Partnerships that Work for SaaS

By Karen Fischer                                                         January 28, 2010

Today there are Software as a Service start-up businesses offering a variety of products and services to consumers and businesses which offer a cost-effective way for both to have access to services they need without the capital investment.   

If you are one of those businesses, you are most likely looking for partners and channels to help you grow your business.  Like  myself , you are probably thinking how excited a potential partner will be to hear about a recurring revenue model and depending on your service you have an idea of who those targets should be.  As you begin approaching those potential partners, there is an initial excitement at the thought of receiving on-going revenue and having multiple year contracts.  That is until you talk to their finance or billing department to find out they cannot handle recurring or monthly billing. There is no need to fret or worry over this discovery, you just need to adjust your thinking and focus on what the type of partnership and also what other types of partners to approach.

If you still believe that the company you approached is the right potential partner for your SaaS product or service, look at alternative types of programs such as a Sales Agent.  If the company has the skills to sell your product and carry the sale to completion, a sales agent program will work for you both. You have a partner that will sell for you and they do not have to alter their backend processes and financial systems to accommodate a monthly recurring billing model.

As for other partnerships, the best ones are partners that your service becomes an integral part of their business.  This is very dependent on the service.  For the most part an excellent target for most are Managed Service Providers (MSP's); as they are always looking for additional services to offer their customers.  Another one are OEMs that can use the service or parts of your service to fulfill a void in their portfolio. For these type of partners, it is imperative that your product is easily "skinned" so they can rebrand the product to look like theirs.  If you fear loss of brand recognition, you can always include in the contract that the "skinning" include "powered by" so that you retain your brand.

Referral Programs also work well for SaaS partners.  Excellent targets for SaaS referral partners are consultants in your industry.  They have many customers that may need your service but they usually like to remain vendor agnostic.  Other companies to target are those that understand your market and your service may be a fit, but is not their main focus or key competency.  They are excellent at recognizing opportunities, but do now want to invest the time in a service or product they will not sell on a regular basis.

Another way to aid your partners that have difficulty on the billing side is by providing them a service where you help them in generating bills for their customer.  You provide them the usage and breakdown that they can then attach to their own bill which has just an amount.  Many partners are happy with paying a few dollars per invoice to eleviate them having to alter their billing system.