There’s more than one way to make money in the cloud. Traditional resellers may automatically gravitate towards reselling SAAS applications. It requires little to no capital investment and data center hardware, but don’t expect the revenue stream to replace existing break/fix work. You have to do both. And not all cloud applications are channel-friendly. Here’s a look at Channel Insider’s picks for applications to get you started cashing in on the cloud.
Office productivity software was one of the first applications to get the cloud computing treatment, but many productivity suites are available to consumers and small businesses for free. Google and Zoho offer their own cloud-based office productivity suites for free to small businesses and then at a per user per month fee for businesses above a certain threshold. Businesses can then build their on additional applications.
Microsoft Business Productivity Online Suite (BPOS) provides messaging and collaboration capabilities, including Exchange Online, SharePoint Online, Office Live Meeting and Office Communications Online. Available in two flavors, the standard version is available for $10 per month (which Microsoft says is a 40 percent discount off of standalone services). A “deskless” worker version (for users without dedicated computers) is available for $3 per user per month.
How does the channel make money? Microsoft provides channel partners with 12 percent of the contract value in a customer’s first year of service and 6 percent of the subscription fee for the life of the customer contract. The math adds up to an 18 percent margin in the first year.
Although Google offers its Google Docs cloud application for free, its overall Google Apps business productivity framework is available to businesses for a fee of $50 per user per year. By subscribing to Google Apps, customers get access to mail, calendar, voice, wiki and document management/collaboration applications. Available direct from Google, the company has also been working with channel partners since last year to build out its indirect sales channel and claims more than 1,000 partners.
How does the channel make money? Authorized resellers in the Google Apps channel program get a 20 percent discount off of the annual subscription fee, and then the VARs are responsible for billing their own customers for the service. VARs also make services revenue from migrations, app development and other value-added integrations.
Salesforce.com is the largest and most well-known of the cloud CRM vendors. The company has been providing its applications since 1999. Pricing varies from $5 per user per month for Contact Manager only to $250 per user per month for the Unlimited version, which has the most applications of all of its packages and the most access to support.
How does the channel make money? Salesforce.com wasn’t able to provide information on its channel margins. For VARs, Salesforce.com has more of a focus on its Force.com platform, creating opportunities for those that also dabble in app development.
SugarCRM, founded in 2004, offers two versions of its application—Professional (for SMBs) and Enterprise (for larger businesses). Pricing is $30 per user per month for Professional and $50 per user per month for Enterprise.
How does the channel make money? SugarCRM promises competitive margins, and the exact margins a VAR will make depend on where the VAR fits into the company’s channel partner program. Bronze partners make 15 percent, Silver partners make 20 percent and Gold partners make 25 percent off the subscription price.
Microsoft Dynamics CRM Online put Microsoft into the CRM business. Priced at $44 per user per month, Microsoft’s cloud-based CRM application has been gaining some traction in the market.
How does the channel make money? Microsoft compensates partners on an annual basis with 10 percent of recurring revenues it receives for the customers partners sign up for the application.
Intacct provides cloud-based financial management and accounting applications used by certified public accountant (CPA) firms and other businesses. With more than 3,300 business customers and 100 channel partners, Intacct is focused on selling to CPA firms as well as through the VAR channel. Pricing is based on the size of the business, with its entry level version (for those moving up from the likes of QuickBooks) priced at $1,500 per month and the enterprise version priced at $4,000 per month.
How does the channel make money? Intacct offers some of the better margins in cloud computing applications, with resellers earning 50 percent during the first year and then 20 percent on subsequent year subscriptions.
NetSuite offers both CRM and ERP applications that cover applications for accounting, customer support, calendaring, salesforce automation, marketing automation, partner relationship management, inventory management and ecommerce. NetSuite also works with VARs to bring its applications to market, as well as to develop additional applications on top of its platform. Pricing varies based on the specific applications an organization needs, but it’s based on a per user per month fee.
How does the channel make money? NetSuite is offering 100 percent margins to select partners during the first year of a subscription, although it must be a net new customer that signs up for at least two years. The 100 percent margin is only available to partners in NetSuite’s SP 100 partner program. The standard first year margin is 50 percent. Margins for subsequent years are 10 percent.
Zoho is building itself up as a one-stop shop for cloud-based business applications. It provides the standard office productivity applications like word processing and spreadsheets, but it also offers email, an online presentation tool, CRM, business intelligence reporting, project management tools, a wiki application, messaging and several other applications. Although many of its applications are available for free as long as the number of corporate users is in the low single digits, it charges per user per month fees for additional users and for more advanced features. Pricing varies by application, with some as low as $3 per user per month and going up from there.
How does the channel make money? Zoho wouldn’t provide their exact discounts to partners on each application, but a range instead. That range is 20 to 40 percent, with the average being somewhere around 30 percent.
We’ve presented only a selection of some of the more popular channel-friendly cloud computing applications, but with the growing cloud applications market, there are new vendors in the space popping up all the time—and traditional software vendors are also getting on board the cloud bandwagon.