13 Nov Becoming a Cloud Partner or Partnering with a Cloud Provider
While many enterprise resource planning (ERP) providers continue to focus their practice on implementing on-premises systems, the pull of cloud opportunities has caused most ERP shops to at least consider developing a cloud practice in order to tap into small and mid-size markets. However, organizations that try to maintain both cloud and on premises ERP practices are less likely to be successful than organization that go all-in on one or the other, according to research from IDC.
“To target the mid-market and below, you have to get your customer acquisition costs down and generate lots of volume. It takes a lot of work to get it right if you aren’t already starting out as a mid-market specialist,” said the IDC report. “It’s a very different business model than targeting large enterprises to go deep rather than wide. Either way is a valid choice, just select the strategy that works best within your market and area of expertise, and stick with it.”
However, the world of ERP implementation is turning increasingly toward the cloud and smaller accounts in higher volumes. Cloud partners that focus on hosted services gain new customers about 30-percent faster than those who don’t, with about 80-prcent more recurring revenue being generated. So, the temptation to tap into that revenue is strong for on-premises shops.
Of course there is a third option. Partnering with a cloud provider of ERP solutions allows VARs to deliver hosted Cloud solutions and services without the risk and costs of trying to become a beast with two competing heads.
The longer an ERP shop has been focused on cloud services the faster its revenue grows, according to IDC. Those who have been in the cloud longest generate revenue growth five times faster than those who have been in the cloud the least amount of time.
Organizations who are only dipping their toes in the cloud are better served by partnering with an organization that has proven expertise in delivering cloud based ERP, rather than try to catch up after getting a late start in the race. This will allow them to spend less on lead generation, improve time to value on their cloud efforts and see an improved recurring revenue stream while meeting the demand for cloud.
Cloud partners are able to allocate more personnel resources to sales and marketing than most on premises organizations, who focus on hiring consultants and other service and project oriented staff. These cloud organizations that focus on marketing are then able to reduce their on premises partners’ costs related to new cloud lead procurement.
Of course it’s not just the small businesses that want cloud. Even enterprise level and public sector organizations who are happy with their on premises systems want a hybrid solution that gives them the power of cloud choice. ERP providers can improve their customer service by having the option to deploy all or part of their solution in the cloud simultaneously. But in order to do this, they need to partner with a cloud provider that can provide support for enterprise level cloud ERP and compliance support for heavily regulated industries and public companies.