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Most mainstream software vendors are still trying to work out what to do about Software as a Service (SaaS), let alone actively promoting their channel partners to get in on the act, but that is the position now being adopted by Progress Software.

SaaS is the latest handle given to the re-incarnation of the Application Service Provider (ASP). First time around the early players floundered, usually because they were more concerned about the job of hosting itself, rather than the efficacy of the applications being hosted. Now service providers such as NetSuite and salesforce.com are demonstrating a new and real market demand exists.

According to Colleen Smith, recently appointed head of SaaS Programs at Progress, the company has an ideal business model to make the move as it only sells infrastructure systems and tools. All applications built on the Eclipse-based Progress OpenEdge platform are developed and sold solely by its channel partners, generally small ISVs targeting niche markets of one sort or another. This gives it a greater degree of flexibility in setting licence terms than vendors that sell applications packages both direct and through channel partners.

In supporting partners that want try SaaS, Progress is adopting a business model where Partners can operate under the existing licence and, where relevant, under a new Service Provider licence. Smith indicated that there would also be a fair degree of liberality in how the latter gets exercised. “Basically, we will get paid when the partner gets paid,” she said.

She is developing a Partner support programme to assist them. This will include technical help with re-architecting their applications to fit into an online delivery environment - another common failure point with Version 1.0 ASPs. The package also includes help with building operational and business readiness and help with defining levels of market acceptance in the Partner’s sector, together with target marketing assistance.

“We have also built a range of enablement programmes,” Smith said, “covering business planning, best practices and sales and marketing support.”

Progress has more leeway than most software vendors in that it does not compete with its channel, and never will according to senior VP of Corporate development and Strategy, Jeff Stamen. This gives the company a vested interest in helping Partners find go-to-market approaches that fit their market needs.

According to Alan Snell, Group CEO of KCS, a Partner specializing in HR-related solutions, the company can now offer what he calls "right sourcing". “It means we can ask companies what level of data or function ownership they want to keep, and they can pick and mix between what stays in house and what is serviced online.”

“The availability of the service also allows us to break into the small business market that would otherwise simply buy Sage,” he said.

The move also gives Progress some potential for new business opportunities, as Colleen Smith indicated. The main one is the possibility of acting as a service aggregator, where it brings together the SaaS-based services of Partners offering complementary applications that address the needs of a business sector. The company has already demonstrated the potential at a recent exhibition, where it presented a collection of Partners as Progress-based retail industry package. Extending the approach into a SaaS offering would, Smith feels, be relatively straight forward.

She also sees SaaS aggregation offering a route to market for small software vendors and even individual developers. As the aggregator, Progress could provide the sales and marketing services, together with the delivery mechanism. The small vendor would no longer have to worry about building a sustainable business infrastructure.

“I see software delivery models and methods as the next big area for change in the future,” she said. “It is the point where most changes will occur.”®

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