"The biggest challenge is distribution. Our data shows SaaS companies rely heavily on direct sales — at nearly twice the rates of every other channel, but can afford only modest sales teams of 1 or 2."

Is the primary issue here that the recurring revenue models of SaaS companies are less compatible with existing distribution networks?

I've been researching this and found that hardware companies that sell through dealer networks and authorized distributors have an unrealized opportunity to introduce recurring revenue products for their partners, who typically are operating with narrow margins on "one and done" box sales. The challenge is implementing a revenue sharing or commission model that is both attractive and straight forward.

Great article, Compass. As a CRM (I'm a co-founder @ nutshell.com), we're pretty excited about the growth in our sector. This also meshes with our strong beliefs in building APIs and integrating with a ton of third parties.

While the goliaths do build platforms, they subsequently tend to slowly tighten their hold on those platforms (cf. LinkedIn's API shutdowns, Salesforce's extra charges for API usage). It's great working with other small upstarts that are interested in making software play nicely with each other (something that Compass obviously does quite nicely).

One of the opportunities in SaaS we see at Vendorsi is the chance for small enterprise vendors to be more easily, and less expensively found by other SMBs. Because we don't charge vendors, and instead charge buyers a subscription, we can--and must be--neutral, and focus on presenting accurate data about all the vendors in the space, vs. the 8 who pay us the most.