Every software vendor needs to think about the question whether its SaaS-solution is channel friendly. And I am not talking about channel friendly from a financial perspective, but also from the perspective how your channel partners can administer its end users customers and deploy the solutions. One of the biggest challenges that many software vendors as well as system integrators/managed service provides are facing is the deployment and automation of software solution to end users. In the past, the software vendor was able to ship the bits on a CD/DVD or as download, but now the expectation is that the software vendor provides an instance of its cloud in an automated way and in a way where the channel partner can manage not only the deployment, but also the provisioning, billing, support and all of the associated functions that a software solution delivery needs to include.
Most software vendors are missing all of the key ingredients in transforming the business model to a SaaS business model as it is changing almost every single aspect of the business. The first question is who is going to provision the solution? Is it the software vendor that will be notified of a new client by the channel partner or is it the channel partners that has a solution (UI) that enables them to manage everything themselves? Who is going to do the billing? Is it the channel partners or is it the software vendor? What happens when the end user customer does not pay to the channel partner? Will the software vendor send a threat letter to the channel partner for non-payment of owed use of service? Is the end user customer going to call channel partner first, or directly the end user organization?
I could keep asking these questions and most of the traditional software vendors have not mapped out these changes and will handle them one-by-one as they come. That is not the most effective way of dealing with change as it is managing one crisis after the other while the better model would be to map out the process, ask the hard questions before anything gets shipped.
I got inspired about this topic today as I read in Redmond Channel Partner about Microsoft Office 365 current status, business growth and perspectives of the environment on channel partners. Based on the most recent quarterly financial report from Microsoft, Office 365 was one of the key highlights where the commercial cloud business for Microsoft has doubled year-over-year and both Office 365 and Azure are performing extremely well according to Microsoft new CEO Satya Nadella. He even concludes that Office 365 should be “a gold-rush time in some sense of being able to capitalize on the opportunity”.
The Office 365 business is already a $2.5 Billion business for Microsoft on an annual basis and when you calculate the entire ecosystem of Microsoft partners, it is easy to say that the overall revenue that the ecosystem is generating is many times that number. Microsoft CFO Amy Hood is concluding that it is the partners that are helping in the growth and this is exactly what one want’s to see when working in an ecosystem. The more Office 365 seats are sold, the better opportunity for third-party vendors to build solutions on top of the platform itself. We have to keep in mind that Office 365 can be seen as a platform and any platform should and will always have innovation extensions built by the ecosystem. If you look at SharePoint ISV ecosystem, there are lots of different solutions that people need to complete the platform. I mentioned in my previous blog entry the Office 365 scanning solution GScan Online from Gradient that enables end user organizations to scan document directly into SharePoint libraries without having to install heavy desktop software to do the job. The app is installed centrally and every user gets the ability to scan in documents using any scanner or image on a share folder. This is exactly the type of innovation that software vendors need to be thinking about and identifying what type of solutions are needed, what part of the ecosystem they fit in and create the right type of messaging around it.
Back to the question whether you are channel friendly. What Microsoft has done with its Office 365 channel partners is to provide a new partner tool that enables partners to manage the Office 365 service on behalf of its customers. Based on the feedback from his channel partners, Microsoft has now announced the brand new admin tool that will help Office 365 to be even more channel friendly for its partners.
If you want to scale your business to the next level, you will have to think about how you provide the needed tools for your partners. You can’t expect channel partners to wait you to provision, manage, support and do everything on their behalf. Most of the channel partner want to own the customer relationship and you as software vendor need to provide the tools to enable this.
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