Why would any company commit itself to buy software today? If you reduce your staff, your IT costs for licenses and servers remain the same. Why would any reseller commit himself to let his company go down the drain if an end customer goes bankrupt, leaving the reseller with enormous capital tied up in software licenses?

We argue that (1) technology providers are protectionist and that (2) its about time they take responsibility for the supply chain. Let us explain why.

For too long, the IT industry has controlled the entire supply chain from development, production, marketing and sales. But with SaaS the IT industry will have to separate production and sales.

Major Fast Moving Consumer Goods (FMCG) businesses such as Coca-Cola have long recognized the importance of a stable, streamlined sales and distribution system to bring their products from factory to consumer with a variety of channel players, each accepting and getting paid for their value-added role in the system.

In a similar way, success in SaaS will not be about trying to play every role in the chain, but on focusing on developing a uniquely differentiated value added part in the overall ecosystem.

For resellers and end customers SaaS facilitate lower cost of entry, reduced risk, higher ROI, quick responses to changes in demand, rapid deployment, increased security, and the ability to focus on core business. SaaS promises to shift capital expenses (CapEx) into operational expense (OpEx), while reducing time to deployment and improving accessibility

Therefore, the pressure for less control in the supply chain goes now hits technology providers. Resellers cannot bear the entire risk for selling products, and end customers cannot bear the risk of heavy IT investment without the option of flexibility and scalability. It is only a matter of time before technology providers realise this.