Partnerships in the ERP/SaaS World

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Channel conflict, changing terms, lack of support. These are all things that you will hear and read about in the world of partnerships and when considering the advantages/disadvantages of becoming a VAR for any type of vendor. In the shifting world of ERP/SaaS, you’ll probably be hearing about them more and more.

 

Changing Face of ERP

 

ERP systems have traditionally been sold as in-house solutions, where the VAR is often not only the sales conduit, but the implementation and service provider as well. Different vendors have historically implemented different terms and conditions for the opportunity to participate in their partner programs. Some require substantial payments for the privilege of becoming a partner, some don’t; some provide sales commission or leads but no commission, some don’t; some expect their partners to make money only on implementation and service, and many employ a combination of any or all of the above and more. With the new opportunities of SaaS, where an ERP system can be hosted and many of the implementation and service issues are necessarily falling back to the vendor, things have gotten complicated, and in some cases with big name vendors, even nasty.

 

While there is inherent logic in the decisions many VARs are making, to stick with the partnerships they have been nurturing for years, others are realizing that it may be time to broaden their horizons and try to make the most of the new offers that are now available. While there is a need to focus on a particular specialty or area of the market, both you and your market may benefit from more of a choice of offerings. A look at our previous post ERP Fees & Installation Alternatives will outline some of the different options now available, while we continue to focus here on how these changes effect the partner relationship.

 

Partnerships with Vendors

 

Trust. Beyond the terms of partnership, possible channel conflicts and the way they are addressed, and initial and continuing support, the bottom line when choosing a vendor is trust. Can a vendor be trusted to be fair and to treat their partners decently? Complaints will always be made about varying terms of the partner relationship and fluctuating commission fees, but in the long run, does the vendor treat their partners as true partners, or a necessary evil of doing business in today’s environment?

 

Fairness. Changing realities, new technologies and options in the market will ultimately result in vendors’ need to restructure their price lists or partner terms. This is fair. But do vendors give enough advance warning to their partners? Are they willing to discuss the issues and explain the points and rational behind the changes? Are they flexible with outstanding quotes to end customers, so that no face is lost in attempts to close the deal? All these are key questions to ask potential vendors and will help you determine whether they are fair in dealing with partners.

 

Business Ethics. Channel conflict, where partners have to compete against one another or the vendor’s own sales teams, is another touchy issue between partners and vendors. In addition, poaching customers is not an unheard of phenomenon among partners. While this may have more of a financial impact on partners in on-premise installations with one-time and annual use payments, it remains an issue in the SaaS arena. Different options have been employed by vendors to address this, including deal/lead registration and providing direct support, but the jury is still out as to the effectiveness of these options. Lead registration has been touted as a protection device to ensure that a partner does not undercut the partner who initiated the deal, but has also been thrashed as helping some vendors sweep up the deals themselves. A vendor that is truly interested in promoting the success of their partners will ensure that lead registration is respected and maintained. And that if at a later stage, for whatever reason, a customer decides to switch service providers, the partner who originally made the sale continues to receive some revenue, even if they are no longer providing support.

 

Cooperation. Some believe that if you have a captive market, then the partner working that market is at an advantage. We’ve actually found the opposite to be true. Healthy competition is not necessarily a bad thing. Also, when prospective customers see that there are more and more vendors of a particular solution, they are less insecure about investing in the said solution. As long as the vendor is looking out for everyone’s best interest, cooperation across geographic or even technical expertise lines can be bridged, making cooperation mutually beneficial for all concerned: customer-partner-partner-vendor, a win-win-win-win scenario.

 

Support. In terms of product support, one of the key indicators of a vendor’s willingness to work hand-and-hand with partners is the level of support provided. Often vendors require partners to take expensive training courses as well as pay for on-going support. While this does seem to be fair, it should not be abused by the vendor, and as much material as possible should be provided to enable the partners to help themselves. Again, this fosters the growth of a foundation of strong partners that can be self-reliant and independent, allowing the vendor to concentrate on their own priorities.

 

Ideally, vendors should be focused on getting the best product out to market and providing the support and infrastructure necessary to allow their partners and VARs to flourish. By significantly expanding and maintaining a growing footprint in their market, sales will benefit both the partners and the resellers. Look for win-win scenarios when reviewing terms and contracts, not only from the partner-vendor point of view, but from the partner-partner-vendor and customer side of things as well.

 

By Rebecca Haviv

 

 

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ERP Fees & Installation Alternatives

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ERP vendors come in all shapes and sizes, offer varying levels of functionality as well as functional integration and offer different options for installation. On the face of it, there are three basic installation options, and each enterprise has to decide which the best fit is for their purposes: a traditional on-site one-time payment installation; an over the internet on-demand, software as a service (SaaS) model on a pay per-user/per-month basis; or an on-premise deployment, also on a pay per-user/per-month basis.

 

Traditional On-Premise Installation – One-time license payment

 

Although SaaS and hosted software are the buzzwords of the day, traditional on-site implementations provide some companies with the sense of security and ownership they require, with a one-time license fee instead of an ongoing monthly expense. There is often an additional yearly maintenance fee which must also be taken into consideration. While this model requires an investment in the purchasing and maintenance of hardware and infrastructure, it can sometimes be more cost effective in the long run then a per-user/per-month installation. Once you’ve paid the initial license cost, the service charges are usually fairly stable and hosting and other charges (including testing environments, which in on-premise installations can be a back-up or test server) shouldn’t surprisingly increase as time goes on.

 

To summarize some of the benefits of an on-premise installation:

 

  • Ownership vs. monthly fees: This might be most cost effective in the long run
  • Security: You control of the security of the environment including back-ups
  • Accessibility: Connectivity to the system is intrinsic, without the need for internet connections throughout the organization

 

Software as a Service (SaaS) – Hosted Option

 

The SaaS model provides an ERP option for companies who need the solutions provided in ERP software, without forcing them to make a capital investment in on-premise IT infrastructure: software, hardware and implementation.

 

The hosted option has a number of benefits over an on-premise installation:

                                                                                        

  • Fees: Ease of use, no costly set up fees, and no need to invest in IT infrastructure or personnel.
  • Automatic upgrade: Upgrades are handled automatically on the hosted platform so you are always using the latest version of the software.
  • Accessibility: Connectivity is available online, anytime, from any common web browser.
  • Low-risk: With no large up-front investment or long-term commitment, this model allows you to “try-before-you-buy,” as it were, though migration from an existing system does need to be considered.
  • Security: In general, data is protected by the platform security; systems and backups should be in place to ensure uninterrupted service.

 

When the SaaS model is offered a pay-as-you-go, per-user/per-month basis, with its own advantages:

 

  • Initial cost: No major initial outlay of capital
  • Stability: Your fees are ostensibly stable and on a regular basis with no surprises
  • Functional Scalability: Often, no additional fees required for most of the functionality (e.g. begin using ERP software for CRM and expand to Accounting, Inventory Control etc., at either scalable or no additional cost, depending on the package)

 

On-Premise Installation – Pay-As-You-Go

 

For companies that want to take advantage of the pay-as-you-go per-user/per-month basis model, while maintaining their ERP system in-house, many companies now offer the option to do so, though it’s a mixture of both benefits and disadvantages or each approach. The benefits are, as above for the SaaS option:

 

  • Initial cost: No major initial outlay of capital
  • Stability: Your fees are ostensibly stable and on a regular basis with no surprises
  • Functional Scalability: While often no additional fees are required for most of the functionality (e.g. begin using ERP software for CRM and expand to Accounting, Inventory Control etc., at either scalable or no additional cost, depending on the package) – there might be some configuration involved and updating which would be automatic in the regular SaaS solution

 

Mixed with advantages from the traditional on-premise installation:

 

  • Security: You control of the security of the environment including back-ups
  • Accessibility: Connectivity to the system is intrinsic, without the need for internet connections throughout the organization

 

The many flavors of ERP systems now give you the power of choice. So it’s important that you consider both the short and long term requirements of your organization. If you’re not sure, try to find a solution that offers as many variations as possible so that you can move from SaaS to on-premise if the need arises, without costly migration expenses and the headache of switching such a major part of your business operation.

By Rebecca Haviv

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