SaaS And Inverted OEM Channels

One of the things that I love to do: keep meeting the entrepreneurs to better understand the market and the challenges that they face. Recently, I met an entrepreneur that I highly admire. His company has SaaS components that other ISVs would OEM. Let's say, you are an ISV that would OEM his components and his company goes out of business. What are your options? We had a great conversation on SaaS escrow. Turns out that there is no real good solution. There are a few SaaS escrow solutions that ensure that the customers get their data back, if the company were to go out of business, and they also offer partial business continuity solutions. However, they won't be useful in this case.

One thing that he mentioned got stuck in my mind. He said, during his on-premise days (sigh!), the companies that OEMed his software wished that he goes out of business. The ISVs had his software working anyways and they won't have to pay him anymore. The same story is very different in the cloud. It's an inverted OEM model. If you're a SaaS ISV, you will do everything to make sure that your OEM partner stays in business for your and your customers' business continuity.

I have covered SaaS escrow before, but the solutions that are currently out there aren't perfect, and the OEM channel model makes it worse. The entrepreneur I met is attempting to solve this problem in a very creative way. I cannot discuss the specifics, but I will give you an update once he is done. SaaS changes not only the way the companies make, sell, and consume software, but it fundamentally changes how ISVs and customers need to think about their business and ecosystem. The legacy on-premise thinking won't translate well into SaaS.

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