1 HOW AN EFFECTIVE CHANNEL HOSTING STRATEGY CAN INCREASE YOUR SOFTWARE SALES In a changing market, how can traditional software vendors realise true value from software-as-aservice models by developing effective channel strategies with hosting providers. BY C24 LTD Introduction Many independent software vendors (ISVs) are now evaluating how their software solutions can be transformed into software-as-a-service (SAAS) models, by leveraging the cloud and hosting services. Some organisations are further down the road and have been offering hosted SAAS solutions for years, whilst some are still struggling with reaching the right balance. With entry costs to building your own cloud platform being so high, many ISVs look to hosting providers to fill the gap. Larger ISVs have the advantage of readily available capital to invest in developing an in-house cloud solution and employing the right expertise into the business to make it work. Yet for many mid-market and SMB software providers, it can be difficult and complex to find the right balance for deploying an as-a-service cloud solution to clients. With entry costs to building your own cloud platform being so high, many ISVs look to hosting providers to fill the gap. This can come in many forms, from Public cloud providers such as Microsoft Azure and Amazon s AWS service, to more bespoke Private cloud providers. Often, software vendors use a mix of cloud solutions harnessing Public cloud providers market places to reach a wider audience, and deploying Private cloud services to have more control over the solution they are building. In both cases, the ISV requires expertise in-house to build a cloud platform that meets both the requirements of the application and also the manner in
2 Become a partner rather than a customer. which the customer wants to consume it. This is exactly where strategic partnering between a specialised hosting provider and an ISV can work well delivering the expertise required when fine-tuning the cloud platform to the exact specification of the application. This whitepaper will discuss some of the benefits that arise in true partner and channel scenarios, in comparison with an ISV building their own cloud infrastructure or using a generic Public cloud provider. You can gain access to a wider sales ecosystem By partnering with another technology provider, you become a partner rather than a customer of the hoster. If you purchase compute resources from a Public cloud provider then you are their customer and it is your job to go out and sell those services to your clients. When you partner with a hosting provider to deliver a joint solution proposition, you bring together the resources of both organisations to service joint customers. This gives you access to more sales people who can be out talking to customers about your proposition, without the cost and risk involved in employing extra staff. If you can work closely with those channel sales teams and show them how selling your solution will benefit them and their bank balance, then they will be motivated to sell your services on your behalf. You enable once, and then the solution is sold multiple times. By partnering you will typically be selling to many warm prospects, who are existing clients of your channel partner. Partnering also means that you will also typically gain access to more sales resources; such as marketing, PR, training and technical expertise. By working together, your new partner will gain a different solution to sell in their kitbag, which they will market and promote out to their own clients and prospects, which ultimately benefits your sales numbers. When combined with the activity undertaken within your own sales teams, this effectively doubles the sales efforts. Importantly, by partnering you will typically be selling to many warm prospects, who are existing clients of your channel partner. This makes it easier for customers to trust you and consider your solution as their existing supplier has already given you their seal of approval. This is why it is critical that you choose your partners carefully so that you can be confident in recommending them to your own customers. For you and your partner, it is also much easier (and less costly to the business) to sell to existing clients, rather than finding, winning and nurturing new customers. As your relationship with your channel strengthens, you will start to develop reciprocal business opportunities where you and your partners can share leads confident in the knowledge that they are a tried and tested business partner who you can trust with your clients IT service delivery. Through partnering with another trusted organisation, you can present a more established image to clients enabling you to reach bigger customers that you may not have attempted to engage with previously. You can
3 capitalise on the scale of two companies and the expertise shared between them depending on the individual sales scenario and customer requirement. A bad partner can negatively impact your brand and destroy customers perception of your product, regardless of your involvement in the sale. There are, however, a few obvious considerations that are critical for success. It is firstly important that you choose the right partner this is difficult to do as it can be impossible to know how partners will act and react in a real-life customer scenario. It is perhaps better to work with just a couple of partners to start with, especially if this is your first foray into the world of channel partnering, as your organisation will need to learn how to work effectively with a partner; i.e. what they require from you to succeed, what works well when training their sales teams. You will be more successful working with a small number of active partners rather than hundreds of dormant resellers who rarely engage with you. Too many partners who you don t have the time and resources to dedicate to training and enabling them will result in wasted time and effort on your part, plus many hours of meetings and training activities with organisations who are never going to be able to sell your solution properly. A bad partner can negatively impact your brand and destroy customers perception of your product, regardless of your involvement in the sale. It is useful to also think about the size and scale of your potential partners, as a partner that is too big may not see you as a critical part of their business and you will be competing for time and resources from them if they have lots of similar partners in the same position as you. Similarly, if you have partners who are too small, then they may not have the resources or scale required to meet the demands of clients you are targeting. Very often, partners who are a similar size to you work more effectively together in partnerships as they will probably face similar challenges to you, such as payment terms, business growth issues and aspirations. Fundamentally, partnering with a specialised hosting provider enables your sales teams to continue selling your solution, yet leaves the deployment and infrastructure specification worries to someone else reducing the time dedicated to post-sales activities by your teams. You can develop expertise in different product and solution areas Partnering offers both a challenge and an opportunity to your sales force. Partnering with another organisation who sells solutions completely different to your own, forces you out of your comfort zone. This offers a challenge and also an opportunity to your sales force, enabling them to build significant expertise in other solution areas outside of your product focus. Your teams can start to develop and sell hybrid solutions that mix products and services for a more holistic and strategic sell to customers engaging clients in long term contracts rather than one-off sales. This creates more profitable and sticky clients who work closely with you over a longer period of time giving you the opportunity to upsell further solutions and products to your new clients. Additionally, many customers are now looking for cloud options when they make new software purchases, and by developing a channel ecosystem of
4 specialised hosters, your organisation can quickly develop a cloud option for clients. This also opens you up to exploring other cloud solutions in the future. Partnering with more than one hoster enables you to spread the risk and offer different solution scenarios. You can also develop expertise by working hand in hand with your partner s sales and technical teams capitalising on the experience they already have, to demonstrate a unified partnership to your client, increasing your credibility and experience in the market. You can employ your product to solve different customer challenges See your product from a different perspective... When you partner closely with another provider, over time they will begin to involve you in sales that you would otherwise not pursue opening your solution up to a wider customer base and to solving new challenges. This enables you to see your product from a different perspective, as it becomes incorporated into a new solution that is bigger than the sum of its parts. By solving different challenges, you gain access to a wider range of clients across new market segments in which your partner is particularly effective. This allows you to reciprocate with your own customer base and create net new business possibilities for both organisations. An example of this is analytics. An analytics solution on its own may work particularly well for e-commerce or digital businesses, but when partnered with an ERP provider s solution, the analytics software can gain inroads into new clients and sectors. This results in the analytics solution becoming attractive to an industry where it previously may not have appeared relevant. You can package your product in an easy-to-consume model Package your product into an easy-toconsume service, available to be purchased and delivered with ease and convenience. When you partner with a hosting provider, you have the opportunity to package your product into an easy-to-consume service, available to be purchased and delivered with ease and convenience. Once your solution is in a ready-to-go cloud model, you then have the option to sell your service through different channels such as via online cloud market places. It opens your business up to new ways of selling that don t rely on the traditional product sales cycle and its physical limitations. By packaging your product into an as-a-service solution with your hosting partner, you are able to commercialise it in a different way. For instance, many home users may be unlikely to purchase bulky hard drives and back up software, but may instead choose a cloud backup-as-a-service solution where they can link their desktop folders to a cloud folder because it sounds like an easy, accessible and simple solution.
5 For Public cloud solutions, ISVs can gain access to different sales channels such as Amazon s market place where vendors can sell integrated SAAS solutions. This enables clients to see your solution and opens up your market to customers who may be searching online for a particular service. Selling your software as a service in a commoditised package means that it is easier to set up and activate for clients. They don t have to worry about provisioning infrastructure around your software as this is taken care of by the hosting provider. This is more attractive to time conscious organisations who want to avoid lengthy deployment cycles, and so can be leveraged as an advantage to clients in the sales cycle. Because of the simplistic nature of an all-in-one hardware and software solution delivered to the client as a service, it is therefore easier for your sales and other channel sales teams to sell the solution with minimal training and involvement required from you. Conclusion Without both sides fully invested and engaged in your partner program, it will not work. Partnering can be complex and it often takes many months to develop a relationship before you make that first sale. The more complicated your software solution, the longer this will typically take as your partners become more skilled in selling your solution and becoming proficient in the underlying technical detail. However if you focus on a few key objectives that you want to achieve when implementing your channel program then you can create a framework to work towards with a handful of trusted partners. By working with just a few select partners, you can each dedicate the time and resources required to fully commit to a comprehensive partnership programme. Without both sides fully invested and engaged in the program it will not work, as one side will always be dissatisfied with the other. Partnering enables your business to move in new directions and grow revenues without adopting a completely new product set that your sales and technical teams need to become skilled in. By partnering and developing a new way of enabling your clients to consume your services, it is an extension of your existing product. In summary, partnering is a way of enhancing your existing offerings and appeal to clients by combining different solutions that are more valuable as a whole, than the individual product components would be separately. About C24 C24 Ltd is one of the UK s leading privately owned specialist managed service and hosting providers, based in the Midlands, UK. Working with businesses all over the globe, the company manages, secures and delivers critical business applications to over 100 countries, with a particular focus on the legal sector. As a strategic partner to Practice Management ISVs, we deliver enterprise hosting platforms legal firms who are looking for more flexible solutions for their core practice management platforms.