SMBs have historically led the way out of recessions – and with the impression in mind that this recovery will prove likewise, tech vendors have been clamoring to roll out new “SMB Specialist” partner certifications. The problem is that most of these SMB certifications are meaningless. The requirement for channel partners to achieve SMB certification in many vendors’ channel programs is that the channel partner has to prove that they have successfully sold to and supported SMB customers. Huh? Sounds like the “chicken and egg” syndrome, doesn’t it?
A few vendors, primarily those with large product portfolios, place the appropriate “breadth” value requirement on their SMB channel partners (as opposed to “depth”, i.e., deep knowledge in one particular technology domain) and require their SMB partners to test on several technology domains, albeit at the “101” (“beginner”) level. Note that most vendors, too, provide no path for their SMB-certified partners to reach their top partner tier (most vendors still reward revenue contribution over everything else), so those partners are at a competitive disadvantage to large channel partners that target both the enterprise and SMB markets.
The problem is vendors’ view of “breadth” with respect to SMB partner certification. Cisco Systems’ view of “breadth” is competency across the network and collaboration domains; Symantec’s is competency across the security spectrum; Microsoft’s is office suite and application software; and HP’s is primarily hardware and IT management (at least until it integrates the 3Com channel program).
It’s a well-established fact that social media is every bit as – if not more – influential for business decision-makers (B2B) as it is for consumers (B2C); Forrester clients can read more here. And SMBs are the most prolific of all business-size segments in utilizing social media and online communities to inform their technology purchase decisions. So where are SMBs turning to for that information? Where can you check the pulse of SMBs’ thinking?
Back in February 2009, I wrote a report titled “A New SMB Market Phoenix Is Rising” which examines how small and medium businesses (SMBs) will be the initial source of job growth and creation which leads us out of the current recession, as they have in most previous recessions. The report also examines how SMBs use technology, and how technology vendors can best market to them - this figure highlights my conclusions.
Today, Paul Kedrosky, who has a Ph.D. in the economics of technology and writes extensively on macro-economic trends, wrote a piece I found very insightful about why young firms (small businesses) not only historically account for most of the job growth in the United States, but that their doing so is mathematically inevitable.
My upcoming report, “Fueling the New SMB: Marketing Services-as-Software” on this topic, will work its way through our editing process in the next week. In the meantime, I encourage you to read his post and my older report and let me know if they match what your marketing team is seeing today.
NetSuite, a leading SaaS ERP/CRM provider, recently announced that it is revamping its channel partner comp model: 100% on Y1 subscription revenue, and 10% thereafter. VARs have been remiss in taking up the SaaS torch, largely because most SaaS vendors haven’t provided a financial model conducive to VARs’ cash flow requirements. Per the on-premise license model, channel partners make a big portion of their nut on initial product margin, i.e., up front. But vendor SaaS economics minimize up-front remuneration and spread revenue out over a long period of time. Though it sacrifices year-one revenue, NetSuite’s 100/10 model more closely mirrors VARs’ accounting practices.
NetSuite’s model will be the first of many SaaS channel model “experiments” that will ultimately be a shot in the arm for the SMB market in particular. Contrary to popular belief, SMBs have been slow on the uptake of SaaS (application hosting outpaces SaaS adoption by SMBs by a factor of 3-4x) ...
... due to the fact that VARs, in ownership of the customer trust asset, haven’t been pushing SaaS. But the financial barriers to channel partners’ SaaS advocacy are being broken down.
Now that the path for VARs to play in the cloud is being forged, and their play along with software vendors, aggregators, and ISPs being validated, distributors and DMRs, long wedded to on-premise license models, are going to have to figure out their place in the new cloud channel order.
What do you think? Is this one of many experiments? What is the role for distributors and DMRs in cloud computing?