Google Apps Channel Team Grabs Coffee With Resellers
The Google Apps channel team is preparing to hit the road, meeting with potential channel partners and cloud resellers in Boston, New York and Chicago in April and May. For resellers that continue to avoid the cloud market, here’s a reality check.
The full-day Google reseller meetings — positioned as Coffee. Cloud. Conversation… — will certainly provide an overview of the Google Apps Authorized Reseller program. But the interesting point will involve real-world, live case studies from current Google partners.
Admittedly, some channel skeptics don’t know how they’ll generate reasonable profits working with Google (symbol: GOOG). Indeed, Google Apps costs only about $50 per user per year, and channel partners only make about $10 per user per year in recurring revenues.
Consulting in the Cloud
So can partners really profit from Google Apps? For the answer, check in with Cloud Sherpas — one of Google’s largest authorized resellers.
Earlier this month Cloud Sherpas merged with GlobalOne, a top consulting firm focused on Salesforce.com customers. During a recent conversation with Talkin’ Cloud, Cloud Sherpas CEO David Northington said combined revenues for Cloud Sherpas and GlobalOne tripled in 2011.
The interesting twist: Northington didn’t really mention recurring revenues. Instead, he emphasized consulting fees, training fees and some custom application work that Cloud Sherpas delivers. Northington also promoted the fact that Cloud Sherpas is a cloud consulting firm.
So there’s the lesson: The most successful Google Apps resellers are actually IT consulting firms built for the cloud. But no doubt, smaller resellers are trying to figure out their potential place in the cloud — and their potential role in the Google Apps ecosystem.
If you’re in that position, Google wants to have coffee with you really soon…
First off, many VAR’s selling traditional software earn approximately one to three times revenue selling services to the client to implement the solution. With SaaS, this opportunity does not go away, but is simply in a different format. Consider a VAR that is an expert in accounting selling and implementing traditional accounting software for a client. They understand the application and can leverage their consultative sales skills to identify the requirements and propose a customised solution for their client. Step one, they sell the application and make a margin on that transaction (once). They then begin the implementation process by perhaps installing a server, as well as all the supporting services like the database, and eventually the application. In many cases they may need to set up printers, various systems drivers, etc. Although competent at all these tasks, the true value of their expertise has yet to be exploited. They are accounting experts and so far have spent perhaps days without yet getting to the thing that the customer needs most – a customised accounting system.
Eventually that work begins. In contrast, the same application being offered in a SaaS model allows them to start the process with the customisation and setup of the application and therefore focus on the higher value services and expertise that the VAR is bringing in this equation.
Setup has no customer value, but has been a necessity of the on site product based world. One that you needed to get through in order to get to the usage of the system and any tailoring to the specific customer needs. With Cloud and switch it on vanilla systems this is done quickly and without cost. The focus can then be on the customer specific setup and alignment with the business, ensuring consultancy spend is on valued assets to the customer.
Most of the vendor’s SaaS programs offer the reseller the opportunity to share in the margin over the customer life cycle (in many applications, this could be 5-7 years or longer). This actually has another large benefit over the more traditional software sales model. The valuation of the VAR’s business will be much higher if the VAR has a run rate of revenue that is predictable and consistent.
So whilst cloud does infer a moving from up front to lifetime based billing and at face value removes the need for a channel, in reality the majority of cloud applications still need customer tuning from the vanilla vendor version.
We certainly live this at Workbooks, a Cloud based CRM solution that allows a resale partner to transact not only the initial license (and the renewals), but to also deliver healthy services revenues to deliver true customization value to their clients. Our CRM is also at considerably lower ongoing licensing costs and delivers faster and cheaper implementation than some such as Salesforce, allowing partners to compete successfully as well as combine the service and implementation billing together and own the full customer transaction.
Ian Moyse
Workbooks.com
Ian,
The VAR Guy appreciates the fact that you offer up some educational information with each comment. Our bloggers are watching Workbooks for continued news and partner developments.
-TVG