If you’re a traditional VAR
and you are looking at the potential of the cloud business model, it may be
hard to see how X amount of dollars per user per month will add up to enough
for your business to survive at all, let alone thrive and grow. You are used to
the big sale upfront and then ongoing services after that sale.
That’s the same place Indicee executives Mark Cunningham, CEO,
and Craig Todd, director of partnerships, found themselves in when they were
looking to take their years of technology expertise to the cloud. Both were
part of the team that created the original Crystal Reports business
intelligence software. (It has since been sold to Seagate and ultimately ended
up as a part of SAP.)
Business
Opportunities and Threats in the Technology Cloud
They knew that business was going to the cloud. And their experience had been
that channel partners are the best way to connect with end customers. The
question was how to make it all work.
“The biggest single difference in what SAAS does is removes those boxes,” Todd
told Channel Insider. “It has initially been seen as a threat by some of our
partners.” That’s because they won’t get to sell those boxes anymore.
“A lot of VARs are worried about being disintermediated. Their expertise in
installing software is no longer required,” said Todd. “But the ones we’ve been
working with the last few months see it as an opportunity.”
One of those partners is Arxis Technology in Simi Valley,
Calif., an ERP, CRM
and BI specialist. Mark Severance, director of sales and marketing at the
25-person company that has two offices in California
and also offices in Phoenix and Chicago,
told Channel Insider that the revenue all evens out in the end whether the
customer is deploying on-premises solutions or in-the-cloud solutions.
“The biggest thing people are having a hard time with is that you are used to
the big upfront sale,” he said. “But, honestly, from our perspective, if you
have great products and do a great job taking care of the customer, then
there’s a business model for what you do.”
The annuity part of the business—where Arxis receives a commission per user per
month on an ongoing basis—eventually will make up for the lack of big upfront
sale, Severance said. Plus, Arxis can still offer the integration and
implementation services that customers need. That likely means setting up the
BI solution’s data sources, whether they are data from Salesforce.com or an
internal CRM or ERP solution.
Arxis still offers the traditional on-premises CRM
and ERP software sales and implementation, and currently the biggest vendor it
works with is Sage. And while it also already offers a BI solution from
Business Objects in both an on-premises and cloud form, Arxis recently added
Indicee’s cloud-based BI solution for a few reasons. One of the big ones is
that some customers may not be able to afford an on-premises-based BI solution,
but a cloud-based solution makes the technology economically accessible.
Severance also noted that much of computing is moving to the cloud. It used to
be that companies liked the feeling of having their server in-house and locking
it in when they left for the night, he said. But now they want to access their
data anytime, from anywhere, regardless of what device they are using.
Indicee’s Todd and Cunningham also noted that VARs can offer their end
customers training services as well, or even services such as change
management.
“There’s an exciting opportunity here for traditional VARs,” Todd said. “This
creates a platform that allows partners to focus on the V and A in VAR—the
value add.”
Indicee pricing starts at $69 per user per month. A five-user pack is priced at
$150 per month. Todd said the VAR cut
depends on how much work the VAR is doing to
get the customer, but generally it is a 20 percent commission on sales of five packs
or more, calculated monthly and paid out quarterly.
Cunningham pointed out that SAAS is a market primed for growth, with Gartner
forecasting sales of $150 billion by 2013. And if solution providers are
looking to get in on the cloud, business intelligence, with all the integration
work required, is a lucrative place to start, he added.