Resellers have been discouraged from giving up their customers to application service providers (ASPs) in return for a short-term commission deal.
Speaking at a conference hosted by database and tools vendor Progress Software, Robin Bloor, industry analyst, said there is no long-term business in resellers acting as sales agents for ASPs. Instead, they should look to stay in control of the software portfolio and use ASPs as little more than infrastructure partners.
Bloor said every reseller will have to look at its position in the new market, which is closer to becoming reality than many believe. Progress has 230 software developers signed up to its ASP enabler programme, 67 of which already have applications available for rental.
Cleveland-based SystemCare invested in offering its supply chain management and purchasing software for rental a year ago and has seen its turnover double. Three-quarters of its business now comes from the ASP model.
Mark Armstrong, business development director at SystemCare, said he is looking to recruit resellers in new vertical markets. "Having a reseller set itself up as an ASP with our applications is easier for us because we have only one site to support," he said. He added that as vendors start to offer products on a pay-as-you-use model, it is becoming cheaper to set up as an ASP.
Bloor said resellers with turnover of less than £500,000 will find it difficult to become ASPs. "But they had better change before the market puts pressure on them. Once that happens they won't have the funds," he said.
Bloor predicted ASPs will make acquisitions in the channel, to buy both the skills they need and resellers' customers.
Armstrong said SystemCare will use resellers to provide services such as LAN configuration, which are beyond its core skillset.
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