SaaS applications often simplify installation -- customers open an account and access the software through a Web browser -- and upgrades are applied on the vendor's servers and require no action on the client side. While that has obvious benefits for end users, it renders the role of value-added resellers (VARs) and systems integrators (SIs) uncertain.
The two companies' channel models are almost polar opposites.
SpringCM resellers own the customers, according to Jeff Piper, SpringCM's vice president of professional services and partner development.
SpringCM allows VARs to register leads so a prospect won't get picked up by another VAR or SpringCM's own, direct-sales group. It also lets resellers private-brand the service for some customers, gives resellers a piece of recurring subscription revenue, and relies on them to handle process-oriented parts of the implementation -- designing workflows, migrating documents from legacy systems and other business-related issues.
The company also lets resellers rebrand the product for individual customers and plans to work on letting VARs integrate SpringCM into custom applications for vertical markets.
By contrast, NetDocument VARs refer customers to NetDocument, work with customers to migrate old documents, then leave the equation.
NetDocument gives its resellers all of the revenue from initial deployment and keeps all of the recurring, subscription-based revenue for itself.
"We work with a new breed of people, who bring us a customer and use our tools to do professional services, which include document migration into our repository" and other services, said NetDocument's president and CEO Ken W. Duncan. "It's that whole professional services [idea] they have to have in their mind, instead of saying, 'I'm making some 15% margin.'"
SpringCM started out with a direct-sales approach, Piper said, but now has a cadre of 25 resellers it intends to expand to about 100 during the next six months. By the end of the year, a "significant majority" of SpringCM's revenue will come through resellers, Piper said.
Less than 10% of NetDocument's business involves resellers, Duncan said.
It makes sense for NetDocument to keep all of the subscription costs, Duncan said, because it is responsible for hosting the software and developing all of the upgrades.
SaaS is still a young player in ECM. Only about 2% to 3% of the roughly $2 billion ECM industry is in SaaS, according to Karen Shegda, research director at Gartner Inc., Stamford, Conn.-based research firm. Many companies are still wary of hosting sensitive documents on an outside party's servers, she said, and larger companies tend to already have systems in place and don't see any benefit in replacing them.
But SaaS also lets smaller companies, or individual departments within large companies, try ECM with relatively little risk, said Rudy Sagers, sales director with Technology Consortium Group (TCG) LLC, an IT consulting firm based in Chicago that resells SpringCM.
TCG also works with traditional, on-site ECM products, Sagers said, but SpringCM's monthly subscription model lets companies who are hesitant to buy ECM, knowing they can simply cancel the service if the product isn't worthwhile.
From TCG's point of view, Sagers said, working with SpringCM is very similar to working with on-site software; in either case, his primary roles are establishing document workflows and establishing the initial repository.